After my post counting down my years until early retirement earlier this week, I received a very thoughtful e-mail from reader Tim:
I’ve been reading and enjoying your blog for a long time, and think it’s one of the best out there for your mix of personality, short-term and long-term financial tips and advice. But one thing bothers me: the ongoing, almost central theme (obsession?) with early retirement. It seems to be the goal around which everything else in the blog revolves and leads toward.
Why is that? Do you hate your job so much, and can’t even imagine a job you would enjoy enough that you would want to do it whether you were paid or not? It doesn’t strike me that someone as industrious, curious and intellectually active as yourself would really ever retire. I understand there may be other activities you’d like to pursue, but my guess is that most of them would be potentially income-generating. So you’d still have a “job.” And if that’s the case, then why not pursue one or more of those things now, rather than delaying them until “retirement?”
It seems to me that “MyMoneyBlog” is likely one of those things, and I’m very glad you’re doing it. And if one reason is the hope to fully monetize the blog to the point of retirement from your nine-to-five job, then I hope you do that too.
But still, something about that recurrent theme of retiring just leaves me with a hollow, dead feeling in the pit of my stomach, as if we’re all inmates marking time on the wall of a dreary prison cell until our release. Maybe it’s the implied resignation to the assumption that joyless jobs are unavoidable – a bitter fact of life – that I reject. I just don’t like to think that as a society we accept a lifetime of delayed gratification as a given, and don’t rouse ourselves to do anything more about it than make sound financial plans to enjoy ourselves when the pain finally stops.
There are some great questions in there, and really it also showed me that I can improve on explaining my philosophies. I have all these ideas rattling around in my head, and not all of them reach the keyboard. My reply became rather long…
Definition of early retirement. I know that retirement is a very tricky word to use. For too many people, it conjures up images of playing golf and sitting around all day. Financial independence or financial freedom are better terms, and they all mean the same thing to me – I get to do whatever I want. Cook a new dish every day, rebuild a Land Rover Defender or Willys Jeep, volunteer, spend a year abroad, anything. F— You money.
Delayed gratification. Going back to the early retirement curve, a major assumption is that your current expenses are the same as your future expenses. Let’s say your household earns $80k and lives on $40k. Well, that curve assumes you’ll be living on $40k in “retirement” as well. Using a food analogy, getting there is not a crash diet, but requires a permanent change to healthier eating habits. I don’t feel deprived with my current lifestyle as it pertains to spending, otherwise it wouldn’t be sustainable.
A job that I would do forever? I’ve thought about this. Let’s try to design the best job possible. To start, it should satisfy this Career Venn diagram which reminds us to seek the intersection of things that we do well, things that pay well, and things we like to do. In addition, it should provide all the factors that make a job satisfying beyond money: autonomy, complexity, and a connection between effort and reward.
Does my current job cause me pain? Does my wife’s job? Not really, we are white-collar professionals so we have a certain degree of autonomy and challenge to our work. But we also have managers, meetings, clients, and politics.
Is there any such ideal job that exists? Honestly, if it had to pay $50k a year and 40 hours a week, probably not for me. I am the type of person that likes to do something for a while, and then move on to something else. Even self-employment has it’s own set of restrictions. Even though blogging is a sweet gig :), having income that depends on advertising is very volatile.
This is where financial freedom comes in, because it means more flexibility. I have realized over time that I will probably need to do something, and that is a big reason why I am happy with a 4% safe withdrawal rate. All the academic studies that calculate this withdrawal rate stuff assume that a theoretical person blindly takes out 4% inflation-adjusted to the CPI every single year. From reading experiences of real early retirees, they adjust and adapt.
Let’s say we want that 4% withdrawal rate to create $40,000 of income from investments, but it ends up that 3% is a more reasonable number. Now, I need to find a job that pays $10,000 a year. I could do all kinds of things that would be kind of cool for $10,000 a year, and I wouldn’t have to work 40 hours a week either. I could do just about anything – web design, tutor high school or college students, teach English in a foreign country, apprentice with a skilled craftsman, or work as a travel guide.
Indeed, the possibilities are endless. One day, if the stars align, we will have children. At that point, we plan on downshifting to working part-time so that we can both enjoy raising kids without all the financial stress that our parents had. Our portfolio can already cover half of our expenses. Once the kids go to school, there will be more time for work, if needed. In the end, I would say that I am obsessed with freedom and autonomy.
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This is very americans in your view. In france we enjoy life each day in the present. Even if it gets os AA+ credit rating.
