Removing money from decisions is a fundamental value of FIRE (Financial Independence, Retire Early). Yet so many of us struggle to ditch a scarcity mindset. We latch onto our Monte Carlo simulations and often delay early retirement and happiness to reach that next 0.1% that makes us feel safe.

Strong opinions abound when it comes to safe withdrawal rates.

In his epic post, The Shockingly Simple Math Behind Early Retirement, Mr. Money Mustache laid it out in the simplest way possible. That post alone opened my eyes to the possibility of early retirement. JL Collins‘s writing, a collection of letters to his daughter, also portrays the simplicity in the aptly titled book, The Simple Path to Wealth: Your road map to financial independence and a rich, free life.

If it’s all so simple, why do so many of us spin our wheels instead of taking action and embarking upon early retirement?

While some voices preach the simplicity of it all, others bang a different drum.

Voices from famous people weigh heavy, even when they are entirely wrong.

You need at least $5 million, or $6 million. Really, you might need $10 million.

– Suze Orman

And then some pundits are much more conservative than MMM or JL Collins and believe a 4% withdrawal rate is too risky.

You are left with a choice:

  1. Take a risk, retire early, and embrace happiness.
  2. Spend your days in Monte Carlo simulations, work longer, save more, and delay happiness.

Today, we discuss the importance of happiness in early retirement and life. And explore how excessive focus on reducing risk harms your financial independence and, ultimately, happiness.

Why Hyperfocus on Monte Carlo Simulations May Not Be Ideal for Early Retirement Planning

When it comes to early retirement planning, many financial advisors and retirees turn to Monte Carlo simulations to predict the likelihood of success in retirement. These simulations use historical market data and assumptions about future market behavior to create thousands of simulations and calculate the probability of achieving a certain level of retirement income.

These tools are prevalent in the FIRE community, especially for those nearing financial independence goals. It’s normal to worry that your savings may not last, and Monte Carlo simulations can inject more scenarios than the basic 4% Rule (of thumb).

In this section, we will explore the limitations of Monte Carlo simulations and why spending too much time analyzing and preparing for potential disasters could be better spent. Too much focus on money brings stress and ultimately defies the primary goal of financial independence.

Understanding the Basics of Monte Carlo Simulations for Early Retirement Planning

Google ‘Monte Carlo retirement,’ and you will find a slew of retirement calculators—some free and well-built, like cFIREsim. Many more simulations are available from for-profit institutions.

The basic functionality of a Monte Carlo simulation is to test different portfolio mixes and withdrawal strategies against historical market conditions. These simulations take the Trinity Study and the 4% Rule (of thumb) to the next level.

The foundation of the FIRE movement sits on the 4% Rule, but you may know that the strategy survived for 30 years of retirement in only 95% of the original Trinity study simulations.

Wouldn’t we all feel more comfortable with a higher probability of success?

Modern Monte Carlo simulations are still based on historical market results but allow you to test many strategies.

cFiresim can model eight spending plans.

  • Inflation Adjusted
  • Not Inflation Adjusted
  • Percent of Portfolio
  • Variable Spending
  • VPW
  • Hebeler Auto Pilot
  • Guyton-Klinger
  • Variable CAPE

And these are just one set of the many options for your model. You can dig in and likely need a degree in finance to understand the fine details.

Why Relying on Historical Data Is a Shortcoming of Monte Carlo Simulations

The new generation Monte Carlo simulations are powerful and much more detailed than taking your spending and multiplying by 25 to determine your financial independence number.

After running these simulations, you may find a safe withdrawal rate that makes you sleep better at night.

However, nothing can predict the future returns of your investments. Everything in the future is uncertain. At some point, you must let go of your analysis and step forward into the unknown.

The 4% Rule (of thumb) is not guaranteed, nor is a 3.25863% withdrawal rate you arrived at after months or even years of detailed analysis in Monte Carlo simulations.

The Anxiety and Stress of Putting Too Much Faith in Monte Carlo Simulations

Maybe you’ve been working on simulations for some time, and then news of a 2% market drop in a day hits the headlines. Suddenly, you start to doubt that rock-solid 3.25863% safe withdrawal rate.

Maybe you should re-run some simulations at 3.25859% to be safe.

The practice is futile.

Instead of focusing on happiness, you are focused on losing your money. A scarcity mindset is debilitating.

The goal of financial independence is to eliminate money from decision-making. And here you are in the clutches of endless simulations, worried about money.

No matter your number, the future will have its say.

How Focusing on Happiness Can Lead to a Fulfilling Early Retirement

A common regret among early retirees is failing to focus on happiness during the journey to financial independence. The harsh reality is that reaching that magical net worth doesn’t change you.

If you were unhappy before you had enough money, you wouldn’t suddenly be happy when you do.

When you are head-down and only focused on achieving your goal, there is little time for self-reflection and prioritizing your time for people and things that bring happiness and joy to your life.

Early retirement provides freedom of time. I argue time is your most valuable asset. When you use time for happiness, you are rich.

The Importance of Self-Reflection and Finding Joy During Early Retirement

You may not give yourself time to dive deep into your thoughts and emotions during your working life. When we spend our waking hours trying to make money and calculating our best probability of not losing it, we starve our own need to understand what’s truly important.

You rob yourself of a meaningful opportunity when you do not grant yourself time for self-reflection during your journey. When early retirement arrives, the identity of your job role is gone.

