42-year-old retiree: ‘I lost more than $600,000 due to the pandemic. Now I’m second-guessing early retirement’


MAY 3, 2020

In 2012, I quit my job in investment banking and retired at 34. A few years later, my wife also left her job and joined me in early retirement. We had a net worth of about $3 million. 

For nearly eight years, we saw our passive income streams (mostly from dividend-paying stocks, interest from savings, municipal bonds and rental income) grow steadily. Then came the financial consequences of the coronavirus pandemic.

While we feel very fortunate that the economic downturn hasn’t affected us as severely as it has for other families, we still lost a ton of money and must now prepare for the worst.

How COVID-19 negatively affected our finances and lifestyle:

1. Our net worth dropped by over $600,000.

When the S&P 500 took a massive dip in March, we experienced a 30% drop in our stock portfolio … and lost more than $600,000.

Even though we have a pretty conservative portfolio (with about 20% of our net worth in equities), losing hundreds of thousands of dollars on our existing equity exposure was still very painful.

To make up for those losses, the S&P 500 will have to rebound by about 47%. This could happen if we see a “V-shaped” recovery — where the economic downturn is matched by a huge upswing — in the second half of the year, as the coronavirus gets better contained.

2. My plan to re-enter the workforce has changed.

We had planned to retire early with just one child — our son, who is now three years old. But something unexpected happened in 2019: My wife became pregnant with a second child.

We quickly realized that our expenses were going to increase with another child, especially in an expensive city like San Francisco, where the median cost of child care for preschool-aged kids is $1,526 per month. (Married couples in California spend more on infant child care than anywhere else in the U.S.)

So in early 2020, before the pandemic began, I decided that I had to re-enter the workforce to ensure we could keep up with the additional costs. My plan was to start working as soon as possible, and then hopefully retire again by 2022.

But in such a horrible job market, those plans have changed.

3. We are losing rental income.

My wife and I own three rental properties. But ever since the resorts across Nevada were shut down in March, we’ve been losing all rental income on our Lake Tahoe vacation property (about $3,000 per month). And we’ll keep losing that money for as long as the lockdown continues — while still paying the monthly mortgage of $2,480.

The good news is that our two tenants in San Francisco still have their jobs and are paying rent on time. But with more layoffs expected, things could change at any second.

If they start facing financial hardships, we will of course work with them to ease their burdens. However, we expect to receive zero mortgage debt forgiveness, which means we’ll have to accept the losses.

4. It has never been a more stressful time for parents.

We love our kids more than anything in the world, but early retirement is a lot easier when you don’t have children. Financial security has always been a top priority, so I’m now second-guessing early retirement. I feel foolish for not having a full-time salary to protect my family.

Even with all the dangers and uncertainties of COVID-19, my wife and I still have to put on a brave face for our kids every day. It hasn’t been easy.

Our energetic three-year-old son requires 12 hours of daily non-stop attention. (He keeps asking to visit the playground, but since public parks are closed, we just tell him it’s “still being remodeled.”) On top of that, imagine having a three-month-old baby who hasn’t fully developed her immune system during a pandemic.

5. Our living expenses went way up . . . at a bad time.

In the early first quarter of 2020, our net worth actually increased by about 2.5%. Unfortunately, our living expenses also went up.


After taxes, we basically spent about $65,000, which is $25,000 more than we normally do. (The main reason our expenses increased was because we had to hire a doula — a non-medical maternity coach who works alongside obstetricians and midwives — to shepherd my wife through labor.)

We’re still figuring how to significantly cut our expenses for the coming months.

Keep on surviving . . .

My heart truly goes out to the millions of people who are struggling with much bigger financial problems. But we can all agree that the economy will eventually bounce back. It’s just a matter of when.

My wife and I plan to make use of the downturn by funding our kids’ 529 college savings plan. We’re also trying to appreciate some of the positives, like having no mortgage for our primary residence. We purchased it with cash last year after selling some stock, and rented out our old house to a lovely couple who currently works from home. If the rental income goes away, we have two years’ worth of the property’s expenses in cash to cover rental costs.

When the time is right, I’ll start looking for work again — most likely in investment banking or fintech. In the meantime, we’ll just have to do our best to ride out the storm and protect our existing capital.

Sam Dogen worked in investing banking for 13 years before starting Financial Samurai, a personal-finance website. He received a B.A. in Economics from The College of William & Mary his MBA from the University of California in Berkeley. Sam has been featured in Forbes, The Wall Street Journal, The Chicago Tribune and The L.A.Times.

Courtesy/Source: CNBC