A great, creatively written question from Tim, and an entertaining and informative response from Jonathan. As a reader possibly obsessed with my own retirement, my attention is called to all sorts of angles I haven’t been thinking of. Thank you both!
I agree with Tim. I did not even read the most recent entry on early retirement because it is a loaded term and not even remotely interesting to me. I too get frustrated with my job from time to time, but it is incredibly flexible. There are perks I cannot even begin to put a dollar amount on. We don’t have nearly the salary or portfolio you do, but my wife was able to quit working when our daughter was born 2 years ago, and I now work from my home office 100% of the time, so I get to eat breakfast, lunch, and dinner with my family. I don’t pay for a business wardrobe, I don’t have commuting costs, but I also can’t save by adjusting the thermostat during the day. It does seem to me that you’re looking for something down the road that is out there today.
Thoughtful comments by Tim and Jonathan.
To me, the focus of early retirement is quite simple. It’s “F___ you consumerism! I’m an intelligent person and can recognize that after my basic needs of food, shelter, clothing, and love are taken care of, I’m not going to give in to this rampant consumerism culture that appears to be so pervasive. Rather, I will carefully evaluate wants vs needs and be a careful and deliberate consumer. I’m not going to subject myself to 50-80 hrs/week in a job that I hate so that I can fulfill my never-ending list of hollow wants. Why not take the past 150 years of improved industrial output and use them to work less rather than buying an ever increasing supply of trinkets which clutter my house and eventually landfills?”
In response to Tim, this anti-consumerism focus empowers people to pursue careers that they want to, because it’s easy to follow your dreams if you are only incurring $8k/year in expenses for a single person, or $15-20k/year in expenses as a family. This is precisely what I’m doing now. I quit my reasonably well paying job years ago to pursue more education which will enable me to have the job and lifestyle that I want forever. The thing that empowered me more than anything to make this move was not my decent (single) income for a few years, it was the fact that I learned how to say no to consumerism, and as a result I managed to save a bunch and to live on next to nothing.
Thanks to this progressive tax system that our society touts as “fair”, supporting a family on $15-$20k/year is actually pretty simple. My average tax rate while in school is highly negative thanks to the earned income tax credit and poverty-encouraging initiatives.
Enjoyed the post. I question whether there really are jobs out there that pay say $70k+ that people are truly satisfied with and make no compromises for. I certainly haven’t found one yet. If there are then there are at least jobs or projects that pay less than half that have even higher fulfillment and satisfaction levels. I hope being financially free will reduce (or eliminate) the impact of monetary needs in the work equation.
It’s 9:00 AM on a Thursday and I am reading “My Money Blog” in my family room and not at work, because I retired last year. For me and for every retiree I know, retirement is wonderful. I disagree with the e-mail from Tim. Every job is different, but it is rare in my experience to find a person who was fortunate enough to make a education and career choice at age 18 that translates to a job that they will love and want to keep doing forever 40 years later. (Not to mention, still exist 40 years later). And to change careers in mid life is difficult and probably costly.
Ten years ago I had an awful boss and work was miserable. I tried to change jobs but could not. I started thinking and planning in earnest for retirement at that time. The situation changed but my plans did not. Did I have an “obsession” for those ten years? Kind of. So what?
If you love your job and would do it “forever”, that’s great for you. I tend to believe the old saying … there’s never been a person whose final words were “I wish I spend more time at work:?
Not saying Jonathan can do anything about this, but I find articles on early retirement written by people without children to be very inapplicable to those of us with children. Priorities (and expenses) change drastically once children come around. Most any energy I once had to put towards an early retirement goal is now directed to our son.
I loved the fair and reasonable question from Tim and Jonathan’s response will soon be forwarded to anyone who is confused or doubtful about my aspirations to be financially independent. I couldn’t have said it better, and i’ve been trying for a few years now.
The best part of all this is that we consciously change habits and strategies for a more comfortable tomorrow.
I hope to ‘retire’ to teaching my martial arts class and managing our money. That business has grown over the years as has my portfolio. Jonathan made a good point about finding ‘less’ work to fill the gaps. Dan Miller’s book ’48 Days to the work you love’ centers on this very idea: find work you love and ‘less’ work to fill the gaps. Why can’t i gross $30K from my class and $30k in dividends? I love both! (love the Venn diagram concept too!)
Best of luck everybody!
@Scott: I fully agree with you on the priorities + kids comment. It really is a different world and saving becomes much, much more difficult. That being said, I still find Jonathan’s articles helpful and still am striving towards a (somewhat) early date of financial independence.
