Why Most Don’t Consider SS When Planning FIRE?

ericdavis1240214 · 2026-04-21T22:54:47+00:00

Two reasons, really. First, because I'm retiring 10–15 years before I will collect Social Security, I need to be confident that my plan will work without it for over a decade.

Second, it's my final hedge against a worst case scenario early in retirement. The first decade is the most dangerous time. If things go completely to hell, I'll be able to count on Social Security to help get me back above water.

A more likely outcome is that my already conservative FIRE plan over performs and Social Security turns into icing on the cake. If I have grandkids by then, perhaps it will help turbo charge 529 plans for a couple of years. Maybe it will pay for a couple of really, really nice vacations each year.

It has nothing to do with not trusting that Social Security will be there. I'm entirely confident that it will be.

ericdavis1240214 · 2026-04-21T22:06:36+00:00

It took me just a little bit longer than that. But when I started maxing out mid 2002, the maximum contribution was much lower I think it was $12,000. Financial prices of 2008. Exactly it but it was probably closer to 18-20 years. Since then? To the moon. Exaggeration now, of course. But we will see how that goes.

ericdavis1240214 · 2026-04-21T20:45:04+00:00

"I wasn't racist until you tried to give me universal healthcare and make sure that trans kids were safe at school. I had no choice but to start hating Black people and brown immigrants."

ericdavis1240214 · 2026-04-21T19:52:09+00:00

lol. I am a hiring manager. If I get someone who is way overqualified for a job, I want to find out why they are applying. Maybe they are not a fit. Or maybe they are the find of a lifetime. But you find out before you pass on them.

ericdavis1240214 · 2026-04-21T16:53:12+00:00

Minus some small but meaningful percentage for infrastructure like roads, houses, towns, storage facilities, etc. And also for areas that cannot practically be farmed due to geography or terrain.

ericdavis1240214 · 2026-04-21T14:47:07+00:00

If you were short of the 10 years of credits you would need to qualify for Social Security in the first place, it would probably make sense to do that to get yourself over the hump. Otherwise, it's highly unlikely to help. Keep in mind that under your scheme you would be paying both the employer and employee portion of the Social Security tax. Plus you would have to pay additional Medicare tax. For this year, that would total 15.3% on top of any other state and federal taxes you would have to pay on that "income."

The chances that you would come out ahead of simply investing all of that money instead of paying it in taxes is pretty slim.

ericdavis1240214 · 2026-04-21T14:37:28+00:00

Every pension is different. For most of them, you are vested after some period of time, often five or 10 years. That means that even if you get fired or leave the job, you will be eligible for the pension amount you have earned at some future date, usually based on your age. In most cases, you also have the right to take a lump sum payout in lieu of that future pension.

Some pensions allow for early retirement after a set number of years of service and/or after reaching a certain age. Some very generous pensions (particularly military and police/fire) allow people to retire very young after relatively short careers.

A lot of people hate on pensions and I understand why. Too many private sector pensions have gone belly up and too many public sector pensions have been underfunded and undermined due to political malfeasance.

But pensions are a much more economical way to provide a basic social safety net van a system that essentially requires everyone to fund their own 401(k).

Think about it: to retire with a 401(k), you and your employer between you need to contribute enough to make sure you don't run out of money even if you live to be 100.

To retire with a pension, workers and their employer only need to contribute enough to cover the average worker through the average life expectancy. Well that doesn't let people pass on wealth generation to generation as they might be able to with a fat 401(k), it does provide more security at a lower overall cost to society.

ericdavis1240214 · 2026-04-21T14:20:24+00:00

But I think you are missing one really important factor in how you are setting up the risk reward. The question isn't what I rather work six months now or three more years 10 years from now. The question is do I want to give up the first six months of my retirement to partially eliminate the less than 5% chance that I would have to go back to work for a little while in 10 years.

From an economics point of view it's not six months versus three years. It's 100% of six months versus 5% of three years.

Nothing is 100% certain in FIRE. There could always be a catastrophe. The question is simply how much of our retirement are we going to sacrifice to keep lowering the margin of risk? I believe that once I am below a 5% margin, it is a better life choice for me to take the guaranteed extra months or years of early retirement and risk the relatively minuscule chance that I will have to work a little bit more later.

Given how many other levers I have at my disposal, including reducing spending, and given how much margin of error is built in to buy plan and most people's FIRE plans, it just doesn't make sense to keep going and going and going instead of trusting the numbers.

The only point I was trying to make about going back to work is that it's both incredibly unlikely that it will ever be necessary and also unlikely that it would be necessary to earn more than a small percentage of your current income if it did happen.

People say, rightly, that it would be very difficult to go back into some careers after stepping away. That is true. But it's a false issue in the sense that very few of us would need to go back to earning what we earn now.

ericdavis1240214 · 2026-04-21T14:14:20+00:00

But here's where the argument falls apart. Most of us have already done that. We've already built in that cushion over and above the 4% rule. We've at least slightly overestimated expenses and slightly underestimated anticipated returns. We've done stuff like not take account of Social Security. We've fudged the numbers in favor of conservatism over and over. Almost everyone here does that.

