FIRE and friends

[CuppaJoe]

Welcome to the forum, MBAustin. Being 99% certain may be more than enough. Keep us posted.

 

[ChrisC]

Michelle, I'm just curious where you have encountered all these people that don't spend much and save enough to be FI yet keep working. I know it isn't that hard to do it, as evidenced by all of us here that succeed quite well. Just never seen a big concentration of people that are FI yet keep clocking in every day.

Well, I've encountered a lot of these people in my profession and my job; most of them are not in "big law firms" but firmly entrenched in public servant positions. I also know lots of professionals or people in trade skills who have saved enough for retirement but keep on working because their work is a labor of love or work fills up their time. I came to this forum several years ago, with the ability to early retire, but I'm still working and I don't really need the extra income. I'm not yet tired of all the BS at my job -- and I actually like my work -- but my patience is wearing thin with each working day.

I'm with Michelle's thoughts here; and my sense is that the inhabitants of this forum are not very representative of most people with the financial ability to retire.

 

[harley]

Well, I've encountered a lot of these people in my profession and my job; most of them are not in "big law firms" but firmly entrenched in public servant positions. I also know lots of professionals or people in trade skills who have saved enough for retirement but keep on working because their work is a labor of love or work fills up their time.

I'm curious. How do you "know" these people have saved enough to retire but choose not to? I know a fair amount of people, but there's only a small handful whose financial situations I am relatively familiar with. I guess at a lot of them, but it's at best an educated guess. And I know a fair number of public servants, and I don't think a single one of them continues in their jobs because of a labor of love. Maybe a few because it fills their time, but I don't think many. I would venture to guess that 100% of them would quit their jobs if they won the lottery.

I'm with Michelle's thoughts here; and my sense is that the inhabitants of this forum are not very representative of most people with the financial ability to retire.

I'm not exactly sure what you're saying here. How are we not representative of most people with the financial ability to retire? Maybe it's just a POV issue. This forum is for people who desire to become FI and possibly to retire early. Maybe you are talking about those very few (percentage-wise) who make so much money that they could retire, but don't because of some other draw to their careers - power, or public acclaim (politicians, actors, sports stars). But I don't think there are that many ordinary people who work and save to become FI but then choose to continue working.

 

[FUEGO]

I'm curious. How do you "know" these people have saved enough to retire but choose not to? I know a fair amount of people, but there's only a small handful whose financial situations I am relatively familiar with. I guess at a lot of them, but it's at best an educated guess. And I know a fair number of public servants, and I don't think a single one of them continues in their jobs because of a labor of love. Maybe a few because it fills their time, but I don't think many. I would venture to guess that 100% of them would quit their jobs if they won the lottery.

I had that same question. How do you really know these people are financially independent? People often talk a big talk, exaggerate, embellish, boast, etc when the reality may be different from how they talk. Sometimes people will try to convince themselves that they are well off and could quit any time "if"...

If they sold their house, vacation house, extra cars, etc and moved to a low cost of living area and closely watched their money (which they have done well the last 20-30 years).

If their lottery numbers hit next week.

If they get 10% returns every year in the stock market and they can pull 10% per year from their portfolios in a zero inflation environment.

If their latest invention/biz idea takes off and they can get an IPO.

If real estate values just would have kept going up 25% a year like they used to.

Etc etc etc.

Unless I knew someone who had a government pension lined up to replace 100% of their income and I had a good idea that they were living within their means currently, I don't think I would assume they could afford to retire but just love working too much to quit. I "love working too much to quit" right now because it provides a paycheck that enables me to buy food, gas, pay the mortgage, etc.

I find this topic very interesting though. I really don't know anybody who is FI and just loves their job so much that they stick with it. If anything, the folks I know in the public sector doing what I do are "just putting in their 30 years" to a greater extent than folks in the private sector. And this spans a number of government agencies in different disciplines and at different levels that I have worked for or currently work with (as a private consultant). To a person, I can't think of anyone who had their 30 years and just couldn't help but stick around running up the clock. I'm sure they exist somewhere, I have just never encountered them personally. Maybe professors would fit into this category, but of the many that I know/have known, most of them hang it up around 30 years or shortly thereafter.

