Have you ever feared running out of money? I have. This fear is why there's a phenomenon called the “one more year syndrome,” where workers keep working to save more, even though they've run the numbers and know they have more than enough to live comfortably in retirement. Yet, 10 years later, they are still grinding to great regret!
If I hadn't figured out how to negotiate a severance package in 2012, I'm sure I would have delayed my departure for at least one more year, or maybe five. My original goal was to work until age 40 in 2017, and then be free forever.
Luckily, my severance package paid for at least five years of living expenses, so I figured it was now or never. If I ran out of money, I could always go back to work in my mid-to-late 30s. How rational.
My First Fear Of Running Out Of Money
I won't lie—the first year of early retirement was a dicey period. I kept questioning whether I had made a mistake leaving a well-paying job behind at age 34.
In retrospect, I should have stuck it out for a couple more years to save more money. If I had, perhaps I wouldn't have faced my most recent liquidity crunch. However, I was burned out and experiencing too much chronic pain to continue.
My fear of returning to work with my tail between my legs was actually greater than my fear of running out of money. After all, I helped kickstart the modern-day FIRE movement in 2009 when I started chronicling my journey to financial independence on this site.
I had also publicly announced that I was retiring on my own terms. If I had to then write an update within three years explaining I was going back to work, I would have felt embarrassed. As a result, I decided to make a big move to ensure I wouldn't be an early retirement failure.
Taking Rational Action to Solve My Money Worries
In 2014, two years after I left work, I made a significant change to increase my chances of staying retired. We rented out our house in the Marina district for $7,600 – $8,500 from 2014 – 2017. We had been living in it since 2005, when it was first purchased. The idea was to grow into the three-bedroom house by one day having kids. But our kids never came while we were there.
Since we had so much extra space and would also never pay that much in rent for our house, rationally, we decided to rent it out and earn some semi-passive income.
Then we bought a fixer in 2014 for ~40% less than the cost of our Marina district home when a large CD expired. We lowered our housing expenses significantly by geoarbitraging three miles west to San Francisco's Golden Gate Heights neighborhood. I think it's the best area in San Francisco to buy real estate in 2025 and beyond.
By taking action, we were able to save more money and continue living free. When my wife turned 35 in 2015, she also negotiated a severance. She was afraid to do so, but once she realized she had the option of getting hired back for more money as a part-time contractor, she followed through.
Being a landlord for our old Marina home was a painful experience. As a result, in 2017, we sold the property for a profit after our son was born. I wanted to dedicate my time to raising our son instead of dealing with problem tenants. Another rational decision.
With this seven-figure windfall, we reinvested the house sale proceeds into stocks, muni bonds, and private real estate funds. In turn, we were able to replenish the lost rental income while also eliminating $811,000 in mortgage debt.
My Second Fear Of Running Out Of Money
I hadn't felt the same amount of financial anxiety as I did from 2012 to 2014 until recently. When we sold stocks and Treasury bonds in October 2023 to buy our house with cash, my saver’s mindset kicked into overdrive.
We lived paycheck to paycheck for six months until April 1, 2024. During this time, we were hit with surprise capital calls from several closed-end venture capital funds and venture debt funds. It was as if suddenly, all the general partners decided it was time to invest!
Facing this liquidity crunch, my wife and I slashed all our expenses. From subscriptions to food, no cost escaped the chopping block. I also temporarily found part-time consulting work, which I'll write about in a future post.
In other words, we did everything possible to survive a difficult financial period. Now that we're past the worst of it, I realize from these two experiences that most of us will likely never run out of money.
If you face a similar tight financial situation, you will do what you can to survive too! I have yet to meet someone who buys their last meal with the last of their money and dies broke. Have you?
You Won't Run Out Of Money In Traditional Retirement Either
Many of us are obsessed with ensuring we have enough money to last through retirement, from figuring out the appropriate safe withdrawal rate to forecasting expenses using a free wealth management tool. Careful planning is essential because nobody wants to run out of money before we die.
