Back in November, I wrote about the F.O.O.L.I.S.H. Project:

F*&^%$# Obnoxious Ostentatious Luxuriously Irreverent Silly House

Mindy and I are doing something I NEVER thought I’d do; scrape a home and build a new one. Time for an update.

F.O.O.L.I.S.H. Project: Update!

This project started back in 2024. Mindy and I had purchased a decrepit home in a really great location. Our goal was to renovate it and then move into it eventually. It was about half the size of our current home, so it would be a good size space to live in post-kids. After much deliberation and planning, we scraped it and started over. Read the story here: https://www.1500days.com/the-very-big-f-o-o-l-i-s-h-project/

It’s been 140 days since I published the previous post and much has progressed. Here is what the home looked like back then:

And here is what it looks like today:

Here’s is what has happened since the last update:

Fancy Heat: To heat the home, I wanted hydronic floor heating. This is a system that uses warm water in PEX in to heat the home. The tubing is underneath the floor. However, hydronic systems are uncommon which makes it difficult to find an installer. I managed to get one quote and it was about $120,000. No thanks! I decided to take on the project myself. It took an immense amount of planning and a lot of labor, but I got it done for about $18,000.

I’m using an electric boiler which will use a TON of electricity (80 amp circuit!). But a huge photovoltaic array (24 x 450 watt panels) will more than offset my voracious electron consumption.

Energy Recovery Ventilator (ERV): This home is super tight, so I need a way to bring fresh air into the envelope. An ERV does this by continually exchanging air, but capturing the heat and humidity.

Similar to the floor heating, ERVs are obscure and expensive to have installed. I had someone ballpark the system at $40,000. The materials were about $15,000, so I saved $25,000 by DIYing it:

It was a fun job. A big part of the joy of life is solving puzzles. MMM calls it voluntary hardship. It was a lot of work figuring out all of my runs, but it was also very rewarding.

Windows/sliding doors: I don’t like noise. I also don’t like drafty homes that waste energy. For windows and sliding doors, I went with fiberglass, triple-pane windows from Alpen. Alpen is a local manufacturer that has a great reputation.

Rough electric: I had contemplated doing this myself, but am really glad I outsourced it. The electricians did a great job.

Rough plumbing: I had also thought about doing this myself and am glad I didn’t. It was a lot of work and the plumber was a pleasure to work with.

Insulation: I had a layer of foam sprayed to coat the envelope of the home. Then the cavities were topped off with fiberglass. The foam will make the home tight.

Deck: The home doesn’t have much of a backyard, but compensates with an expansive deck.

Cladding: The home is mostly stucco. But I’m also adding a PVC based product that looks like wood to the front facade. Real wood gets cooked here in the Colorado sun, so I’m avoiding that.

The Big Bad Heat Pump

Not everything has been great. I wanted a heat pump to provide cool air in the summer and also provide backup heat. A floor heating system takes a long time to bring a house up to temperature, so a mini-split system would be a great way to supplement the floor heat.

The system was installed back in January and still isn’t working. I won’t go into details because I’m not sure what went wrong. It could have been a mistake from someone who worked on the system or a lemon of a unit. But it’s been over two months and the thing still isn’t working. I’m out almost $30,000. I should have gone with a simple air conditioning system or used a more experienced installer.

What’s Left

Metal roof: This is going on RIGHT NOW. I just walked past the home and saw this:

We have hail here frequently which destroys asphalt shingles. I’ll never have to replace my roof. If the roof gets dented from hail, it doesn’t matter since you can’t see it.

A metal roof makes installing solar panels much easier. Instead of prying up shingles to install mounts, I can clamp them to the standing seam.

Solar panels: This home is all-electric. Because I’m DIYing solar, it will cost around $8,000 for the system. $8,000 is a small price to pay for a tiny utility bill ($20 monthly service charge) and free EV charging (we have a Chevy Bolt and a Tesla Model Y) forever.

Interior Painting: The home will be mostly white. Easy and simple.

