My employer recently went through a round of layoffs. While my job was safe, many of my colleagues, and millions of Americans, have lost their jobs over the past several months. COVID-19 cases continue climbing in many parts of the country, massive social changes are taking place, and what seems like one of the most important presidential elections of my lifetime is just four months away.

The world has changed a lot in 2020, which has caused us to rethink our plans around our pursuit of early retirement and financial independence.

Part of me has been tempted to use the massive uncertainty as the impetus to walk away and focus on what’s most important to us.

But the more rational part of me thinks it would be crazy to abandon a good paycheck until we have a much better idea what life in the United States might look like in 2021, 2022, and beyond.

Longtime readers won’t be surprised to learn that pragmatism won out.

And with that measured approach comes the first changes to how we’re tracking our progress towards early retirement and financial independence since we introduced our quarterly financial scorecard three years ago.

We’re still measuring the same three financial metrics – net worth, 529 account funding, and passive income – but our targets for each have changed dramatically:

• We increased our net worth target by 20%. If and when we finally achieve financial independence, I want a higher level of certainty that we’ll really be prepared to fund our anticipated lifestyle without fear of quickly running out of money or having to head back to work.
• We also increased our 529 account funding target by 20%. While we’re still unlikely to have enough money saved to fully fund our children’s college educations, I’d like the potential shortfall to be smaller than what we were previously targeting.
• We cut our passive income target by 50%. Our original goal was to be able to fund our expected lifestyle entirely through passive income, but I acknowledged when I first wrote about it three years ago that this was a “stretch goal” for us. We made modest progress towards our initial target over the past three years, and it’s time to acknowledge that even in a best case scenario, we’ll only be able to fund about half of our anticipated lifestyle through dividend and interest income.

Changing our three financial goals also necessitates a disappointing revision to our fourth goal – our target FIRE date. Three years ago, we established a target FIRE date of Friday, July 2, 2021. Our change in plans requires us to push that date out a whole year, so our target FIRE date is now Friday, July 1, 2022.

The dream of reaching early retirement in my 40s has ended.

But if we can achieve our revised goals, I think our chance of a successful and permanent early retirement will be materially higher.

Let’s take a look at how we’re doing in relation to our new targets as of June 30, 2020:

I. Net Worth: 90.7% of Goal (+12.9% during Q2 20)

Our financial position improved dramatically over the past three months, driven by the best quarterly returns for the S&P 500 in over two decades.

We briefly topped our previous long-term target at the end of last year before, well, 2020 happened, but achieving our new goal will be more difficult. My earnings potential is much lower than I thought it was just a few months ago. I anticipate my potential bonus for this year will be down materially from previous years, or perhaps even 100% deferred or zero. Right now I’m very thankful to have a job that allows me to work from home and pays me a salary that enables us to still save some money.

Our new short-term net worth goal is to get to 92% of our long-term target by the end of this year. Hitting this goal will be dependent on the stock market not taking another leg downward, which is by no means certain in this time of pandemic, social change, economic hardship, and political uncertainty.

II. 529 Account Funding: 64.5% of Goal (+10.4% during Q2 20)

The rebound in the stock market during Q2 also helped improve the funding level of our children’s educational accounts. The value of our 529 accounts moved 10.4% closer to our new target as markets rallied in April, May, and June.

However, we’re still much further away from this new goal than we are from our net worth target. It will take substantial additional contributions, as well as robust market returns, to hit our loftier 529 account funding goal over the next two years. While we have some control over the level of contributions we make, market returns are completely out of our control. I think this will be the most difficult of our three financial goals to hit by the summer of 2022, but we’ll continue to try!

Our new short-term 529 account funding goal is to get two-thirds of the way to our long-term target by the end of September. As with our net worth goal, we’ll need supportive financial markets for this to become a reality over the next three months.

III. Passive Income: 69.9% of Goal (-7.9% during Q2 20)

While there is a chance we’ll be able to hit our much less ambitious passive income target by mid-2022, we still have a lot of work to do here, and recent trends have been unfavorable. Although markets bounced back over the past three months, our passive income took a significant hit, as stocks we own cut or eliminated their dividends, a corporate bond we own failed to make a coupon payment, and income we’re earning on cash declined as interest rates fell.

The end result was finishing the second quarter further away from our goal than when it started. With a couple additional CD’s scheduled to mature this month, we’re likely to be reinvesting at even lower rates, which will put continued pressure on our passive income going forward.

Our new short-term passive income goal is to get to 75% of our long-term target by the end of 2020. With continued headwinds from lower interest rates, we’re going to need to deploy some capital over the next six months into stocks that pay respectable – and sustainable – dividends to achieve this goal.

IV. Target FIRE Date: Friday, July 1, 2022

Until recently, I thought our target FIRE date was only a year away, but as outlined above, we’re now two years away from potentially reaching financial independence and early retirement. While what happens in the world around us over the next eight quarters will ultimately determine whether or not we are successful, I think there is a reasonable chance we can hit all three of our financial goals by the summer of 2022.

How have your financial goals changed during 2020?