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-   -   Perpetual Self Employed Semi-Retirement (http://www.early-retirement.org/forums/f28/perpetual-self-employed-semi-retirement-37730.html)

ferco 08-05-2008 04:06 AM

Perpetual Self Employed Semi-Retirement
 
Be interested to know how many posters have ever considered never officially totally retiring. Does anyone "work" for themselves 15-20 hours per week at their leisure/own schedule and never plan to "retire". Taking time off per your own wishes and desire etc.Make enough to pay minimal or no taxes. Would this not ease some of the inflationary bumps/market variances and still keep the mind active particularly if you're doing something you love to do and its not really "work" but almost an avocation/hobby.

JoeDreaming 08-05-2008 05:49 AM

Hey, that's my plan! I currently have a full time j*b in IT. Evenings, weekends and holidays, I'm an artist selling my landscape paintings through a few art galleries. My plan is to retire from the IT day job soon, leaving more time for the artistic pursuits. Some might consider that 'just a hobby' but it does require quite a bit of work and I spend more time on the business side of my art than I do on the actual painting. On downer is that the art market is very fickle - in good years, I can make a decent income from my paintings, but when the economy is bad, the last thing someone wants to spent their $ on is original art.

I want to be FI when I quit the day job, then any income from my art will be a nice cushion. So I guess I will never really retire, I'll just make a career change to something that pays a lot less, but I really love doing. (Ok, maybe that is retirement then).

donheff 08-05-2008 06:02 AM

I have posted about my brother before. He is 75 and still working. He is a lobbyist so his work returns a lot more than a supplement. But for the past 10 years or so his schedule is pretty light. Since he is a solo practitioner he can control what he gets into - but he still has some crunch periods. He thrives on the activity - I can't imagine him quitting until his health fails.

socca 08-05-2008 06:40 AM

Quote:

Originally Posted by ferco (Post 694220)
Does anyone "work" for themselves 15-20 hours per week at their leisure/own schedule and never plan to "retire".

Edit this to 50-60 hours per week, and you have my situation. I don't plan to ever 'retire' - it looks boring, although admittedly I've never tried it. :D

Martha 08-05-2008 06:43 AM

Quote:

Originally Posted by JoeDreaming (Post 694226)
Hey, that's my plan! I currently have a full time j*b in IT. Evenings, weekends and holidays, I'm an artist selling my landscape paintings through a few art galleries. My plan is to retire from the IT day job soon, leaving more time for the artistic pursuits. Some might consider that 'just a hobby' but it does require quite a bit of work and I spend more time on the business side of my art than I do on the actual painting. On downer is that the art market is very fickle - in good years, I can make a decent income from my paintings, but when the economy is bad, the last thing someone wants to spent their $ on is original art.

I want to be FI when I quit the day job, then any income from my art will be a nice cushion. So I guess I will never really retire, I'll just make a career change to something that pays a lot less, but I really love doing. (Ok, maybe that is retirement then).

Hey, show us a picture or two! I love to see people's art and always wished I had the talent. But I don't.

Marquette 08-05-2008 07:16 AM

I have a side job already that averages about 10 hours a week over the year (but I go many months without taking on new work). I'm not sure how long I'll keep it up, but I have thought what it'd take to keep the work coming in over the next many years.

JoeDreaming 08-05-2008 07:41 AM

Quote:

Originally Posted by Martha (Post 694240)
Hey, show us a picture or two! I love to see people's art and always wished I had the talent. But I don't.

I'd love to show some of my work here, but since I revealed so much of my finances in earlier posts, I think I should try to stay anonymous, and showing some images might reveal my true identity. (But I'll PM you something if you promise to keep it secret).

rs0460a 08-05-2008 07:45 AM

Quote:

Originally Posted by ferco (Post 694220)
considered never officially totally retiring.

No.

- Ron

Nords 08-05-2008 09:09 AM

Quote:

Originally Posted by ferco (Post 694220)
Be interested to know how many posters have ever considered never officially totally retiring. Does anyone "work" for themselves 15-20 hours per week at their leisure/own schedule and never plan to "retire". Taking time off per your own wishes and desire etc.Make enough to pay minimal or no taxes. Would this not ease some of the inflationary bumps/market variances and still keep the mind active particularly if you're doing something you love to do and its not really "work" but almost an avocation/hobby.

Bob Clyatt ("Work Less, Live More") has always intended to work part-time, and he's been able to return to his love for art:
Bob Clyatt Sculpture Home

retire@40 08-05-2008 09:26 AM

I'm in that boat, although after seeing both sides, I'm sure I would be even happier being fully retired.

Just consider that $1 in earnings is equal to $25 of investable net worth. So, if you are willing to earn a few bucks, you don't have to work as long to save up what you need to fully retire. Even if you only earn $10,000 a year, it reduces your required savings by $250,000. For some, earning $10K a year is much easier than saving $250,000.

Semi-retirement may or may not be as good as full retirement, but it beats working full time.

ferco 08-05-2008 10:03 AM

Retire@40,
Could you "earn" the entire 10k and take it as (legitimate)business expenses (auto,postage,cellphone,health insurance etc) and essentially owe no taxes....I would think so.