Flooring: The home will be all tile. This is slightly weird for a Colorado home, but:

• I don’t like carpet! Yech! We’ll have rugs to make the home cozier and quieter.
• The tile will act as a big heat sink for the heated floors.

Trim: Simple design, painted white.

Kitchen and vanities: I would have been fine with IKEA, but Mindy wanted to go a little bigger. The home will have a mid-century feel, so the kitchen will look something like this:

Concrete: Driveways and a walkway.

Landscaping: Xeriscaping with some raised beds.

Big Money

We have spent about $685,000 so far. That’s a lot of money. However, Mindy and I will get a lot of joy living in this home for decades. I believe that in a couple of years when we reflect on the project, we will consider it money well spent. The home:

Has a floorplan that is efficient and pleasing. The kitchen, dining room and family room are one big flowing area. I don’t need a living room to put random souvenirs on display. The bedrooms aren’t small, but aren’t large either. You’re unconscious most of the time in a bedroom, so they are as big as they need to be and no bigger.

Is quiet. I don’t like noise. The triple pane windows will minimize noise from the outside. In the inside, many of the walls have mineral wool in the walls and a layer of sound absorbing material:

Is in a location that we love. We have a great community in Longmont. We also have a great group of friends in our little neighborhood. I’ve always thought that living in a great neighborhood is more important than the house itself. Here, we have both.

Has low maintenance systems. I’ll never have to paint the exterior or replace the roof. The boiler is a big resistor; much simpler than a modern, multi-stage furnace. I don’t want construction and home repairs to consume my life anymore.

Has one floor living. I love stairs now. Free exercise! In two decades, my knees may not feel the same.

Will be great for hosting people. We designed the basement to be a great guest area. It has two bedrooms, two bathrooms, a full kitchen, and a dedicated entrance. Good friends and interesting new people are frequently passing through town and we look forward to hosting them.

Will be great for travel. We will xeriscape the yard and have no grass. This will allow us to be away for long periods of time.

Big Joy.

I’ve always been fascinated about how things get made. Even as a kid, I loved walking through structures as they were being built. I paid no attention to Keep Out signs and explored freely. This was one of my favorite books as a kid and I still have it:

Designing and working on this project has been a joy and very fulfilling. It’s also really nice to work with skilled tradesmen who really care about their craft. I haven’t been so fortunate in the past.

I had deep reservations about building a home. But now that the finish line is in sight, it has been one of most fun projects I’ve ever worked on. I expect that when I’m old and decrepit, I’ll look back on this time with fond memories.

Amsterdam!

Mindy and I are taking a brief break from home construction and heading over to Amsterdam for a river cruise in early April. Let me know if you’re in the area or have any suggestions for us!

Life is good.

More 1500 Days!!!

You can also find me (and the dinosaurs) at:

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Mindy and I just got back from an adventure that took us to New Jersey, Amsterdam and Belgium. The Amsterdam and Belgium part was a river cruise we booked with FI Friends Travel, run by my friend, Kristen. Here was the itineray:

New Jersey Beach (3/26-3/29): First, we stopped to visit my good friend, Bob. Four other friends joined joined us at the Airbnb. The weather was cold, but the beaches were amazing.

Urecht (3/30-4/2): This was a pre-cruise adventure planned by my friends, Jolene and Darren from Dare to Draw Down.

FI Friends Travel River Cruise (4/2-4/9): And finally, the main event.

Random Thoughts: River Cruising, Netherlands, And Friendly Travel

River Cruise

A river cruise is much different from the big ship version. On a big ship, much of the experience is the boat itself; pools, waterslides, go-carts, zip lines, musicals, restaurants, on and on. A river cruise is much more sedate. The attractions are the cities that it stops in. The experience onboard was still fun, but on a much smaller scale with less options.

Watching the world go by from the ship was really good. On a big ship, you’re either docked or in the middle of the sea. On a river cruise, you can always see land. Watching the world go by as the sun goes down was very nice.

