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. It was irrational to leave a well-paying job behind at such a young age.

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 take drastic action 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.

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 generate even more passive 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.

Other Rational Things You’ll Do To Protect Yourself

If you’re being bullied online, you will rationally defend yourself 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 you or 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 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.

Reader Questions

Do you think you will ever run out of money? Is the fear of running out of money greater than reality? Do you believe we are all rational and selfish beings who will do whatever we can to survive? Do you think you could cut expenses and make more money if needed? Has there ever been a time when you ran out of money? If so, what happened, and how did you get out of it?

You can listen to my podcast episode on the Saver’s Mindset on Apple or Spotify. As always, your reviews and shares are appreciated as podcasting is a labor of love.

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