I find Jonathan’s “obsession” completely in sync with mine. In fact, I am ready to pull the trigger: I think I have the right amount of money set aside and I’m sick of my job at “bigcomputerfirm”.
But let me tell you that the thought of walking away from a 170K job would be considered crazy by almost anyone I know. In my case, I got spoiled by the money and stuck around with early retirement as the goal.
I think I have enough but it’s one thing to talk (or blog) about it and another to go for it: to sever the ties and take that plunge. For me, there is no path back to making such good money once I leave it behind. And with a family to feed, there is definitely way more pressure to make sure I make the right decision.
Anyway, just a matter of weeks now—for me at least, these blogs are great!
I think you love your spouse, kids, family, etc. Not sure about ‘love’ your job. Most people I know if given the option would choose to kick back on a beach on a sunny day instead of doing their lovely work.
You all are forgetting the one article that was posted here a while ago: There’s no difference in happiness levels once you make more than 60k a year.
All the content starting from original comment from Tim, Jonathan’s detail answer and comments to that answer really gives some interesting perspective about financial independence where someone like it or not.
I been enjoy reading mymoney blog for almost few year now. Being a guy who passed CFP last year(I don’t practice), some articles Jonathan post with facts and graphs really makes me things how he gets the content and as well time to do the research to post it. They really are informative and educative. He might not have kids but still working and blogging takes lot of effort. I know what it takes to achieve being blogger myself.
As few others said, blogger with no kids posting about early retirement doesn’t really works for everyone. I don’t agree to that point at all. I have seen Jonathan taking kids also into perspective when he does few analysis. So you cannot just in rule out in general his early retirement fundamentals. Some of them are basics which can be development with different criteria’s on top of it. I know its tough to save when you have kids but you still have to have emergency funds which he talks about and shares ideas on how to invest it.
I wouldn’t say Financial independence is a fantasy world but in reality it is attainable to a point where you can do things you want to do in your own flexible schedule and reaching that goal can be in 40’s or 60’s. It can be tough when you have kids but you can still get there with proper planning. You just need to be practicable about your situation and do the work to reach it.
F- You money. I love it!
Jonathan and Tim – great exchange.
Of course children create expenses, but like any other expenses, the influence of consumerism is rampant, and the basic principles Jonathan espouses remain true. That is, buying things second hand, limiting the cello lessons and setting reasonable xpectations about financial support for college, all go a long way towards early retirement. Whether that’s right for a given parent is their call, but lots of people have kids and still acheive financial independence earlier in life than similar peers with kids.
I like your food analogy under “Delayed Gratification,” that “getting there is not a crash diet, but requires a permanent change to healthier eating habits.” I make pretty much the same point in my book, “Doing More With Less”: in all our life decisions, frugality need not be painful. On the contrary (as Ben Franklin taught), it can and should be a source of creativity and sane, sustainable prosperity in both our personal lives and business endeavors.
This is a great question and a great response.
My one comment is that children may not come if their existence depends on, “the stars align.” Many people don’t realize how steep the decline is in a woman’s fertility during her 30’s.
i agree with lynn. children are the best “investment” ever. Yup they cost money and demand time and affection but they give something that is priceless. I totally underestimated children untill i had one of my own.
Great article. Good question from Tom and good response. I also like that venn diagram about how to be happy at work. I have the same opinion as Jonathan about retirement. Its really about financial freedom.
Love both posts. I happened to be contemplating the same topic lately. Currently I am leaning more toward Tim’s philosophy. I agree that chances are slim for most people to find the perfect job that they can love forever. But how about just a job that we don’t hate? I guess most people here agree that jobs should not be the main thing in life. If we find a job that we don’t hate, and maybe one that we even enjoy a little bit, can we then mentally put it aside and free up our mind to think about something else more pleasant? I guess it really depends on your personality. If you enjoy working in a different career every year or even every few months, the expected salary from those jobs can be low. Then you do need to have savings and investment to support that kind of life style. For other people, maybe they are just lucky, that they are ok or even enjoy a little bit of some 40 hour work week job or maybe some 20 hour work week job for some amount of years, they would then require a much less amount of savings. They can start their dream life style much earlier.
I guess it is yet another trade off. On one hand, I agree with Jonathan that having enough savings to support doing whatever is the best! On the other hand, I agree with Tim that enjoying dream life earlier is way better than suffering now so that we can have dream life later. Time is limited, how many years are we willing to suffer to exchange for how many years of dream life later? What if the dream life later is not as good as we imagined? And I keep reading about happiness comes from within? What if all it took is to change our perception of life and not so much about life style itself? whatever that means….