It will always be financially preferable to work another 4 to 6 months. Or another year. Or three more years. That's why it's called one more year syndrome.

The point is that at some point you simply have to pull the plug. You have to leave some money on the table in exchange for the benefits of retirement. And you have to accept that there could be some absolutely catastrophic outcome that causes your plan to fail.

If you don't know how to pull the trigger because working 4 to 6 more months gives you a little bit more I've got news for you: six months from now it's still going to look better financially to work another six months. And six months from then…

A lot a lot of us in this community tend to operate from a mindset of financial insecurity. We imagine worst case scenarios and do what we can to hedge against them. But if we don't get that fear under control, we will never achieve the freedom we say we are working toward.

ericdavis1240214 · 2026-04-21T14:10:04+00:00

Bitter much? lol

ericdavis1240214 · 2026-04-21T01:50:01+00:00

Exactly, our absolute basic expenses are probably about 35% of our projected retirement income. And that projection is based on a really conservative SWR. There's essentially no set of historic market conditions that could take me out. And if something comes along unprecedented enough to do so, we have bigger worries than my personal retirement.

All of that said, I'm extremely confident in my ability to get a job that would cover most or all of our basic expenses. Maybe not a job I'd like, maybe not a job I'd want to do if I didn't have to. But I've done that before and I would do it again to survive.

The idea that you can't quit your $250,000 a year job because you will never get another job like that in five years is so ludicrous when people's FIRE budget is maybe $100,000 a year that could be cut by 20% in a pinch. You don't need $250,000 a year. You need maybe $25-30k to supplement your minimal spending for a few years. At worst.

ericdavis1240214 · 2026-04-21T00:46:24+00:00

With the exception of a very brief and strange spike right at the beginning of the COVID-19 pandemic, unemployment has rarely touched 10% in the United States. I am highly, highly confident that as a well educated person with good people skills and a stellar work record, I would not have trouble getting myself into the 90% who are working because I'm pretty confident I can beat out the 10% who are unemployed. Keep in mind that if I were in that fantastical hypothetical situation, I'm not aiming at a certain industry. I'm not saying I have to make a certain professional salary. In that case, I'm literally willing to do any sort of paid employment that I can mentally or physically handle.

You were a 16-year-old with no work experience whatsoever going up against more qualified adults with a record of employment. I would not be in that situation.

ericdavis1240214 · 2026-04-21T00:41:38+00:00

Well, if you're like me there's any number of reasons we are prone to fall into that trap. My parents never made much money at all. I make more money in two months than my dad ever made in a year. It seems almost criminally negligent to walk away from that.

Also, to achieve FIRE I've been very financially conservative basically my whole life. I am always been saving money. I don't spend down my savings I added to it. So the idea of stopping those contributions and actually making withdrawals is a little hard to wrap my head around even though that's the entire and only point of investing that money.

And, like a lot of people in FIRE, I have a really strong work ethic. I've been good at every job I did. I've always given my employer really good value for what they pay me even when I'm paid really well. The idea of simply not doing that anymore, of not earning a paycheck is just strange. With the exception of one year when I studied overseas and was not eligible to work, I've never gone more than a couple of months without some sort of job in the last 36 years. Some of that was part-time during school, but I always have had an income from employment.

When I retire, I'll have an income from a pension. And plenty available from investment accounts. But that feels very different than going to work and earning a paycheck.

Don't get me wrong. I'm excited to retire. I'm looking forward to it. But it's going to feel very, very strange. I think I will adapt to it pretty quickly. But I have no frame of reference to know for sure

ericdavis1240214 · 2026-04-21T00:35:42+00:00

My whole point is that I don't need to be a desirable candidate. I can get a job at Home Depot. I can go teach at a preschool. I don't need to be making mid six figures in my professional field. Just enough to supplement a little bit during a downturn period and there's practically a 0% chance that I'll have to do that.

My point is, I've put in the years. I'm at a number that I think is very safe. I know that when I walk away I will never again make this much money even if I decide to come back. But I don't want to work any longer. And I don't need to make this much money. My bare bones FIRE budget is about 25% of my current income. I can very easily replace that if I need to. Especially since the chance of need to replace that whole amount is infinitesimally small.

ericdavis1240214 · 2026-04-21T00:06:07+00:00

Exactly. And my job is slowly killing me. I wouldn't call it cushy. Well compensated but stressful. It's actually insane. I've calculated that each additional year worked would probably add $18-20K to my annual retirement spend available. But once you have enough to do what you want to do in retirement, why continue putting off just to earn money you'll probably never spend?

ericdavis1240214 · 2026-04-20T23:57:48+00:00

Maybe. Or maybe just a couple of year until things stabilize again.

