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Anyone ever intermittently ER'd?
Old 05-19-2009, 12:40 PM   #1
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Anyone ever intermittently ER'd?

I'm thinking along the lines of semi-retirement. But instead of part time work on a fairly steady basis, intermittent ER would consist of working full time at a regular job for a while and then taking off for a year or two.

The idea would be to make enough in 2 or 3 years working to live on for another few years after that while you weren't working. Maybe 3 on, 2 off or 3 on, 1 off. I'm thinking the plan would be a nice way to finish up accumulating whatever size portfolio you desire. For example, if you reached 60-80% of the desired portfolio value, then began the intermittent ER lifestyle, you should be able to make enough from working to fund a year or two off every once in a while, plus throw a little into the ER portfolio. Small contributions to ER portfolio plus earnings from the portfolio itself would eventually give you 100% of your targeted portfolio value (in theory anyway ).

Does this idea sound crazy? Has anyone ever intentionally done this?

One way to "juice" this idea a little is to stagger your start dates and end dates to make sure you work a partial calendar year on either end of your working stints to take advantage of much lower tax rates for lower income individuals.

There are obviously a number of upsides and downsides to this type of plan. Con: Establishing a patchy work history could hurt your job prospects in the future (if it matters and you aren't FIRE anyway). Patchy work history could also hurt your reputation among your network, since folks would be less likely to go out of their way to help you get a job if they thought you would just quit it after a few years. Seems like the reality is you couldn't "take a year or two off" more than 2x without establishing a history and reputation as a perpetual slacker. Unless you switched careers or moved to a new geographic location. Another con: Delay in receiving benefits after starting a new job, like health insurance, 401k participation and vesting, profit sharing plans/matches, etc. Long term salary potential MAY be hurt, or maybe not since getting a new job is frequently a good way to get a salary bump, especially if hired with the tailwind of a strong economy and thin labor supply in your market.

Pro: lots of free time off earlier than you would have otherwise. And while you are still young. And it may fit in just right with your personal life (ailing parents, young children, etc). Husband and wife team could take turns intermittently "ER'ing". You may also have time to refine marketable skills that boost your earning potential. Or serendipitously stumble upon something you excel at that you can monetize, and even enjoy doing. Another pro for the idea is if you can combine a buyout package, layoff w/ unemployment insurance, nice severance package, etc with the period of intentional unemployment.

I have considered the idea personally. Not quite at that magic 60-80% of my target portfolio value yet though, so still at least a few years away from implementing something like this. And DW has said "no" to the idea of husband-wife intermittent ER tag teaming. We do have young children though, so I think I have an easier explanation (for 16 more years at least) than some male peers if I do ever decide to intermittently ER - ie "I took a year off to take care of the kids and be a househusband".

Thoughts?
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Old 05-19-2009, 12:46 PM   #2
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There are a million ways to skin a cat, as the saying goes.

All I can say is that for me, this would just prolong the agony. I would want to keep working until I could afford to stay retired forever. Then I would not have that future return to work hanging over my head. My time off would be far more valuable to me if I had permanently retired.

Each of us is the inventor of our own lives, so to speak.
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Old 05-19-2009, 01:05 PM   #3
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A lot of nurses do this especially in tourist areas . They work during the busy season at premium rates and make enough in six months to take the next six months off . As long as they keep their education credits current there is no problem with it . I Er'd in stages .I started by going three days a week and then I progressed to per diem which was basically three days but I could take off for a month whenever I wanted . My last job was just one day a week and when that became annoying I knew it was time to fully retire .
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Old 05-19-2009, 01:06 PM   #4
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All I can say is that for me, this would just prolong the agony. I would want to keep working until I could afford to stay retired forever. Then I would not have that future return to work hanging over my head. My time off would be far more valuable to me if I had permanently retired.
That's a good point. I guess it depends on your perspective. I'm targeting an ER around age 40 with kids not quite yet in college. So at that point even a full ER won't really be a full ER since one would never know if they are permanently retired forever (even with a substantial portfolio plus some cushion). So the prospect for needing to return to work wouldn't be as scary in my situation whether it was very unlikely (ie I have 100% of what I think I need to FIRE) or very likely (I intermittently ER with only 60-80% of what I need).
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Old 05-19-2009, 01:19 PM   #5
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I think if I were in an occupation where I was confident of my ability to get another job when it was time to start working again, I might consider this.

Being in the IT area isn't one of those occupations. And letting go of a job voluntarily over 40 is starting to take a leap of faith that age discrimination won't bite you in the butt.
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Old 05-19-2009, 03:03 PM   #6
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I would be worried about a spotty work history turning off potential employers down the road. Plus I am in a field where keeping my competences up to date is a must and I would probably be at a competitive disadvantage if I took an extended period of time off. I would personally favor working until I have reached my full FIRE target or, as I get closer to the target, permanently switch to a less demanding career.