Sorry if my comments are confusing for I am still contemplating…
Thank you Jonathan for the great blog!!
Great response. I’m totally with you on enjoying doing things for a while, and then moving on to something else.
My interest in early retirement stems from the realization that, not only is it true that I don’t like doing the same thing all the time (e.g., I have several hobbies that I love, but none that I’d want to do for 8 hours in one day), but also that my interests in those hobbies themselves changes over time, too. For all I know, those hobbies I like doing now and which I would consider possible part-time income generators in retirement might not appeal to me in 20 years’ time. Financial security in retirement gives me the freedom for that kind of change, too.
Sorry, but it is moronic not to look forward to retirement even if you love you job dearly and would do it for free everyday. Retirement means freedom from having to work. Just like those of us who have attained a degree of freedom from debt and living paycheck to paycheck that we may have once experienced, life is better when you don’t have to do anything you don’t want to do. I’m glad Jonathan has framed the word retirement for those who were not enlightened enough to understand that is what retirement truly means.
I for one cannot think of any job that I would want to be tied to. Not even something that was fun everyday. There are just some days that you don’t want to have to wake up to an alarm.
I totally agree with Tim, BUT your blog has never bothered me the way others have in the sense of early retirement. I get annoyed with some blogs that are all about early retirement, but the people *work* MORE than we do, in their retirement. If the only requirement is to like one’s job and have a flexible schedule, then I retired 10 years ago and my husband is definitely retired because he hasn’t worked for money since age 25. I guess I relate to the young retired on many levels so get annoyed with the idea that there is no rewarding/flexible employment out there. (I’d personally work even if I didn’t have to but do LOVE my job).
Anyway, if you retire but start *working* 50 hours a week in retirement, then I will roll my eyes. 😉 Like you know, suddenly it doesn’t count because you are self employed?
I have detected a bit of “living for tomorrow” that I have hoped you won’t come to regret. But the flip side is I think your approach will mostly pay off, so it’s not a strong concern. The thing about having kids is everyone I know is whoafully unprepared financially and not handling it very well, but the second you point that out in an online forum everyone says, “Oh, no, babies are just as expensive as you make them!” Meanwhile, dad is working two jobs and is never home and mom has serious regrets about working but has no choice. See that 1000 times and it is hard to criticize *your* plan. Having kids was just too important for us to wait as long as you have, but I am also well aware that isn’t necessarily by choice and that other people have other priorities. (A cousin of ours just had a surrogate-born baby after TEN years of trying, and she started trying in her young 20s, so I never assume a childless couple is that way by choice). But we waited long enough to skip most the extreme miserable financial upheaval of having kids. You are well past that and you will be better for it when/if you do have children.
Honestly, I believe that saving money beyond 20% is a hobby. It has to be for the average person to pull it off. It is an anti-consumer hobby as above. Most hobbies encourage you to spend while meta-hobbying. Saving as hobby encourages you to squeeze nickels and make dollars, but they both have the same passion and level of interest at the meta-level. It’s not like you are filling out bonus credit cards or managing your investments on a daily basis. The Internet certainly encourages the slightly obsessive behavior.
I know a guy that retired at 30. He’s 80 now and is wearing clothes that I purchased from a thrift store for a quarter 15 years ago and didn’t want. For his daughter’s wedding, he spray painted a pair of 30 year old shoes from brown to black and on the way home from the wedding, he spent 30K cash on an antique rocking chair.
That’s just not my lifestyle.
What about my job?
– Work ~30 hours/week
– Can work from home as much as you like, alternatively there is no schedule to come in to work
– Free food, drinks, etc.
– 4 weeks vacation
– Pays 6 figures
Seems pretty awesome, right? And yet I still want to leave…
Thank you Justin! Love your story! I have a money saving hobby too. I noticed that to some degree. Of course not as extreme that guy in your story. I have been running into friends who don’t agree with my life style, and I have not been understanding them. Your post helped. Thanks!
Financial independence is my dream as well but it is founded more in simple independence. I have been working at a Fortune 200 job and seeing the plutocracy of mediocrity running the company leaves me jaded and drained. The business doesn’t have anyone in charge. It is really just a weekly “strategy-du-jour” that sweeps through with people saying “Executive management really wants this.” A faceless leader to a multi-billion dollar company. I am always working on ways to put myself into something smaller with clear purpose and accountability. That is where my independence will come: both financially and vocationally. That is what keeps me going. Love the blog. Keep it going. Best of luck to you and Mrs. MMB.
