Semi-retirement

[short timer]

Hi all,

I've been lurking for a while and like reading posts in many of the forums.

I'm coming up on my first year of semi-retirement - I retired at 60 from a state gov't job and continue to work as a part-time (1-2 days a week) employee.

It  has been a great opportunity to have time for other things and to phase out of work gradually with most of the pressure off.

I will continue reading your posts and learning a lot.

short timer

 

[Caroline]

Welcome and best regards, Short-timer!

Tell me if you would, what do you do part-time? I'm a full-timer myself these days but I'm looking to blow this high-stress job in a year and move to something part-time.

Would love to hear what you (and others) are finding enjoyable as part-time work?

Again, welcome!
Caroline

 

[playaman]

I "semi-retired" myself in spring 2004 when I left a consulting firm to run a nonprofit (allegedly half-time). It is a much lower stress position and gives me time to do other things too -- like teach a course at the local state university and serve on a number of volunteer boards (as well as one commercial one that compensates well for the relatively small time investment). I think this is sort of the "best of both worlds."

I have been asked to be a candidate for a short-term, full-time appointed local government position that tempts me -- but I keep thinking "Do I want all that stress again, even if only for a short time?" It's nice to have the option to decline.

 

[retire@40]

Being semi-retired is the next best thing to full retirement.  I would be fully retired if I had enough net worth to do so, but I don't yet.  My thoughts are, why kill yourself and waste your 30's and 40's to build a high net worth so you can fully retire at 50?

In my situation, I could have easily fully retired at 37 or 38 with enough net worth to use a 2% to 3% SWR if I kept working 50 to 60 hours a week until that point.  But I think it makes more sense for me to go part-time at 34 or 35, even if I have to extend my work an extra 5 to 10 part-time years until I am in my net worth comfort zone.

Part-time work reduces stress a lot, gives me an income stream, gives me enough earned income to fully fund my Roth and my wife's Roth, and gives me plenty of time to do things I may not be able to do when I'm 50 or 60.

 

[cute fuzzy bunny]

If I think about work and the thought makes me shiver, does that qualify me for 'semi retirement'? Or do you actually have to DO something.

 

[Spanky]

Just curious - does part-time job offer benefits, e.g., medical and dental insurance?

 

[retire@40]

Just curious - does part-time job offer benefits, e.g., medical and dental insurance?

When you're self-employed you charge a rate that includes your income plus whatever benefits you want. So if you want to make $30 an hour and your health insurance costs break down to $5 an hour, you charge $35 an hour and now you have benefits.

 

[retire@40]

Let's take a FIRECalc example for determining one possibility for semi-retirement.

Say you will need $40K a year, but you have only accumulated $725K by age 40.

FIRECalc gives you a 95% chance of success if you withdraw about $30K (assuming no social security benefits and a 45 year portfolio lifespan).  So if you can work part-time earning $10K a year (adjusted for inflation) to make up that difference, you can be semi-retired.  Using a rate of $25/hr, you would only need to work an average of about 8 hours a week (or ten 40 hour weeks per year) to accomplish this.

The trade-off in this case would be to keep working past age 40 and accumulate an additional $200K to $250K, depending on how much longer you are willing to work.  I haven't gone through all the permutations of increased net worth to your remaining lifespan, but obviously the longer you work full-time, the shorter your retirement years.  It's a viable option to complete retirement and one that could make sense for a lot of people.

 

[kat]

I did something similar, using FireCalc and figuring the benefits to part-time/semi-retired work. I entered a lower initial withdrawal to start out, and then year five or six I raise the withdrawal to the amount that would make me quit work for sure. So, I can either work minimal part-time hours for those five or six years and make up the difference, or work as long as it takes to save up the pot I'll need to carry me over to year five or six when I make the larger withdrawal.

kate

 

[Sheryl]

So if you can work part-time earning $10K a year (adjusted for inflation) to make up that difference, you can be semi-retired.  Using a rate of $25/hr, you would only need to work an average of about 8 hours a week (or ten 40 hour weeks per year) to accomplish this.

Except, by the time you pay income tax, business and occupation tax, social security, and all the other costs of being self-employed, you need to work more like twice that to take home $10 k.

Our current plan is to semi-retire in the next 1-2 years, at about 45(me)/50(him).  My theory is that we can afford to live on half the income we currently make, (which we do now, we just save the other half).   We can stop hording, and just let the nest egg grow and real estate appreciate a few more years, then when it hits our magic number we can fully retire.

The downside is that if I use all my income to live, I will not also be maxing my Roth and 401.  I have been so indoctrinated that that almost seems criminal.

Also if the market sucketh as mightily as it has recently, the magic number won't happen.   

Any opinions on this theory?

 

[retire@40]

Except, by the time you pay income tax, business and occupation tax, social security, and all the other costs of being self-employed, you need to work more like twice that to take home $10 k.