Also, I keep hearing that peak earning years are now in one's 40's. Average incomes apparently start sliding in one's 50s due to a number of factors. If you lose your job in your 50's for example, it's harder to find another job paying as much as or more than the job you've just lost. It's also a decade where many people develop disabling health conditions that could prevent them from going back to work. Because I don't want to wake up one day in my 50's and realize that FIRE has just slipped out of my reach, my goal is to achieve FIRE as fast as I can, and certainly by the age of 45-50.
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Old 05-19-2009, 04:25 PM   #7
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If your spouse has medical, or you have a small pension with medical - then you have a great idea.

Friend of mine ER'd with a small pension and medical. He now takes jobs with small companies as a contractor with no benefits.

He lives in a part of the country for a year or so, then finds another job in another part of the country - and takes a couple months for travel inbetween.

Key benefit he has is the small pension is a "backstop" - if he didn't work, he could live off it. And he has continuity in medical.
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Old 05-19-2009, 06:09 PM   #8
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I'm kinda doing this as I have been eldercaring the past 5 years, but plan to go back to work building some business when my duty is done and work, then not work, then work, then not work.
My Dad would take a year or two off and then go back to his godawful hours of work again. Lived to 90. Maybe that's the secret.
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Old 05-19-2009, 07:54 PM   #9
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I sorta did this, but my situation was unusual.

I retired from the Navy and had no concrete plans about where to work afterwards (although I definitely planned to work.) My wife was working at the time, so there was a cushion. But, we learned, we could do just fine on my Navy retirement.

My stated goal was to take 90 days off and then start working. It took more like 120 days.

I got a job (#1) which I kept for 2 years. I got sick of it and quit with no concrete plans.

About 3 months later, I got another job (#2) which I liked reasonably well and stayed there about 18 months. I probably would have stayed with them, but I saw an ad for a job at a university near my house. I always thought it would cool to work for a university and, even though it meant a pay cut, I quit job #2 and went to work for the university (job #3). About 2 years later I got bored with it, quit and took about 4 months off. Somebody called me and offered me job #4 (which related to my Navy career) and I took it. After about a year I found the commute (>1 hr.) to be too much, so I quit. I took a few months off and another colleague from earlier times called me and offered me a job (#5) which I took. I hated that job and lasted about 9 months. I quit that and retired for good.

Now, what I did would be crazy under normal circumstances, but I had health care (both from my wife's job and, even if she quit, from the Navy), a steady stream of income through my pension and I was saving/investing (not spending) most of the money from these civilian jobs. My neighbors, who didn't have the same flexibility, thought I couldn't keep a job. But, except for the university job, I got a nice pay bump each time I changed jobs.
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Old 05-20-2009, 01:11 PM   #10
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Fuego, we are in the situation where we are at 80%+ of target but not quite where we want to be. If my DH was to lose his current position, we probably would not look for full time work for either of us. We have calculated if we could work 1,000 hours a year between us that combined with our current stash would give us enough to comfortably live on and likely put a bit away. However, given our skill sets, it is most likely that I would pick up the majority of these hours.

If you run the numbers I am certain that it is better that either 2 of you work part time or only have one partner working at a time as the 2nd income pushes us into higher income tax rates.

The other benefit with both doing part time is your social security credits are always current in case of disablement. Not a major consideration, however if something was to happen to either of you, that would be an ace in the hole.

Of course this scenario is a lot easier for us as we can fall back on the national health system in Australia, also private health care is much more affordable in Oz.
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Old 05-20-2009, 01:24 PM   #11
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I did something like this before I married, though I didn't frame it that way. I thought I was just another hippie, but one with a much more secure job skill than labor, petty theft or dealing.

I didn't carry medical, didn't own a home. A small apt at the beach, a car, and some fishing gear. I would work until I had a few thousand, then quit and go to Mexico. I'd stay, mostly fishing and camping near campesinos that I knew and to whom I distributed a few USDs. I would come back when I was almost out. Once I cut it too close and had to have a buddy wire me money for gas to get home. That cured me and I decided that it was no longer a very relaxing way to live.

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Old 05-20-2009, 01:39 PM   #12
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Jobshopper - aka contract engineer. Did it in two stints about 2 yrs after getting layed off for a total time of a little over a year.

Depending on your skill set - there a a variety of companies waiting to put you to work.

I still have one friend jobshopping in Huntsville - in his 70's - adult kids came home and haven't left yet. .

It's like being a landlord - either you master the skill set and take to the lifestyle or not.

I chose ER.

heh heh heh - . And cheap bastardhood - and sold the duplex to consume the proceeds. I would have walked uphill to school both ways but I was too old and it would have messed up my ER. .
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Old 05-20-2009, 01:50 PM   #13
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If you run the numbers I am certain that it is better that either 2 of you work part time or only have one partner working at a time as the 2nd income pushes us into higher income tax rates.