GatorBuzz 08-05-2008 10:23 AM

Quote:

Originally Posted by retire@40 (Post 694348)
I'm in that boat, although after seeing both sides, I'm sure I would be even happier being fully retired.

Just consider that $1 in earnings is equal to $25 of investable net worth. So, if you are willing to earn a few bucks, you don't have to work as long to save up what you need to fully retire. Even if you only earn $10,000 a year, it reduces your required savings by $250,000. For some, earning $10K a year is much easier than saving $250,000.

Semi-retirement may or may not be as good as full retirement, but it beats working full time.

Interesting. But are you saying that you have to work for the rest of your life for that 10k a year or until 65 or...? How are you calculating the 1/25 ratio?
Thanks.

lucija 08-05-2008 11:06 AM

Quote:

Originally Posted by GatorBuzz (Post 694385)
Interesting. But are you saying that you have to work for the rest of your life for that 10k a year or until 65 or...? How are you calculating the 1/25 ratio?
Thanks.


I am not retire@40, but I believe he was illustrating that $250k worth of investment assets should be able to support $10k withdrawals in perpetuity -- this is assuming you subscribe to the 4% SWR (i.e., 4% of $250k is $10k). So, to answer your question, in lieu of $250k worth of assets, you will either need to continue with the part-time job forever or until the $10 can be replaced with SS income (assuming you are not already accounting for SS $ in your assumptions/calculations).

GatorBuzz 08-05-2008 11:10 AM

Thanks, lucija. That makes sense. I wasn't picking up on the 4% angle. I never did well in math. :)

samclem 08-05-2008 11:27 AM

Quote:

Originally Posted by ferco (Post 694374)
Retire@40,
Could you "earn" the entire 10k and take it as (legitimate)business expenses (auto,postage,cellphone,health insurance etc) and essentially owe no taxes....I would think so.

Depending on the biz, you might be able to claim some expenses like these (add home office, travel, etc). The IRS expects that you are in business to make money and gets suspicious when the endeavor doesn't make money. If audited, they'll look at everything concerning the activity (are you running it in a businesslike manner? Have you made money in the past doing similar things, etc). From what read, they leave you alone if you've made money 3 out of the last 5 years. If not-they'll asume it is a hobby, not a business, and you'll have some explaining to do. You can't write off the expenses for a hobby

Also, having a business allows you to put away money tax-deferred in a SOLO 401K or a SEP. This can be quite a chunk of change. If you don't have other health insurance, you can also save on taxes through use of a health savings account.

antmary 08-05-2008 11:27 AM

perpetual self employed semi retirement
 
I plan to work/play until my last day; I have planned for it for many years. Now we own an herb farm; I consider it as an asset to keep me engaged in life, and robustly healthy as well. I would be growing a garden anyway...also it dovetails well into my art work. Finally, it is great fun for me to make money! Thanks for the post!
Mary

haha 08-05-2008 11:32 AM

Quote:

Originally Posted by GatorBuzz (Post 694407)
Thanks, lucija. That makes sense. I wasn't picking up on the 4% angle. I never did well in math. :)

The shortcut of taking job income and mutiplying by 25 will in some ways overstate the job's value, and in some ways understate it. It understates because when you are employed money isn't the only thing you get. You also are staying connected to employment opportunities and networks, and maintaining habits and skills that make you suited to working- if only waking up to an alarm clock!

If for some reason you find that you need the job to provide more income, you at least might have a fighting chance to accomplish that.

At the same time, in a purely mathematical sense, a multiplier of 25*income is too great, since the job often is not expected to be infinite or very long duration. It would seem that a better value estimate might come from an inflation adjusted period certain annuity quote.

Ha

retire@40 08-05-2008 11:41 AM

Quote:

Originally Posted by ferco (Post 694374)
Retire@40,
Could you "earn" the entire 10k and take it as (legitimate)business expenses (auto,postage,cellphone,health insurance etc) and essentially owe no taxes....I would think so.

When I said $10K, I meant after expenses.

No point in earning a gross of $10K and paying $10K in business expenses. Might as well not work for the $10K.

However, you could subtract a contribution to your SEP-IRA or similar retirement plan once you have self-employed earnings. That would be a simultaneous deduction and a tax-deferred savings.

If you turn your hobby into a business, you could also deduct some expenses that would otherwise not be deductible. There are many rules to follow, so you need to know what you are doing to to it right.

ferco 08-05-2008 11:52 AM

I like the idea of slow deceleration..............seems more physiologic and natural; ie., 40 / week --> 20 / week --> 10/ week. Maybe its just an observation (anecdoctal), but a fair number of people I know once retired in the traditional sense, seem to decline mentally and are not as sharp and also begin to have all sorts of infirmities and in some cases "early" death. However, maybe its different for the ER cohort; anyone have any other observations?

GatorBuzz 08-05-2008 12:14 PM

Quote:

Originally Posted by haha (Post 694418)

At the same time, in a purely mathematical sense, a multiplier of 25*income is too great, since the job often is not expected to be infinite or very long duration. It would seem that a better value estimate might come from an inflation adjusted period certain annuity quote.

Ha

Yeah, exactly. Once I picked up on the rationale as being the 4% rule (yeah, so what, it took someone pointing it out to me ;D) I came to the same conclusion.


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