This cruise company (Avalon) fit my style. I overheard another passenger lamenting that one of the other river cruise lines had better food and passengers who dressed up. The food was good and the last thing I want to do on a vacation (or pretty much ever) is wear fancy clothes. Taco Bell*/Costco Casual for the win!

*The food was better than Taco Bell.

The guided tours were great. Avalon offered excursions, many of which were free. The free excursions were usually guided tours around the city. These were staffed by locals who did a great job.

Boat Versus Ship. When talking to the crew, I learned NOT to call the big floating thing a boat. Workers on the SHIP get angry if you call it a “boat.”

Netherlands and Belgium

The cities have an eclectic mix of old and new architecture, sometimes simultaneously.

Stunning cathedrals built 500 years ago.

Structures hundreds of years old with modern addtions.

A home in Utrecht that was built in 1924, but looks like it could have been built this year.

This one in Rotterdam reminded me of one of the spaceships from the Dune movies.

And whomever designed this one may have been under the influence of one of substances that Amsterdam is famous for legalizing!

The public transportation was spectacular. Even small towns had modern trains. Seeing this one in Ghent roll up in front of a castle amused me.

The Dutch are industrious people. I admit that prior to this trip, my knowledge of the Netherlands didn’t go much beyond dykes, windmills, and stroopwafels. Reclaiming 2,700+ square miles of land by use of windmills, canals, and dykes would be a monumental engineering achievement today. The Dutch did much of it in the 1600s! I’m not surprised that they build miraculous machines today.

Bike culture. It’s pretty great that so many use bicycles as a primary source of transportation. I saw:

• Children being transported in various ways; in seats mounted behind the handlebars, in a basket on the handlebars, and in a variety of cargo eBikes.
• One adult transporting another adult in a cargo bike. The guy being transported may or may not have been drunk.
• Families biking to school.

For the pedestrian, Amsterdam was slightly treacherous. Bikes have precedence over all other forms of transportation. And probably pretty much everything and anything else. Cyclists stop for no one. DO NOT STAND IN THE BIKE LANE!

The cars amused me. I knew I’d see a lot of electric vehicles (EVs) in the Netherlands. I didn’t expect to see all of the miniature EVs. I especially liked the 3 wheeled Carver that leans like a motorcycle when turning (bottom left below).

Bathrooms are difficult, but now you can tap-to-pee. It’s hard to find a place to go pee. It felt equivalent to NYC. Toilets are few and far between.

But one really neat thing is that public toilets now take credit cards. A quick tap and you’re *in*. This was a vast improvement over my last visit to Europe when I often found myself with a full bladder and an empty wallet. No Euro, no pee! Tap-to-pee makes it easy!

<TMI Alert!> There are some really cool bathrooms. One of them had a sound system and a screen in the stalls. When doing my, ahem business, I listened to soothing music and inspirational messages while watching deer run in slow motion. I could have stayed there all day.

I was particularly impressed with another bathroom that had a pee waterfall about 20′ long and 8′ high. It worked like this: You stand on a little ledge in front of the waterfall and then the water would start flowing faster. Picture a miniature Victoria Falls. And then you pee into the waterfall. It was stunning. I wish the ladies could experience something like this, but alas, anatomy.

I would have taken a photo, but doing so in the bathroom would have been super creepy. So here is a crappy picture:

</TMI Alert!>

The No Bullshit Attitude Is Good. There are semi-dangerous things all over Amsterdam and the Netherlands:

• There are canals everywhere and most don’t have guard rails of any kind. More than one drunk person must fall in every year.
• Small electric cars and mopeds are allowed in the bike lanes. And don’t forget that bikes DO NOT slow down for pedestrians. Or anything.
• Here is working windmill where the blade comes very close to the ground. It was also a house at one time. If you were the windmill caretaker and got too close, this thing could take you out! BONK!!! (I seriously wonder how many people got whacked by a windmill back in the old days when there were 1000s of them?!??)

