1 Year of Early Retirement: What Our Finances Actually Look Like

When I hit the six-month mark of early retirement back in October, I was still adjusting.

The sudden abundance of free time was overwhelming, and not having a job title or clear responsibilities felt… strange.

I wasn’t just figuring out the financial side—I was trying to picture what life would actually look like for the next 30+ years.

Now, after our first year of early retirement, that picture is a lot clearer.

There’s a lot to unpack after a full year of retirement, so I’m breaking this into two parts.

In this post, I’ll focus purely on the financial side. I’ll share what we did to make the retirement leap easier and what we could’ve done better.

In the next post, I’ll get into the lifestyle side: what surprised us, what’s changed since 6 months, and how retirement actually feels.

THE FINANCIAL REALITY AFTER 1 YEAR

Six months in, we were still learning how to spend money. After decades of doing everything to increase our net worth, it was hard to spend without looking over our shoulders.

Since then, we’ve started trusting the plan—and spending a little more freely. We still make conscious spending choices and track all expenses, but it’s gotten easier.

That’s not to say I have zero concerns over our finances. That’s hard to ignore when prices are rising, and the stock market feels like a rollercoaster.

Our finances have definitely been affected by what’s been happening since early 2025, but especially in the past few months.

PLAN VS. REALITY

“Everybody has a plan until they get punched in the mouth.”

—Mike Tyson, Boxer

No matter how well you plan something, things can always unexpectedly go wrong. How you handle and adapt to adversity is as important as the plan itself.

For the most part, our spending during the first year is in line with what we anticipated. For years, we’ve tracked our annual expenses on a Kakeibo spreadsheet, so we had a good idea of how much we needed in retirement.

But a few things still caught us off guard.

UNEXPECTED COSTS

The first was having medical costs that were not covered by insurance at all. We knew we’d spend more out of pocket on health insurance, but we also thought insurance would cover most costs.

After all, that’s the whole point of having health insurance, isn’t it?

I previously shared having to start out-of-state treatment for TMJ issues, which isn’t covered by medical or dental insurance. By the time it’s done, I’ll have paid roughly $14,000 out of pocket.

I’m happy it’s working… but that bill still feels like a punch to the face.

MARKET VOLATILITY

The second thing that caught us a little off guard was market volatility.

One of the worst things that can happen for a retiree is to see the stock market crash and their portfolio along with it just after retiring.

At the end of 2024, our portfolio looked great, and our net worth was at its highest. But since the start of 2025, it’s been such a wild stock market ride. Our portfolio took a hard hit.

Watching your net worth nosedive can make anyone second-guess retiring.

Fortunately, although we didn’t know the timing or scope of market swings, we did plan for something like this.

FINANCIAL MOVES WE MADE

As of this writing, we’re not in a recession. Excluding the short-lived pandemic downturn, it’s been 17 years since the last major recession ended—an unusually long stretch.

We know another recession will come eventually, just not on any reliable schedule. So instead of trying to predict it, we assumed it would happen and planned accordingly.

BEFORE RETIRING

During our wealth-building years, we kept only 1-2 years' worth of living expenses in cash. Everything else was invested in individual stocks and a few index funds.

As we approached retirement, we increased that to five years’ worth of living expenses. The majority of this cash is kept in a CD ladder to mute the effects of inflation.

The reason for this was two-fold.

First, it would give us a cushion to ride out a recession if one struck during the first years of retirement.

Second, it would allow us to take advantage of the 0% long-term capital gains tax bracket by strategically selling investments with little to no tax impact. Since we'll be living off investments in the future, reducing our tax liability is a major focus.

The cash cushion also gives us the option to use a Roth conversion ladder* strategy to get penalty-free early access to our retirement funds.

*I'll explain the Roth conversion ladder in a future post.

DURING YEAR 1

After retiring, I made a few additional moves to give us more financial security. Now the focus is less on wealth building and more on wealth preservation.

Prior to retirement, I had invested all of our money in individual stocks and index funds. Although the conventional wisdom is to always keep a percentage of investments in bonds, I never did. I preferred buying stocks in companies that I understood well and had a wide economic moat.

Since retiring, I’ve shifted part of our portfolio from index funds and stocks into Treasury bill funds. I’ve been using the 0% capital gains bracket to sell investments without paying federal taxes. The spreadsheet calculator I created last year makes it easy to figure out just how much to sell.

Holding more money in Treasury bills gives us some protection against market crashes. I also now have access to cash to buy stocks again when prices drop to more reasonable levels.

Thanks to these financial moves we made before and after leaving the rat race, the unexpected medical bill and market downturn still hurt, but they hurt less.

If it sounds like we’ve planned for everything, there’s still another unknown.

One major move we haven’t made yet but will be making later this year is buying our own health insurance.

HEALTHCARE UPDATE (COBRA → WHAT’S NEXT)

Currently, we still have COBRA coverage through my ex-employer, but that expires at the end of the year. I have nothing but gratitude for my ex-employer when it comes to health coverage.

After paying for COBRA for a year, I saw just how much of the insurance premiums my previous employer had been subsidizing. Not only that, but the coverage is good and the total premium, while high, was still lower than I had expected.

Once COBRA expires, our two options for coverage are the ACA Marketplace or private insurance. There’s a chance we’ll end up paying more for less coverage.

Having researched our healthcare options before, I know choosing the right plan will make our heads spin. Since we can’t switch insurance mid-year, choosing a plan is a big decision.

For that reason, we plan to meet with an insurance broker. Using the Healthcare.gov “Find Local Help” tool leads us to a listing of brokers and agents in our area.

ONE THING I WISH WE’D DONE DIFFERENTLY

Although I’m immensely proud that we managed to retire before turning 50 and have thrived in our first year, I often think about what we could have done differently.

If there is one thing, it would be to start investing sooner and more consistently. We had a little money invested in funds while in our 20s, but we could’ve been more aggressive. Cashing out some of the funds was also a dumb move in retrospect.

At the time, we didn’t really think about retirement. It felt too far away to even plan for. And we didn’t understand how long compounding would take.

So we didn’t really start investing until our late 30s. Had we started even a year or two earlier, we might have retired several years sooner.

FINAL THOUGHTS AFTER ONE YEAR

One year into early retirement, the numbers are holding up—but not without a few surprises along the way.

We’ve had unexpected expenses, market swings, and plenty of moments that made us second-guess things. But the plan hasn’t broken. If anything, it’s proven more resilient than I expected.

That said, numbers are only part of the story.

In the next post, I’ll share what this past year has actually felt like—what’s changed since the six-month mark, what surprised us most, and whether early retirement has truly been worth it.

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Disclaimer: I’m not a licensed financial professional. This blog shares my personal experiences and opinions around money, investing, and early retirement. It’s for informational and educational purposes only—not financial, legal, or tax advice. Always do your own research or consult with a qualified professional before making any financial decisions.