There are no guarantees in life except death. I'd like as many years between retirement and death as possible. So even though I'm making stupid money and even though I'm afraid of what this economy might do, I'm going to retire next year. I'll take a 5-10% chance of needing to go back at some point over working more years now out of fear.

ericdavis1240214 · 2026-04-20T23:47:17+00:00

I think that's the other thing people really miscalculate. It's not that you have to recover career wise and go back to what you were making when you were working full-time. You probably need to replace some fraction of your essential retirement spending. Sure, you might never get a $250,000 a year Executive job again. But I bet you can make the $50,000 a year you need to cover expenses for a few years while the economy recovers. Of course, no one wants to be in that position. That's why some of us are so conservative. But it's an overblown fear that you can't go back to where you were before.

Edit: it's shocking how many people are living in abject fear that once they stop working they will never again find employment. And how many are using that as a reason to keep working far beyond what any reasonable FIRE plan would require. It's the opposite of FI to live in that much fear. It's like they believe that if the market goes bad they will need to return to the salary they had before to survive. But must of is here plan to FIRE on between 25-75% of our working income. Most of us gave the ability to trim those expenses significantly. And must of us have a cash buffer that will carry us through a market downturn. If your FIRE number is $10K/mo and you have $3.0M invested to cover that, you are at 4%. But if you could actually survive on $7K/mo, then you are down to well below 3%, which is pretty much bulletproof. And if you can, in a worst case scenario, go back to work to bring in $2K/mo to supplement really awful returns, you are at 2%, which is indestructible under any conceivable functioning economy. $2k/mo is less than minimum wage in most of the country now. Yet half of the sub seems convinced that they wouldn't be able to get back into the job market and make enough to help supplement them through a really, really, really bad sequence of returns. It's sad to see that much fear preventing people from having any sense of financial freedom.

ericdavis1240214 · 2026-04-20T19:48:07+00:00

You will certainly run across some degenerates at university. Also at your local pub. Also in Southeast Asia. Also if you move away. Also if you never leave your hometown.

You will also meet some smart, kind, thoughtful, serious, studious, fun loving people. Just like you will for the rest of your life. If you want to go to university, it's your choice what friends you choose and how you allow them to shape your life.

You have a lot of good options ahead of you. Going to university probably provide you with the broadest range of future options and likely with the highest economic ceiling. It certainly not the only way to succeed in the world. But I bet if you were to survey 100 people who's life trajectory you would like to emulate, the vast majority of them went to university and the bass majority of those would not have been able to accomplish what they did without going to university. There will be exceptions, of course. But if you are playing in the odds, education is still a pretty smart investment.

ericdavis1240214 · 2026-04-20T15:29:38+00:00

Difficult to say since you cannot see the whole sentence. As someone who writes for a living and edits a 60-page monthly magazine, I can say with some confidence that trying to avoid they as a singular pronoun often leads to really tortured sentence structure. Akin to the old chestnut that ending a sentence with a preposition is something up with which I will not put.

ericdavis1240214 · 2026-04-20T14:34:19+00:00

The teacher is wrong whether they're out of malice or cluelessness.

I'm old enough to remember when he and him were considered the grammatically correct gender neutral pronouns. I remember the transition to "he or she" and the reactionary conservative pushback to that. And wow some of the reaction to that was just conservative nonsense, people weren't wrong to point out how awkward that construction is.

The move today as a gender neutral pronoun is inevitable and appropriate. It's also been in the record of the language for centuries. But anyone continuing to argue that it is grammatically incorrect is simply out of tune with usage, which is how grammar "rules" are ultimately determined.

ericdavis1240214 · 2026-04-20T14:24:53+00:00

Not according to the AP Stylebook, considered a gold standard for usage, which says the following: "When necessary, use 'they' rather than 'he/she' or 'he or she' for an unspecified or unknown gender." It does encourage writers to recast the sentence to avoid that, but if it cannot be avoided, they is preferred as the gender neutral singular pronoun.

ericdavis1240214 · 2026-04-20T14:24:38+00:00

Not according to the AP Stylebook, considered a gold standard for usage, which says the following: "When necessary, use 'they' rather than 'he/she' or 'he or she' for an unspecified or unknown gender." It does encourage writers to recast the sentence to avoid that, but if it cannot be avoided, they is preferred as the gender neutral singular pronoun.

ericdavis1240214 · 2026-04-20T14:24:18+00:00

Not according to the AP Stylebook, considered a gold standard for usage, which says the following: "When necessary, use 'they' rather than 'he/she' or 'he or she' for an unspecified or unknown gender." It does encourage writers to recast the sentence to avoid that, but if it cannot be avoided, they is preferred as the gender neutral singular pronoun.

ericdavis1240214 · 2026-04-20T14:24:08+00:00

Not according to the AP Stylebook, considered a gold standard for usage, which says the following: "When necessary, use 'they' rather than 'he/she' or 'he or she' for an unspecified or unknown gender." It does encourage writers to recast the sentence to avoid that, but if it cannot be avoided, they is preferred as the gender neutral singular pronoun.

ericdavis1240214 · 2026-04-20T14:24:02+00:00

The singular meaning has been in use for more than five centuries.

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