Based on my experiences with financial stress, I strongly believe most of us won't run out of money in traditional retirement either. We will rationally adapt to different circumstances, just like how my dynamic safe withdrawal rate changes with different economic environments.
We will always find a way to save, earn, or borrow money if we need to make ends meet. Don't think your kids will lend or give you money if you're in need? Of course, they will! You spent at least 18 years raising them. What about your lifelong friends? Nothing makes a true friend feel more honored than helping another friend in need.
We also have insurance policies to protect us from catastrophes. After my wife and I obtained matching term life insurance policies during the pandemic through Policygenius, we both felt tremendous relief. Finally, I was able to secure an affordable 20-year term life insurance policy that would cover my children until they are 22 and 24 years old, respectively.
As a last resort, if we're really in trouble, there are government social programs to lend a helping hand. Even if we’re not in trouble, there’s Social Security.
Other Rational Things You'll Do To Protect Yourself
If you're being bullied online, you will rationally fight back or reduce your time spent online. You're not just going to let someone hurl racist insults and tarnish your honor!
If your doctor says you run the risk of heart disease and may die five years earlier as a result, you will rationally start eating better and exercising more. You won't choose to do nothing because you want to see your children grow into adults.
If you're seeking love, you will rationally work on improving your personality, updating your wardrobe, attending more social events, and creating a profile on a dating app. You're not going to accept sitting alone in your apartment every Friday evening for the rest of your life.
If you aspire to reach the corner office, you will rationally work longer hours and build great relationships with your bosses and colleagues. You're not going to do the minimum and watch your peers surpass you.
If your marriage is going through a rough period, you will rationally spend more time listening to your partner's concerns and take action to address those concerns. You're not going to ignore the problems if you want to stay together.
If you can't stand your micromanaging boss who doesn't respect your time, you're not going to quit with nothing. Nor are you going to give your boss the satisfaction of laying you off. Instead, you're going to read How To Engineer Your Layoff to learn how to walk away with a severance package. Controlling your destiny is an amazing feeling.
Your Rational Self Will Save You
Funny enough, I was inspired to write this post after listening to my latest podcast episode, “Your Saver’s Mindset Will Naturally Kick In If You Need Money” below. This is the power of regularly engaging with personal finance topics—they will inevitably motivate you to think about and improve your finances.
You will likely encounter difficult financial situations in the future. However, rest assured that you will find a way out even if you do run out of money. We're hardwired to survive and take care of our families. If we weren't, the human race would have gone extinct long ago.
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This is a great piece, and I wish it were true. It assumes people are rational. But they are not. Smokers know that smoking will kill them, but they can’t stop themselves. Cheaters know that they are risking their marriage; too many continue. People buy luxury cars using equity from their very modest house. And the biggest example of irrationality is the current Presidential choices. People know that having Trump as President is better for the country and their children’s future. Yet, so many just can’t rationalize themselves away from their anti-Trump emotions. Many rationalize their hatred of Trump by thinking he’s Hitler or will be. Based on 4 years in office of evidence, that perspective is incredibly irrational. So, while, it’s a very nice sentiment, it’s not accounting for the foibles of the human condition.
I enjoyed reading this. You seem so refreshingly grounded. Clearly you could have gone so much further with your career but opted out the rat race to spend quality time with your family and do your own thing.
Having worked hard all my life, nursing then bringing up a family and doing Buying and selling ‘fixer uppers’ at 60 I bought a small buy to let flat and two small shops. I thought I could finally retire. Long story short, the flat rental was a nightmare. I then moved to Portugal as I thought I could live more cheaply (and better weather). Then one of the shops in the UK went out of business and I could not get another tenant. I sold the flat and the shop in the UK and bought 2 small properties in Portugal. Same thing, the tenants’ would not pay and abused the cottages. Ongoing nightmare trying to get them out. Eventually they left and I have just sold those two properties, making no profit after tax and costs. I am in my 70’s now and struggling to survive. Any bright ideas ???