One of the tour guides mentioned that it’s very difficult to sue in the Netherlands. If you do something stupid and injure yourself, like challenging the Windmill of Death in a Don Quixote-esque drunken stupor, it’s on you. This is much better than the I-got-rear-ended-at-2-mph-and-now-I’m-hiring-a-lawyer attitude in America.

Invader. The street artist Invader hangs 8-bit mosaics in random public places. Mindy happened to spot this one in Antwerp and it made my day (I’m easily amused. You should know this now from the Pee Waterfall).

Traveling With Friends

FI folks. It was really neat traveling with a large group of friends. Two of them, Randy and Laura from Laundromats101, are people that Mindy and I met way back in 2014. We don’t get together often, but when we do, it’s a great time. (Sorry Laura and Randy for this ridiculous photo.)

FI Friends Travel. Kristen did a spectacular job organizing this trip and taking care of us. While I didn’t expect it, she was constantly looking out for our group, always on top of everything. Sometimes I needed to be herded like a wayward, low-IQ sheep and Kristen always led me back to the flock. If the TV weather thing (her normal job) doesn’t work out, she could do this for a living. Thank you Kristen for a great trip!!

Planning for more planned travel. I’m a hopeless planner. I can easily fall down a mile deep rabbit hole on something as trivial as researching airport hotels. Going on organized trips minimizes my OCD because someone else has done all of the work. An organized trip is something I had never considered until fairly recently. Now, I’m certain I’ll be taking more including Kristen’s trip to Japan next year.

Note: Kristen, if you’re reading this, I’m sorry if I wasn’t supposed to let the neko out of the baggu.

Random stats:

• There were 38 people in the FI Friends Travel group. The ship had 160 passengers, so we were about 25% of the guests.
• I had crossed paths with about half of them at various FI gatherings prior to the cruise.
• There were 7 people from Longmont aboard.

Life Is Good

Reflecting back on the trip, I’m a fortunate human:

• Damn, I got to see a windmill! I even went inside a working one! As a kid, I dreamed of seeing the windmills of the Netherlands. Seeing them in person was really cool! 10/10!
• Security was my goal. Trips like this are icing on the cake. I didn’t save for FIRE, at least not the retire early part of it. I saved to create security and peace. Trips like this are just little bonuses. My life has somehow turned into a fairy tale that I never saw coming and still have a difficult time processing.
• I have a lot of good people in my life. I feel awkward around most humans. I’m bad at making small talk about sports, weather, TV shows, fashion, politics, or celebrity bullshit. The What do you do? question leads to severe awkwardness 99% of the time. But I’m almost instantly comfortable with people who I’ve met through the FI community. While we don’t actually talk about money that much, having FI as a core principle is a strong filter that results in a lot of other commonalities.
• We flew fancy this time. Before this trip, I had never flown anything but coach. I logged into the United app and saw that I could bid on a first class seat for $400 and points. I have no status with the airline, so our chances of getting the upgrade were remote. But we got it anyway. I’ve heard people talk up the fancy seats like they’re the best thing ever. I don’t quite agree with that, but it was a fun experiment and I’d consider it again for an international trip.
• Mega Mindy! On the trip, I learned that there is a superhero from Belgium named Mega Mindy. Now I have something fun to needle Real Mindy about.

More 1500 Days!!!

You can also find me (and the dinosaurs) at:

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I’m back on the BiggerPockets Money podcast this week with Mindy! So exciting! For me at least. I enjoy podcasting and look forward to recording more when the F.O.O.L.I.S.H. Project is over.

What FIRE People Won’t Tell You

Being financially independent is a truly stunning and incredible circumstance. It gives you autonomy:

You love your job? Great! Stay there and throw some more dollars on the pile!

You hate your job? Great! Tell your boss where they can put that job and go find something else to do with your time.

But leaving work is one of the biggest life changes you’ll ever experience. It’s up there with marriage, divorce, and children. Old men have the highest suicide rate* in America. Part of the reason is social isolation. Men tend to build their lives and identity around careers. And then they feel lost when when that career ends.