Pretty powerful letter from Tim and response by Jonathon. These are the kinds of thoughts and struggles that run through my head as I am working and I am thankful for the thought-provoking dialogue. You guys are awesome!
Tim has a bit of the American corporate mindset. Many people are appalled by the idea because perhaps most people get their identity from their job. So not having a job leaves many adrift and the thought of it is rather frightening.
For most it is a dream that cannot be achieved so they don’t really want to hear about how others are making progress toward that goal.
The consumerist culture of America runs deep. When I was working many used to laugh at many of the things that were key to my becoming financially independent. They would prefer to work their lives away than have to sacrifice in the least.
Truth is there is some loss of identity when you quit working and that’s why many go back to it. It can also get incredibly dull at times. After all, most people are at work when you want to do something.
Financial independence is a great thing though even if you choose to keep working. Having the ability to just walk out the door whenever you like is a great sense of freedom.
Retirement can mean different things to different people. Financial freedom is more appropriate word in my context. I save to have the flexibility to leave the job when I choose to. It doesn’t mean I want to leave my job. Most of the stress comes from financially tied to job. When I have security of financial independence, I might enjoy my job more than I do now. I enjoy my work some days and some days it if frustrating. when I have financial freedom, I can cut back hours, responsibilities and anxiety to enjoy it more. It gives me more satisfaction when I know that I can buy BMW whenever I want to.It doesn’t mean I have to buy it. Same thing with my thought of retirement.
Here’s my situation:
Work week: about 35 hours
Vacation: 14 weeks per year, with 8 weeks off in summer and 6 weeks off during the academic year in any configuration I want.
Salary: around 85K
Benefits: outstanding
Job: Helping people in an academic setting
Commute: 6 minutes each way
Location: gorgeous mountain community
Next year, I can start to work 1/2 time, which for me is just 88 days per year. Will only earn half my pay but will accrue pension benefits as though I’m working my full contract. 8 years later, will retire with 65% of my income.
No kids which was my choice. 7 billion miracles is enough.
Of course, I am in my 50s and have paid my dues for decades to achieve this. It’s not like I’m 35. But, I think it’s as good a situation as I am likely to achieve.
I like the blogger’s response, especially the last statement speaks for me, too.
I retired relatively young; at age 60. It is not what I thought it would be. I need to find a reason to get up in the morning. I thought it would be more than it is. Retirement to me, is not all it is cracked up to be.
I miss my coworkers. I don’t really miss the job. I don’t miss the long commute. I just miss…what I am not sure…maybe my identity?
Also, I am shocked that I do not know myself like I thought I did. I am totally shocked at that; I thought I KNEW what I wanted. I really did.
I should not have retired FROM my job, instead I should have retired TO…something…what I don’t know…
@Ann – It seems like you need to find a meaningful purpose or at least more human interaction. Perhaps volunteering in your community?
It’s 9:00 AM on a Thursday and I am reading “My Money Blog” in my family room and not at work, because I retired last year. For me and for every retiree I know, retirement is wonderful. I disagree with the e-mail from Tim. Every job is different, but it is rare in my experience to find a person who was fortunate enough to make a education and career choice at age 18 that translates to a job that they will love and want to keep doing forever 40 years later. (Not to mention, still exist 40 years later). And to change careers in mid life is difficult and probably costly.
Ten years ago I had an awful boss and work was miserable. I tried to change jobs but could not. I started thinking and planning in earnest for retirement at that time. The situation changed but my plans did not. Did I have an “obsession” for those ten years? Kind of. So what?
If you love your job and would do it “forever”, that’s great for you. I tend to believe the old saying … there’s never been a person whose final words were “I wish I spend more time at work:?
A BIG PLUS ONE FOR THIS POST. I feel the same. I have been intellectually challanged in a demanding career but I am tired and will be out at age 55, having raised three kids and put all 3 thru college. Don’t for one second fool yourself into believing that you will never get tired of work or never get sick. I find many persons use this as justification to never save or plan ahead….”I love working, I’ll just work forever”.
This is an old blog but I will chime in anyway:
I have a decent job with a great boss(s) and I respect and learn a lot from. However, I do not trust my coworkers and think they are all fake people who intentionally try to keep me in the dark or ruin me. They are a threat to my self interest and for those reasons, I will commit everything I have to build enough passive income to invest ASAP and enjoy life without coworkers.