Hi Deborah, thanks for sharing your story and stopping by.
Will a risk-free 5% plus yield from treasury bonds be enough to pay for your living expenses? If so, that is what treasury bonds are paying right now for 1 to 2 years. Longer-term duration you still get around 4.5%.
See: How I’d invest $250,000 today
If you watch Bob Wells’s youtube channel about people who live in recreational vehicles (RVs), like in quartzsite arizona, a fairly good percentage seem to be single/divorced/widowed middle aged-elderly women basically eking out a living on their social security checks (which are usually pretty low) and whatever other public assistance they are able to scrounge up. Now we don’t usually hear the full backstories but the running-out-of money problem can probably be linked to a pretty well defined subset of bad luck and bad life choices that one should try to avoid if at all possible, in most cases.
So lets try to avoid being mentally ill, drug or alcohol or gambling addiction, committing crimes, getting divorced, and having a really bad illness or accident without proper insurance coverage. Or having parents that do these sorts of things thus giving their kids a really bad start in life.
Right? Bob Wells has single-handedly prevented probably thousands of people from becoming homeless and showing them how they can live on their disability checks or whatever in their vehicles. He’s an American hero. I want to do van life too. It seems awesome but I’ve been watching some other YouTube channels about slow traveling the world and that’s cheaper and much more luxurious so I might do that instead. Plus the food is way better lol.
It’s not a question of running out of money but of having to radically reduce living standard. Here in Australia we have the “Age Pension” which is means tested. If a couple’s capital falls below AUD 1m not counting their home they will begin to get a “part pension” and at AUD 450k the full pension. The full pension for a couple is about equal to the minimum wage for one person. I’m 59 and have two children aged 5 and 8 in private school (which my wife insists on). In theory, I have just about enough capital to retire and maintain our current lifestyle. Clearly we could cut costs drastically by putting the children in public school. But do we want to do that? I am also still thinking about getting a nicer house. This one is at about the median price for this city. Our current budget doesn’t include travelling overseas… So, for now I am still working but thinking of cutting to half time next year.
The anonymous MD is right on about the medical system in this country. It is rotten through and through. I had a somewhat similar experience, although fortunately a little later in my career after I was able to eliminate every debt and build a modest portfolio. I would have liked to work a few more years before being, in effect, administratively excluded from practicing.
Sam, in previous posts you mentioned Dr. John Sarno and chronic pain. So you know that the symptoms associated with most painful chronic conditions are caused by the brain/mind, and that these conditions are misdiagnosed by the medical system by the tens of millions. What you may not have appreciated is that Dr. Sarno’s wisdom is also the true medicine for many other so-called “organic” medical conditions, such as potentially any disease of the immune system, the autonomic nervous system, or the endocrine system. That covers a lot. See Sarno’s last book, the Divided Mind, and Gabor Mate’s books for examples. One of my favorite quotes from Sarno is “The various health disciplines…with their medieval concepts of structural damage and injury as the basis of back pain.” Not only that, the medieval concepts pervade the whole medical “profession,” how they think, act, and behave.
Anyone considering entering a medical field, I would advise against it. Other than a complete takeover by AI (taking humans totally out of the loop), there doesn’t seem to be any hope for what passes as “healthcare” in this country. One would be better off working in some type of alternative medicine, naturopathic medicine, etc. This comment is coming from a pathologist, the hardest of hard sciences in medicine.
I will check out the Divided Mind! Sarno is a hero to me.
No wonder they there are so many doctor bloggers writing about personal finance. Sounds tough.
How much do you or pathologists with 20 years of experience make nowadays? Hopefully the high pay makes up for the difficulty of being a doctor?
Pay for pathologists varies widely, with ranges from $200-800k not uncommon. It depends a lot on the particular subspecialty expertise within pathology, who you know, private practice (more money) vs academic, and geographic region. I never made more than the lower quartile of that range. I was lucky enough and smart enough to realize early that I needed to save most of it. I remember years of living by the other guy’s motto something like “live debt free or die.”