The other benefit with both doing part time is your social security credits are always current in case of disablement. Not a major consideration, however if something was to happen to either of you, that would be an ace in the hole.
More good points, thanks! The tax hit going from one person working to both working is huge for us. With one working, we pay basically zero taxes (lots of kids and other deductions/credits). With two working, we are phased out of a lot of deductions and credits and pay WAY more taxes. So marginal income for the second person working is much less. Hence the desire to just scrape by on one income or a full income for a part of a year - no more taxes for us!

Definitely a huge point about the SS credits. Disability and survivor benefits phase out after a certain period (2 yrs or 10 years?) if you don't have credits paid into SS. We have 2 very young children, so we would get a MASSIVE windfall from SS survivor benefits should one of us kick the bucket prematurely. For us, this negates the need for supplemental life insurance as long as we are working and have SS survivor coverage.
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Old 05-20-2009, 01:58 PM   #14
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I did something like this before I married, though I didn't frame it that way. I thought I was just another hippie, but one with a much more secure job skill than labor, petty theft or dealing.

I didn't carry medical, didn't own a home. A small apt at the beach, a car, and some fishing gear. I would work until I had a few thousand, then quit and go to Mexico. I'd stay, mostly fishing and camping near campesinos that I knew and to whom I distributed a few USDs. I would come back when I was almost out. Once I cut it too close and had to have a buddy wire me money for gas to get home. That cured me and I decided that it was no longer a very relaxing way to live.
After I posted this thread, I realized that I was basically summarizing the lifestyle of the stereotypical hippie of the days of yore. Work for a while, save up some money, then bum around Europe/Asia/India/Mexico. Except, like you may have experienced, there are certain challenges to wrapping this lifestyle around a nicely paying professional career.
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Old 05-20-2009, 02:24 PM   #15
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After I posted this thread, I realized that I was basically summarizing the lifestyle of the stereotypical hippie of the days of yore. Work for a while, save up some money, then bum around Europe/Asia/India/Mexico. Except, like you may have experienced, there are certain challenges to wrapping this lifestyle around a nicely paying professional career.
And in a particularly competitive job market, all those gaps in the employment history could be a deal-breaker.
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Old 05-20-2009, 02:45 PM   #16
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I have friends who have been doing this for years. But they work 10 months a year and take 2 off; and every 3 years or so, they'll take about 6 months off for a long trip someplace. Their skills are very compatible with contracting, so that's all they do - they never join a company full time.
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Old 05-20-2009, 03:09 PM   #17
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And in a particularly competitive job market, all those gaps in the employment history could be a deal-breaker.
Sure but you could always fill those gaps with some half-truths. "I was learning X new skill". "I was working on starting a company doing Y". That might even show ingenuity, go-getter attitude, independent thought process, showing initiative, etc. etc. YMMV on how far those perceived traits would actually get you...
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Old 05-20-2009, 03:21 PM   #18
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Sure but you could always fill those gaps with some half-truths. "I was learning X new skill". "I was working on starting a company doing Y". That might even show ingenuity, go-getter attitude, independent thought process, showing initiative, etc. etc. YMMV on how far those perceived traits would actually get you...
True -- but again, it comes back to the occupation AND the job market for that occupation. Significant gaps in employment for an IT guy, for example, would be almost certain career death with only a few possible exceptions (such as a couple years off to get an advanced degree).
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 05-20-2009, 05:32 PM   #19
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More good points, thanks! The tax hit going from one person working to both working is huge for us. With one working, we pay basically zero taxes (lots of kids and other deductions/credits). With two working, we are phased out of a lot of deductions and credits and pay WAY more taxes. So marginal income for the second person working is much less. Hence the desire to just scrape by on one income or a full income for a part of a year - no more taxes for us!
Fuego, we have almost found it to be detrimental to our lives to have us both working. When we do the taxes are horrendous and as you say deductions phase out. We have found our quality of life has improved immensely by having DH in the major breadwinner role and me playing the supporting role. Our health has improved as we both sleep better as I don't get up early for work anymore, we don't eat out as often, we don't throw out as much food as I have time to cook based on what we have on hand.

It is probably looking at what skills you have to see if your could transition to something that you could easily pick up and put down as you choose. I am an accountant so it's easy to find piecemeal work. There is no real continuing education as I am not CPA or taxes so the type of accounting I do doesn't change. DH on the other hand is an engineer and we know once he is out he is unlikely to get back in. He is thinking about retraining as a high school teacher and just doing say one semester of relief teaching a year.
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Old 05-20-2009, 08:47 PM   #20
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If you were self employed that would solve a lot of issues concerning the gaps in employment. It might take more than 2-3 years to get up and running though, but you could sell the business and take the proceeds to live off of for 2-3 years and put the rest in investments. Rinse and repeat (watch out for the non compete clause).
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