I struggled when I left work too. Life won’t just magically come to you. Even retirement takes work. This is what I talked about with Mindy on the podcast. Watch here or wherever finer podcasts are distributed:

One more thing: Almost ten years after quitting work, I’m in a great place now. There’s NO WAY I’d go back to a conventional job.

Life is great.

Note: If you or someone you know is struggling or in crisis, help is available. In the US, you can call or text 988 to reach the Suicide & Crisis Lifeline.

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In the world of very early retirement, we tend to ignore one of the most important things for normal retirees: the Social Security program.

Don’t get me wrong, it’s a great thing for the 73 million people who currently draw benefits, and it provides an essential safety net for many who don’t have much income from anywhere else.

But for those of us leaving the workplace in our 30 and 40s, Social Security is just a fuzzy concept in the very distant future. We aren’t thinking about money that eases us into our Golden Years, we need something that starts working now. Plus we’d rather not rely on our government keeping its promises that far into the future.

Those were my thoughts in 2005, when I was just a young retiree myself. But a funny thing happens when time passes: you get older. And you realize that there are plenty of other older people around too. And suddenly, Social Security is an important subject after all, that many people would like to know more about. But there is an endless pile of conflicting opinions:

• Social Security is going to be bankrupt, so don’t count on it!
• No, actually Social Security will never be canceled, because it’s important to older people and old people vote!
• You should delay your withdrawals as long as possible to get the largest possible payments!
• NO, actually you should take the payments as early as possible so you can retire earlier!

But when I did the math on all of this, I realized that it’s more confusing than it needs to be. Because when it comes to deciding on how Social Security fits into your retirement strategy, it really boils down to only one number: 

The Net Present Value of your future lifetime stream of Social Security payments.

That little piece of math jargon might not mean much if you don’t have fond memories of  Economics 101 class. But don’t worry, it’s easy to understand if you think of these two extremes:

If you want to retire in your 30s like I did, the value of your future Social Security is pretty close to zero. Even if the government keeps all of its promises, those payments are so far in the future that you need to save a full retirement ‘stash to get through the three decades until it kicks in.

On the other hand, if you’re already over 60 years old, contributed to Social Security throughout your long career and have a low cost of living, you may be eligible for payments that already meet all your needs. 

In this situation, you are set for life. Social Security will in theory cover all your needs and rise automatically with inflation, so you don’t have to save any additional money.

In between these two extremes, the math gets interesting. Because while most people assume Social Security is useless until you reach full eligibility, the real story is that you can think of it as a chunk of money that you already have right now, which reduces the amount of saving you have to do on your own. 

And there’s an easy way to calculate it, with an extremely useful thing called the Net Present Value calculation.

There’s an actual formula for this, but don’t worry you don’t have to memorize it because you can just have any Internet calculator, AI tool or spreadsheet do the math for you.

Where:

• PMT is the monthly payment you want
• r is the monthly interest rate you expect from investments (annual rate / 12)
• n is the number of months you want the stream to continue

First let’s calculate the value a young couple might get if they do this calculation at 30 years old. We just have to make a few assumptions to have numbers plug into the formula:

• A future Social Security income of $4000 per month ($2000 each)
• They will collect those payments starting at 62 and then live to 92 (so it’s a 30 year stream of payments
• A compounding rate for investments of about 6% after inflation

When you plug in all the numbers and calculate this (the Net Present Value of a 30 year stream of income), the first number you’ll get is $667,166. But that’s not the final answer – that is how much you’d need if you wanted the payments to start right now.

The final step is applying a simpler version of the formula a second time, to account for the fact that you don’t need the money until 32 years from now:

At that point, you end up with a number around $98,280. But what does this mean?

It means that if you stuck $98k into an investment account today and let it compound for 32 years, at that point it would be big enough to provide a stream of $4000 payments for the following 30 years. And this even takes future inflation into account!