I share many of the same fears and insecurities that you’ve described. Combining that TMS personality with a stressful job, at one point I was disabled by the pain like in Dr. Sarno’s books. In that sense it definitely wasn’t worth the pay. On the other hand, having had the knowledge to appreciate Dr. Sarno’s incredible perceptiveness and superior knowledge of anatomy, to effect my own “cure” out of temporary disability, was priceless.
I know about 20 other pathologists. We’re all run of the mill AMGs (American Medical Grads). 2 are happy. I get the sense that many, many doctors would like to escape their jobs any way they can. Finance blogging and industry can only absorb so many. For the rest, I don’t know what will happen.
Thank you for sharing your thoughts. What do you think about walking away from the occupation and doing something less stressful that’s lower pay, since you saved most of your money?
Although I left my $250,000 base salary job in 2012, I feel much happier. All my chronic pain went away, as did my white hairs.
Anytime, and that is exactly what I did. I’ve been voluntarily unemployed for 8 months. I couldn’t take the stress any longer. I’m interested in doing something non-clinical, but for now I’m still decompressing. My pain is gone, along with lifelong allergies, asthma, several other mindbody symptoms, and I lost 25 pounds with no effort. I still have the same number of gray hairs though. Mentally, the loss of the role is an adjustment in progress. I still don’t know how to answer the question “What do you do?”
Health is priceless! I’m glad you took it down to heal.
It is ridiculous to see that US these days continue to produce the most expensive but rather ineffective Healthcare services and burnout and debt laden health care professionals especially doctors under 40.
I don’t have a realistic fear of running out of money, but I still find myself running really fast and hard from where I started (drowning in student loan debt with a net worth of -$160,000). These days I manufacture scarcity by running our checking account down to almost zero every month after deploying money at the beginning for investments, , retirement, savings, 529s, etc. It tricks me into thinking my back is against the wall when it’s not at all. The book Die With Zero covers how most people overestimate how much money they will need in retirement, thus working and saving too much.
What happens if you can’t meet a capital call with one of those private placement funds?
Good question, depends on how long it takes for you to meet the capital call. The private fund has a line of credit with the bank. So in reality, the funds investment in a company will always be made whole due to its line of credit and Capital calls from its limited partners.
Usually, worst case, the fund just pays interest on the line of credit that makes up for the missed capital calls. And I’m sure there are cases where a limited partners simply doesn’t meet the capital call at all. In these rare cases, the limited partner gets cut off and the money it fails to meet will probably get taken from the money the limited partner has already invested. Or the shortfall gets spread to the other limited partners who end up owning a greater percentage of the fund.
I’ll ask my friend who is a managing partner out of venture debt Company what happens in this scenario.
You don’t want to be chronically late, otherwise, do you want to get invited back for their next fund. This would be bad if there historical track record is good, and there is tremendous demand.
I have this strange fear that the stock market tanks to zero and ALL of our retirement money gets wiped out! Hence the portion in liquid cash/money markets…maybe in your reader world not such an uncommon fear?
Yeah, that’s simply not going to happen, unless an atomic bomb goes off in multiple large cities in America. The worst we saw was a ~52% drawdown in stocks during the global financial crisis in 2008-2009. That was the worst of times. So if we survived those terrible times, I think we can survive practically anything.
That said, I do prefer investing in real estate for that reason you mentioned of stocks tanking. At least with real estate, it provides utility in terms of shelter!
I knew you’d squelch my fears Sam! Thank you!
I believe that most likely none of your readers will ever run out of money, because we’re all more likely to be savers and long-term planners, and I would bet that all of us have higher-than-average incomes because almost all of us are willing to pick up a side hustle or two on top of our regular jobs. The people who are most likely to run out of money aren’t people like us.