I can't imagine a local government agency staffed with a bunch of millionaires with fully vested pensions, all sitting around bitching about the upcoming staff meeting, drinking stale watered down coffee, bitching about the boss, office politics, etc. I guess those that are truly FI but love their jobs and keep at them are doing something meaningful? That's hard to find these days.

 

[Milton]

In contempory Western society, personal financial details are essentially a taboo topic, even (especially?) among family and close friends. So it is effectively impossible to know whether someone is genuinely FI and working by choice rather than necessity.

People often talk a big talk, exaggerate, embellish, boast, etc when the reality may be different from how they talk.

I agree. Certainly many people talk it up at work about how they "don't need this", they can "quit at any time (they) want", and so forth. But they almost never do quit ... which suggests that they are full of hot air.

 

[W2R]

I find this topic very interesting though. I really don't know anybody who is FI and just loves their job so much that they stick with it. If anything, the folks I know in the public sector doing what I do are "just putting in their 30 years" to a greater extent than folks in the private sector.

I knew a man in his mid to late 70's at my (former) agency, who would have received a hefty pension had he retired. He wasn't motivated to work too hard. His job was not especially stressful, though it was repetitive since he was more or less a glorified clerk.

He lives with his wife of 50+ years in a small, paid off house and they live a very simple lifestyle. His children and grandchildren live close by and they spend a lot of time together. Talking about them makes his eyes light up.

He didn't want to retire, and in fact seemed distressed that I wanted to do so. I could see four reasons for his reluctance to retire:

(1) He felt like people often just died after retiring, and that retiring was giving up on life;
(2) He wanted the time away from his wife;
(3) He liked the social aspects of work, felt it kept him young, and thought he would be completely bored without work and the interactions with others that it entails; and
(4) He was spending the extra money on doing good works with/for Catholic Charities, helping the poor, and this meant a lot to him as he is a devout Catholic.

The last (4) may have been the most important to him.

 

[FIYes]

I worked with a few people who continued working for years after they qualified for a very good pension. While there were aspects of my job that I liked, I personally felt that there was more to life than spending hours per day in cubicle (office politics and cubicles were definitely aspects I did NOT like). I have enjoyed my post retirement life so much and I think that is an important aspect of the FIRE decision----having a life outside of work. The people I know who have continued working well past typical retirement age in spite of the availability of a good pension, by and large haven't had many interests outside of work.

 

[FUEGO]

Such people do exist. My wife - employed in the private sector - is FI several times over (thanks to generous compensation and a LBYM lifestyle), but will not retire for at least the next few years; she derives a great deal of satisfaction and status from her work. I have no doubt that there are other people similarly situated, although perhaps they are rather fewer that Michelle or ChrisC believe.

I will say I have worked directly in a very small group with two people who I suspected may have eventually ended up like this (working well past FI). In both cases, they had very plum government jobs with full pensions that would provide a very handsome six figure fully COLA'd sum in their early to mid 50's. Salaries at the time were close to $200,000 in one of their cases, and around $150,000 for the other.

The first guy is probably rounding the corner on 30 years service right now. He's still in the saddle. But he reports directly to the top elected government official of the government he works for. He has worked there virtually all of his career. He is the second most highly compensated employee in this government that employs a few thousand people. His direct reports are six highly competent professionals who have also been with this agency mostly 20+ years (all handsomely paid), and a handful of support staff. He basically sets his hours, takes long vacations to Europe, and loves life. He is on tv frequently, sound-byted, quoted in the paper, etc. The elected officials (who are mostly nice folks too) hang out in his office, shoot the breeze, and trust him. He may stick it out past 30. He made need the money to support his lifestyle to which he is accustomed. I don't know enough about his personal finances to guess one way or the other. But he likes his free time, likes spending time with his ever increasing brood of grandchildren. Eventually the other attractive things in life take away the beauty of the workaday world, even if your job is this guy's job.