It also means that the 30 year old retirees can mark an imaginary $98k onto their “net worth” spreadsheet and save that much less. Or at least think of it as a nice safety margin.

If you’re new to money and math, that may sound like sorcery, but if you’ve been investing for long enough you will understand that it really does work that way. So let’s re-run the example for a couple who is already 62 years old, and needs a $5000 income starting right now, that still needs to last 30 years. 

That NPV calculation looks like this:

And the answer is right around $834,000. 

What this means, is that if they invested $834,000 into a fund that paid out 6% per year for 30 years before running dry, they’d get that exact same $5000 monthly income. And it would keep up with inflation.

 Now that we’ve seen these examples from the extreme ends of the spectrum, we can see how this applies in a more typical situation. Here’s one that is loosely based on one from a real person I worked with last year:

Shane Survivor is 55 and he has been through some hard times. He lost most of his savings in a business blowup a few years back, but really wishes he could still retire soon. His financial picture:

• $3000 monthly expenses including upkeep on a small house he owns
• $250k in remaining investments
• No debt

Most financial advisors would tell him to tough it out and  just keep working until he hits Social Security eligibility. At least 62 to get the minimum benefits, but maybe even longer to get to Full Retirement Age (67) or even until 70 to get the maximum benefit. 

But wait! Let’s do the math because who wants to work another fifteen years when you’re already tired of working at 55!

Shane logs into the Social Security website SSA.gov and uses the online tool to calculate what his payout will be. I just did this myself so we can use my numbers:

Let’s start by calculating the Net Present Value of each of these three options for our 55-year old friend:

• $1968/month from age 62-90 is like having $210,433 today
• $2796/month from age 67-90 is like having $203,849 today
• $3467/month from age 70-90 is like having $197,192 today

Whoa wait a minute, that’s a counterintuitive result!  Am I really telling you that it’s actually less valuable to work longer so you can get the higher benefits? The answer is yes, for people who understand the concepts of “investing” and “the time value of money”.

To really understand this, just imagine what would happen if you started taking those payments as early as possible (age 62) and tossed them into an index fund, earning 6% after inflation on average. After the first year, you’d already have about $24,300 and you’d still be piling in that extra two grand per month and the whole snowball would be starting to compound.

 By the time your more patient friends started drawing $2796 payments five years later, you’d already have over $137,000. It’s such a big lead that the 67-year-old will never catch up.

But let’s go back to Shane’s real situation and see if he can retire:

• He needs $3000 per month to make ends meet
• His investment account holds $250,000
• Applying the Shockingly Simple Math (Net Present Value) to his Social Security Numbers gave us about $210,000
• If you take this total amount ($460,000) and apply my other shockingly simple math number – the 4% rule – you end up with $18,400 – still far below his $36,000 annual spending target.

So the answer is no, not quite yet. But he’s closer than it looks: every year of additional work will have a triple effect because it will:

• Increase the eventual social security payment
• Decrease the number of remaining years he has to cover before SS kicks in
• Increase his $250k stash through extra savings and natural appreciation.

As soon as his combined ‘stash investment income plus the Social Security payment reach $3000 per month, he’s done.

And of course, any additional tricks he can apply like streamlining his spending and boosting his income, will make this even faster. I’d give him about three years before reaching liftoff.

So how can YOU use this information to speed up your own retirement?

The net effect of Social Security is that it should help you worry a little less and work a little less. The worrying part should benefit everyone, and the working part is kind of a sliding scale:

• In your early 30s, accounting for Social Security will allow you to retire 1-2 years earlier
• In your 60s, Social security is already here, and it can allow you to retire up to 30 years earlier, in the case that you have no other savings but can live on those payments alone

Can we just put this in ONE SIMPLE TABLE based on some reasonable assumptions?

Yes, absolutely! Just to hit the most common situation, let’s assume a household that has

• two people
• each qualifying for an SS benefit of $2000 per month
• planning to take the benefits as early as possible (age 62)

How much is this future benefit worth you you, based on your current age?