I do know of some people who have literally run out of money. But I can guarantee you that they’re not readers of yours. They have small incomes and spend money on not-wise things, and have nothing in their savings accounts. They don’t plan for anything beyond a couple of days from today, if even that far. I’ve tried to help counsel the ones that I know of to get them to start planning for the future, but the message rarely sticks. Their credit card bills go up, their car starts smoking and is at risk of imploding any day now, but they spend $100 getting a full manicure or spend $500 getting their hair done. (Both legit examples from the people I know.)
It’s true that when the fit hits the shan for them, they usually don’t end up on the street or sleeping in their car (although that’s happened on occasion), but they end up crashing on a family member’s couch or eating at a family member’s house or just lying in bed at home because they can’t afford to do anything.
For the rest of us, who are all here, we will find some way to survive. We’ll pick up extra work, we’ll cut down on expenses, and maybe most importantly, we’ll have something in our rainy day fund in advance of any emergencies. I always have a plan B, and usually a plan C, in place before any bad stuff arises. But the fear of running out of money, as irrational as it may be, is a really good motivational tool. :)
Ah, so they rationally find a way not to be homeless and make back some money! Of course there will be people who will be down on their luck and lose everything. However, my belief is that many of them will figure a way out of their financial quagmire if things get dire enough.
Yes, the fear of running out of money is a great motivator! I just realized I wrote another related post: The #1 Ingredient Necessary For Achieving Financial Independence: FEAR
Well, thousands become homeless and some die on the street, literally. Or they get taken to the hospital and die there. But definitely I think if you’re capable of behaving rationally, then you can find a way not to end up like that. A surprising statistic I just read, one out of five Americans have a mental health problem. Seems to be a crisis.
I’ve always had this fear driving much of my financial discipline. It goes back to memories of childhood when we had to put Grandpa into a not so nice care facility because it was all my family could do at the time. For better or worse, it’s turned me into a very disciplined saver and investor.
The risk that remains for even the most prepared person (in the USA at least) are unexpected health emergencies that aren’t fully covered. This could bankrupt you if not careful
That must have been a difficult time and tough memory to reconcile as a child. I think about that sometimes as well, and I am determined to have enough money, time, and health to take care of my parents when I’m needed.
Health expenses is the leading cause of bankruptcy. But I hope with ACA, more people are covered, and fewer people go BK as a result.
The other thing to do would be to get better, faster, i.e., you don’t have to wait 2 months for an appointment, and vastly cheaper healthcare in KL or Thailand. Some countries even have special visas for people who need to stay there a few months for medical care.
Thanks for your take, but I will distastefully comment here. You said it yourself, you don’t know anyone who’s run out of money, and well, you need to look outside your SF bubble, but well within your scope of practice. This article is so out of touch.
Every year thousands of medical graduates with hundreds of thousands of medical school debt don’t match to residency. I’ve seen you post about student loans infrequently. It seems like you have a bit of unresolved anxiety about money if you are stressed living paycheck to paycheck at your income and expenses level.
Imagine never getting a residency with 1/2 million in student debts living a political pawn for the next election student loan program sold slave to the next bidding loan servicer.
Of course you’ll hardly ever hear about or talk to these individuals. They have been shamed by the profession, chunked into depression and lifelong debt, in a market that wants to take take take, and profit off of every transaction.
You’ve signed up and pay for insurance and back up plan after back up plan, but your goal doesn’t seem to be to avoid running out of money, but to not die without a stockpile.
I could go on but it gets more and more difficult to sound positive as I describe further the endpoints of a failing medical training career, and you certainly won’t find them in your zip code or tax bracket.
Thanks for your comment and your perspective.
It is interesting, because most people view doctors as making a good amount of money and a high status profession.
If you didn’t match to your program, what did you end up doing in the meantime? And how did you manage to survive? It seems like you are a doctor now, so you took some steps to make money and improve your situation. So doesn’t this argue that you made rational decisions and did what it took to put you in a positive financial position today?
Are have you run out of money now and don’t have a way out? Thanks for the clarification.