It can be quite an eye-opening experience to realize you don’t understand your identity after you’ve left the working segment of society.

It took time after leaving my job to release my mind and begin to realize how deep in my career and early retirement goals I had been entrenched. There was very little life balance. Life imbalance more appropriately described my condition. I was so focused on my goals that I let everything else go without appropriate attention.

Topher Freeman: Mini-Retirement Provides a Wake-up Call

If you fail to allocate for self-reflection before stepping away, expect to spend time in early retirement to figure out your identity. It’s much easier to uncover joy when you understand your purpose.

The Freedom and Flexibility of Prioritizing Happiness Over Financial Security

Some people are content to pursue financial independence at wide open throttle. Many who used this approach successfully later reflected regret about the relentless pace.

Slowing down and enjoying the journey is an optional approach.

You will reach the finish line slower. Still, likely, you will better understand your identity and be able to shape your life in ways that provide happiness, even before achieving the ultimate financial security goal.

Coast FI is one such approach. Read more: The Power of Flexibility: How Coast FI Can Improve Your Quality of Life

Many things that bring joy to our lives cost little to nothing. Making time for joy and happiness will provide more riches than saving for that extra 0.002% annual withdrawal rate.

Time is more valuable than money. The sooner we realize this, the sooner we will be free.

Exploring the Benefits of Hobbies, Volunteer Work, and Other Non-Financial Pursuits

When you retire, you suddenly have a lot of free time. If you don’t understand your identity, you will soon be bored.

Take action while you are still working. Invest time in a hobby or volunteer with something you are interested in. It’s good to experiment with these pursuits while you are still working. They can help you create an identity outside work and your status as a professional Monte Carlo simulation expert.

The goal is to discover something you enjoy and create happiness early on. Waiting until retirement for this step wastes time.

We don’t get wasted time back.

Take some of the cycles you spend worrying about running out of money and divert them to discovering your identity.

How to Balance Financial Planning and Happiness in Early Retirement

Financial independence requires fiscally sound decision-making. You need to understand risks and be prepared for your future after retirement.

The basic equation is simple. Save enough and live off your savings for the remainder of your life.

Some of us struggle more with a scarcity mindset than others and need additional assurances. Monte Carlo simulations are great tools for evaluating potential situations.

These simulations have helped many feel comfortable about moving into early retirement. Others get caught in an analysis wormhole, worrying about every possible scenario and how they might lose everything. Thinking like this robs you of an opportunity to find happiness before and in early retirement.

The most successful early retirees have found how to let go of these worries and enjoy the freedom their hard work created.

Integrating Priorities and Values into Your Early Retirement Financial Plan

Understanding your values, those most important to you, can help you mold a plan for financial independence, even if it’s not early retirement. The Fioneers coined Slow FI, a path that prioritizes values over rapidly achieving your financial goals.

Want to learn about other paths to Financial Independence? Read: 6 Types of Financial Independence: Which Best Fits You?

No matter your priorities and values, there is a path for you. You are more likely to enjoy the journey if you find the right direction that supports your values.

You do not need to analyze this to death, though. Start the journey, and get your finances straight before you spend precious time analyzing your path to death.

A typical path to early retirement takes years, and you can change strategies on the way. The more you understand your values, the more informed your path selection is.

Rethinking Traditional Assumptions for a More Balanced Early Retirement Plan

It’s hard to believe that FIRE is old enough to have traditional assumptions. When I first read the MMM article, I had yet to learn early retirement was possible.

About a decade later, at least a half dozen recognized approaches to financial independence exist. And many more out there have yet to be pushed into the spotlight.

Many of us chose a path to early retirement because our work didn’t provide the balance in life we wanted. It turns out that financial independence is possible with a better life balance, just on a different timeline.

A scarcity mindset often drives us to overanalyze to avoid risk and avert losing money. The key here is that no matter how much analysis we do, there is always a risk.

Embrace the advancements available for early retirement planning, including the Monte Carlo simulations. But understand that early retirement is simple.

You will need to be able to react to adversity in retirement, no matter how much time you spend evaluating failure scenarios.

The Benefits of Flexibility and Adjustability in Your Early Retirement Financial Plan

If everything turns sideways, there is never a better time to go back to work than early in your retirement. Have faith in your abilities.

If you need to spend less or earn a little more to support your lifestyle, make it happen.

These are better solutions than consuming precious cycles evaluating every scenario. More importantly, these are plentiful mindset actions.

If you embark on a financial independence journey, you already have a leg up on almost everyone in society. You are not like half of Americans who won’t be able to retire at all.

Embrace your abilities, understand that you can adjust, and be flexible when needed.


There is a risk in early retirement. There’s also a risk in working yourself to the bone. We don’t live in a utopia; no matter what we do or how much we analyze a situation, some risks will exist.

You need to understand risk; tools like Monte Carlo simulations can help you. They provide more options and detain than the 4% Rule (of thumb).

It’s unhealthy to forgo happiness, both on the journey and in early retirement, by worrying about losing your money. This scarcity mindset puts money front and center in a journey designed to move money to the background.

Time wasted worrying, analyzing, and reanalyzing is time lost.

Be fiscally sound, understand risk, and be willing to adapt to overcome adversity. Spend the rest of the time pursuing your identity and finding happiness and joy in life.

Most importantly, understand you do not have to wait for early retirement to find happiness.