These aren’t enormous FAT Fire numbers, but every one of them is enough to feel like a meaningful contribution to your eventual early jump into freedom. For example as a 51-year-old, I can look at my number of roughly $350,000 and say yeah, that’s quite a big boost – enough to buy an entire house in many areas of the country or enough to fund multiple lifetimes of high-end groceries. And until now I had never even considered it as part of my retirement savings!

Frequently Asked (or Complained) Questions

Now that we’ve covered the facts, I can already hear the complaints coming. 

What if Social Security is canceled or greatly reduced by the time I reach that age?

Yeah, it might happen, but it’s also a top priority for most voters in our aging population. So it’s hard for politicians to make cuts. What is more likely is that the benefits will be cut for wealthier people. And if you find yourself in that camp (as I do), you won’t actually need the payments. 

Sure, it’s not “fair”, but you know what? I can think of more fun ways to enjoy the fact that I’m a rich person rather than complaining about how some government program is “unfair”, and so can you.

 Nobody can live on just a Social Security check!

First of all, millions of people do. In fact, last time I checked my own annual spending it was under $30k, most of it on optional luxuries, which is less than my expected payout! 

But more importantly, most of us won’t have to, because we are also investing healthy sums on our own.

I’m still scared and worried about something else!

Now this is the root of the issue. In fact, worry is the root of almost all issues. And so that’s what we need to focus on in our future work. For some reason, I have managed to live the last twenty years pretty much completely free from financial worries, and I had assumed everyone else was the same way. But it turns out this is not the case, even among people much wealthier and more advantaged than I am.

So in the next article, we need to get into that.

Your Homework:

Log yourself into ssa.gov, and if it’s your first time doing that – congratulations! Note that new users will need to create an account, and they’ll guide you to login.gov for that purpose. Don’t fret, it’s very useful to have this account for multiple reasons.

In the comments:

• What are your own thoughts, plans and experiences with Social Security, or its equivalent in your own country?
• How much do you worry about your financial future, or the future of the world given all the bad things that are in the news these days? (hint: in my 51 years of life there have been bad things in the news every single day and yet here we are with the world still turning)

——

Bonus Materials: the Quirk of Social Security Contributions

If you log in to check on your Social Security account when you’re still young, you’ll see some confusing stuff – basically it tells you how much your payout will be if you continue working and contributing for a ridiculously long 35 year period!

Your benefit is calculated by taking an average of your 35 highest years of earnings, which sounds bleak for people like me who only worked a ten-year career, because in theory that average might contain mostly zeroes. But never fear because:

• You qualify for the basic minimum amount after only ten years of work
• People who retire very early usually tend to continue earning some self-employment income in the in-between years (further raising that average)
• The whole system is scaled progressively. It is designed to help and subsidize people who need it more, and it becomes less of a “good deal” the higher your income. 

To illustrate this point, I ran a simulation of two people who each make a $100k salary and contribute accordingly, but one retires after 10 years and that poor second guy works the full 35.  Look at the difference in their benefits:

So the early retiree only worked and contributed about 28% as much as the late retiree. But his benefits are still a much higher 45% of the big earner’s payouts. In summary? Social Security provides a mild incentive for slacking.

One other factor: after retiring earlier, you might still end up contributing more than you think. This is because any income you earn later in life through optional employment (or self employment) will trigger more contributions. In my 21 years of retirement, I have ended up earning and contributing more during about 15 of those years, bringing my average level up much higher than I originally expected.

Final Tip: If in doubt, ask your Favorite AI

Even though this has become a long article, it is still far from a complete analysis of the Social Security program. If you want to learn more, I’ve found the AI tools (Anthropic’s Claude, Google Gemini or OpenAI’s Chat GPT) to be shockingly useful at answering questions and running analyses. If you haven’t started using these in your financial research, I highly recommend them. Just search for any of those names (or install the phone app), start typing your questions, and you’ll be learning at a rapid pace within moments.