Survived yes, but not without the illusion of financial wellbeing. Net net I’m upside down, but the student loan pause and IDR programs grant the illusion of financial wellbeing. In reality it’s a long, dragged out, mental turmoil, the constant moving target of rules and regulations and idiosyncrasies of the federal loan programs and their incompetence, and the lack of support for FMG’s, the match acceptance rate is around 60% annually after spending thousands on applications after waiting 12 months to employ 6 months of savings working menial jobs with an MD unused. The way to survive is to alter one’s relationship with money and desires of high cost needs, like a resident (I use more vulgar terminology).
There are other jobs to start at the bottom from, but the debt is designed for a medical career that no other entry level career tract will fast pass you to catch up with compared to the attending salary that the loan is designed to be able to pay for.
Gotcha. Perhaps you just need to give your doctor career a little bit more time to pay down debt and make more money? I know several doctors in their 40s and 50s who are doing really well. I’m seem to be struggling financially.
Given what you know now, would you not be a doctor? And if not, what would you have been? And are you telling other people trying to become doctors to not go down your path before it’s too late?
For me, I will not pursue this career further unless things change in the application cost and frequency timeline, and the alternate career pathways for MDs. The match needs to end. Yesterday.
US med schools have now taken responsibility by holding back med students that do not match (though they keep taking your money), but private med schools outside the US really need to look in the mirror and ask if 60% is doing a service or a complete failure for nearly half their graduating class. 10 years and a quarter million in loans is not worth a coin flip, and they won’t take responsibility (yet) for their FAILURE rates.
I would strongly advise those who are well off financially to please go in to medicine but also to learn about and stack your investments before you apply for the MCAT. If you are beholden to loans you would be better off becoming an NP or PA and making $100+k after 18 months of school. The landscape is changing state by state with unclear career pathways for MD graduates as assistant physicians but my contacts who have trailblazed these roles are not as happy as you’d expect. They’re supplementing their work elsewhere as well which is not why you get into medicine.
I could podcast about this all day at this point.
Huh? So, even though you’re making good money as a doctor, you’re irrationally going to stop working as a doctor until the system changes for a residency matching? That makes no sense.
Also, every single person who goes to medical school and take out debt knows the statistic about matching residency. Everybody knows there’s no guarantee. Medical students are rationally taking this risk and nobody’s forcing them to do so.
Now there are schools like NYU that pay the full cost of medical school so it’s free for students.
You must be going through some really really tough times my man. What happened to you? Are you drowning in debt and got kicked out of your practice or something? I don’t get it.
I don’t think you understand his situation. He got an MD degree he but is not working as a doctor because he didn’t match, he didn’t get a residency. So he has all the debt but not the job to pay for the debt. And on top of that, he doesn’t have the training required for a non-doctor job.
Sad if true. But not what he is saying. He’s working and making big bucks and doing well.
He’s sharing a luxury belief that others are not and have it tougher. But he’s doing OK.
Feel free to correct me if I’m wrong Anon MD.
Sorry you suffered so much as a doctor after going to medical school for so long. Aren’t you doing better now though? You eventually got your residency and got a well-paying job. Surely, making $300,000+ a year isn’t running out of money, even if you’re in debt.
Running out of money was never a rational fear, the fear is having to work until I die in a shit job so I can pay car, mortgage, rent, student loans… it’s lifelong enslavement. I’d rather die broke, homeless, and free.
Lots of great food for thought in this post, thanks! My fear of not having enough money as a middle and high school student while observing my parents’ financial challenges motivated me to get good grades. I wanted the chance to get into the best school possible with my abilities because that would give me the best chance at a stable job with a decent income. Although I’ve made some money mistakes in my life – we all have – I do try and take my time with the various money related choices I have to make. I’ve found that rushing tends to lead to regret spending or suboptimal investment decisions. And taking time to sleep on things, find lower cost alternatives, and really determine if a money decision is worth it helps a lot.