Oops. I retired when I shouldn’t have.

It dawned on my today – I retired (and gave up my FT freelancing job that allowed me to work from home), but maybe i should have worked longer. Why? My passive income stream is just not there. Let me break it down.

I have about $380k in VTSAX. Like a good little girl, it’s all tied up in an IRA, Roth IRA and a Solo 401k. It’s great because i’ve taken advantage of all the tax deductions that incentivize this path, BUT i can’t touch any of it right now. Nor do i really want to.

I’ve got one investment property house. I collect rent on it monthly. The revenue is $500/month – approx $100 for water and misc expenses. I owe $222k on it, but it’s worth at least $425k (maybe even $525k). I purchased it for $375k.

THAT’S IT. That’s all i’ve got for a passive income stream.

All the FI teaching out there tells us that if you have 25x your annual spending, then you can retire. My monthly spending is about $2000 (1000 rent+1000 everything else). I’ve got $51k cash lying around + 380k retirement + $202k (equity using conservative $425k value) = $633k net worth. This number meets my monthly needs of $2k/month.

What I didn’t really take into account was the amount of income i get each month. Sure, i get the $500 or so from rental income, but i’ve reinvested my dividends in my retirement. The cash i have is a big bundle of safety + emergency fund. I may have too quickly “retired” from a purely monetary POV.

BUT, I’m not totally freaking out actually. I’ve got a few safeguards in place, such as the $51k cash i’ve got lying around. With that as a worst-case scenario, i can at least fund a 2-year semi-retirement. I plan to freelance. In fact, I’ve got a very easy recurring gig that will effectively cover my rent for the year. That leaves me $1k in expenses each month. I can dip into the $500/month revenue on investment, which means i only need to come up with $500/mo to sustain myself, or dip into the cash. And i somehow managed to get another gig recently that pays more than 2x what i was making hourly at the freelance job that i retired from. So that will be a nice chunk of change. I should be good for at least 6 months without touching my cash.

Do i regret leaving my FT job? NO WAY. The benefits of my uncertainty in retiring (or semi-retiring) surely outweighs the cost of the 9-5, politics, deadlines, etc. I love the days where i can wake up whenever i feel like it, enjoy a cup or two of hot coffee and curl up with a book, or take an afternoon nap with Wiggles. So i’m super confident that things will be fine for me. And if push comes to shove, I can surely look for more work or even (gasp!) get a job.

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