The $10K was part of the $40K needed in my example.  The $40K is gross income that takes into account ALL expenses including income taxes.  That is how FIRECalc works.

 

[Martha]

Sheryl, there is some sense in still trying to maximize the Roth at least, especially if you are at a low tax rate when you go into semiretirement. Do you have the possibility of using some income from your savings to live on so you can maximize the Roth contribution? That might be worth looking at as a possibility. Your savings would still grow, just in a different form.

 

[vic]

I would love to work part time. But where do you find a job that pays well and is part time? The only jobs I see that are part-time are direct labor type of jobs just above minimum wage. Anything that pays more is self-employment which demands a bit more than remembering to show up in someone else's cube for 8 hours every monday.

My employer offers part-time but the problem is that the same amount of work is expected at the end of the week - so I would work for free. For those without kids it will also raise some eyebrows about ambition.

Vicky

 

[kat]

Any opinions on this theory?

Sheryl, I like your approach. The way I'm going is to ride the part-time/semi-retired time and stay at it as long as it takes for my pot to be the size I want. Right now I figure two years, but it could be more or less. I like the flexibility in my plan, which for me is the best way to deal with variables in my investments.

I'm a part-time/semi-retired self-employed lawyer, which is a really good gig to have. I expect to be spending most of my time doing other things.

kate

 

[playaman]

The simple truth is that finding "part-time" work that pays well is very difficult.

In my case, I convinced the board of directors of a nonprofit that I could do the job on a part-time basis for what they proposed to pay for a full-time employee (not much by business community standards but in line for similar nonprofit positions). I could not do it, however, if I had not been fortunate enough to have been "elected" to the board of a significant sized commercial enterprise a few years ago. That takes about three weeks of time per year, but when added to the nonprofit salary is more than enough for me to live on. The hardest part though is benefits: there are none, so I have placed myself onto my wife's insurance policy. We both plan to call it "quits" (but for the commercial board and volunteer boards) in two years.

 

[Sheryl]

The $10K was part of the $40K needed in my example.  The $40K is gross income that takes into account ALL expenses including income taxes.  That is how FIRECalc works.

Sorry 40 -  I was taking your example and extrapolating it to my own situation -  sometimes there are logical steps in my brain that I don't really explain in my post.   I'm really not crazy, I just seem that way to the outside world.

Sheryl, there is some sense in still trying to maximize the Roth at least, especially if you are at a low tax rate when you go into semiretirement. Do you have the possibility of using some income from your savings to live on so you can maximize the Roth contribution?

That's a good point.  Take the earnings from my taxable accounts and recycle them into the Roth to essentially "launder" them from future tax.  Yeah... I could do that.

I would love to work part time. But where do you find a job that pays well and is part time?...  ...Anything that pays more is self-employment which demands a bit more than remembering to show up in someone else's cube for 8 hours every monday.

For those without kids it will also raise some eyebrows about ambition.   Vicky

One of my options is sort of self-employment - to continue at the firm where I am a part-owner, but go to part time.  The other is to leave and free-lance part time.   My S.O. works in construction.  Our idea of "part time" is not 20 hours a week, but more like keeping up the regular pace for 6 months, then taking off for six months.  It all depends on scheduling construction projects, then taking off when they are done.  We REALLY hope to start doing our own design/building but when a single family lot can't be had for under $150k its a hard market to break into.

As to the "those without kids" question-  I've been there all my life, so I don't even notice the raised eyebrows.    Not having kids is what has enabled me to save enough money to FIRE -  and also to do what I want to do - travel, etc.  A lot of people think my lifestyle is strange - taking classes in weird subjects for no practical reason, flying off to strange countries whenever I can get a few days off...   It's not the right life for eveyone but it is what I want.

 

[sailor]

I would love to work part time. But where do you find a job that pays well and is part time? The only jobs I see that are part-time are direct labor type of jobs just above minimum wage.

Vicky - how much for you is just above minimum wage?
For example a part time nanny in Atlanta can get $15 per hour.
You can try to use craigslist for such job searches (we've used it to find our part time nanny).

My wife is working part time from home now and she is making $35 per hour (but no medical benefits, b/c of part time status) - I would say if you have marketable skills, you are good at something and people know about it there is somebody there to emply you.
It's way tougher to try to jump into "brand new" environment as a part time - but still possible - some employers do look for part time guys, since they don't have money for a full timer.

sailor

 

[retire@40]

Some people have a misconception about starting their own business.  They think it takes lots of money, it's a big financial risk, and specialized skills are needed that they just don't possess.

I know lots of people with their own business that have none of the above and are doing just fine.

A few examples are being a nanny, mowing lawns, pet-sitting, selling things on Ebay, any kind of car, home, or business cleaning service, making gift baskets, and I can go on and on.  Just be creative and think outside the box.  You have to do it for yourself because nobody else is going to do it for you.

 

[Martha]

Part time isn't working so hot for me. I do enjoy more free time and ability to travel. But I feel I still have a chain attached to work. I need my computer, email and cell phone everywhere because something might happen. My clients say, "you're gone again?". I am working maybe 60% time for 40% money.

Bad week at work. Tying up old bankruptcy trustee cases where there is no money left to pay me or anyone else. Working for nothing is never fun.

Let me outta hereeeeee!

 

[Nords]

Part time  isn't working so hot for me.  My clients say, "you're gone again?".

Sounds like that's the kind of client who needs to make friends with a new partner. How much longer do you have to think of them as "your" clients?

I am working maybe 60% time for 40% money.

I can't solve this problem but I'm curious.

I wonder if there's a sweet spot in this curve. Do you get more efficient at part time work as time goes by? Would being less available to clients reduce the number of problems you have to solve since they'll start solving the crisis-response time-wasters on their own? Is it a selection of better clients (after you shovel out the deadwood) to decide which are worth keeping and which need to be "fired"? Is it worth hiring a part-time assistant to handle the drudge work that sucks up 90% of your 60%?

 

[cute fuzzy bunny]

There are some part time jobs that pay well. But you need strong specific skills and a good network. And they probably wont run for more than a couple of years.

For example, I knew a guy who was very strong in developing high tech training curriculum. He dropped out, but kept his network alive. Every now and then someone would call him up and say "I need a couple of hundred pages of boilerplate for a training class in high speed networking...I need it by the end of the weekend (it would be wednesday), and I can pay $10k". He'd spend the next 4-5 days working 20 hours a day spinning together an outline and then filling it with stuff he grabbed from here and there, tailoring and tweaking it and turn it over. Same folks would have him go teach a one-off class off the top of his head with a whiteboard for a day, pay him 3-5k plus expenses.

I could have, and probably still could, do some consulting gigs for my old company. I'm sure one of my old vp bosses would love to have me cowboy up a program out of control or something radioactive that nobody else wanted to stick their political weener into. I could probably do 1-3 months a year, probably all in one chunk, and make 30-50k a pop for the gigs.

Couldnt be less interested. Although just thinking about it, maybe I'll try one. Might be fun to get out of the house, see what airports are like these days and get a good facefull of why doing it would be the worst idea I ever had

 

[Martha]

Sounds like that's the kind of client who needs to make friends with a new partner. How much longer do you have to think of them as "your" clients?

[whine] But they are mine, all mine [/whine]. I do have a partner for back-up who knows and works with my clients. Unfortunately he is about as busy as a human can be so guilt raises its head and I have a hard time dumping on him.

I wonder if there's a sweet spot in this curve. Do you get more efficient at part time work as time goes by?

No. I am getting less efficient every day. Here I am, chatting with all of you at my desk at work.

Is it a selection of better clients (after you shovel out the deadwood) to decide which are worth keeping and which need to be "fired"? Is it worth hiring a part-time assistant to handle the drudge work that sucks up 90% of your 60%?

I did pare down my clients to the best of the best, though I am having to get rid of some old bankruptcy deadwood, which is what is ruining my day. Got a new associate coming on in August.

I just have lost the taste for it all.

It is complicated by a odd circumstance. I have this part time arrangement that will pay me based on a formula we negotiated. I can guess pretty close where I will be by year end, and I am not thrilled with the money outlook for this year. On the other hand, based on our employment agreement, if I quit now, at mid year, I would get more money now than I would by working all year. This is because the midyear, pre bonus payout formula is based on my prior two year's work, which was fulltime.

By not quitting mid year, I am saying to myself, "self, you are planning to stay at least until mid year next year" when the formula again would give me more to quit midyear than to work a full year.

 

[uncledrz]

so Martha is it worth another year? I've some of the same frustration as you, but have been able to slice off all/most of the b.s. and just get my client base down to a core of good clients, and this has allowed me to enjoy the practice again. But if you don't, is it worth another year?

 

[Sheryl]

Part time  isn't working so hot for me.  I do enjoy more free time and ability to travel.  But I feel I still have a chain attached to work.  I need my computer, email and cell phone everywhere because something might happen.  My clients say, "you're gone again?".    I am working maybe 60% time for 40% money. 

Bad week at work.  Tying up old bankruptcy trustee cases where there is no money left to pay me or anyone else.  Working for nothing is never fun. 

Martha, this reminds me of me.  Substitute Architect for Lawyer and "old remodel projects" for "old bankrupcy trustee cases."   Still not getting enough fee, and not having fun, and wanting to be outta here.

I can certainly learn some good lessons from your experience.   Thanks for being the guinea pig 

 

[Nords]

I just have lost the taste for it all.

Was it really just last year that you weren't sure about ER?

Sounds like you're mentally ready now... How's the portfolio?