I agree. Certainly many people talk it up at work about how they "don't need this", they can "quit at any time (they) want", and so forth. But they almost never do quit ... which suggests that they are full of hot air.

Actions speak louder than words. Some just shut up and do it. Others keep complaining. Because they can't do it.

 

[michelle]

I had that same question. How do you really know these people are financially independent? People often talk a big talk, exaggerate, embellish, boast, etc when the reality may be different from how they talk.

A fair question. One of my hobbies is doing tax returns for people for next to nothing; skills I acquired in a former life. My reputation has grown and last year I did almost 20 for various colleagues and friends. So I have an inside look at some people I know.

These people do exist and they are not small in number. Even then, your argument of "It can't be proven, and therefore likely does not exist" falls flat. The absence of proof of a fact does not verify that the opposite is true. In this case, the proof is only absent to you.

In contempory Western society, personal financial details are essentially a taboo topic, even (especially?) among family and close friends. So it is effectively impossible to know whether someone is genuinely FI and working by choice rather than necessity.

Prior to my tax return hobby, several close friends and colleagues shared their personal financial information with me. Friends having deep and interesting conversations will do that when the trust each other. However, in my observations, you don't have to actually know people's personal financial situation to know that they are financially independent. It is obvious in the way they carry themselves at work. They don't become embroiled in politics. They don't complain about meetings or anything at all. They are calm and pleasant to be around. If you think back to your working days, perhaps you will remember some colleagues like this. The last place you would find these people is posting on the ER boards.

I guess those that are truly FI but love their jobs and keep at them are doing something meaningful? That's hard to find these days.

Not that hard at all, but certainly hard to find amongst the group that posts here.

 

[ziggy29]

I'm curious. How do you "know" these people have saved enough to retire but choose not to? I know a fair amount of people, but there's only a small handful whose financial situations I am relatively familiar with. I guess at a lot of them, but it's at best an educated guess. And I know a fair number of public servants, and I don't think a single one of them continues in their jobs because of a labor of love.

Pretty simple, really. When the economy sucks and jobs are almost non-existent, many people want a much higher "margin of safety" in their retirement calculations before pulling the plug.

Put another way: If decent jobs were plentiful and I was pretty sure I could quickly find a decent job if I needed it, I'd be comfortable retiring even with only an 80% historical success rate. But in *this* economy and *this* job market, I'm not sure I'd even do it with a 95% success rate. I'd probably want more like 98% to voluntarily retire into this economic mess.

So the odds are good that they *do* have enough, but uncertain times with low confidence cause people to reach for -- and cling to -- all the security they can find, and that means holding on to jobs they probably don't *need* to keep.

 

[MasterBlaster]

These "can't give it up" posts reminded me of the businessman I met a few years back.

I posted about him in a 2006 post...

I was out looking at cars last Friday when I saw a car that I was casually interested in. I could write a whole nother' post on this adventure however..., The salesguys kept trying to close the deal which I, of course, resisted. Their last move was to have me talk to the owner of the big dealership in the big plush corner office overlooking the dealership.

Well the owner, a very personable guy about 70 or so, told me his story. He had owned (simultaneously) 16 new car dealerships and sold them all so that he could retire. He took first class round' the world cruises, tried golf, and was bored stiff. So after sitting on the sofa for a year he bought the dealership that I was in "just for fun". Guessing from this guy he must be worth several hundred million dollars.

I told him that I was considering retirement but had not made the leap yet for the very issues he raised. We had a long talk about retirement, cars, and traffic in the Southern California. I liked the guy but never agreed to purchase the car.

In a way I admired this guy. Besides being a very successful businessman, he was in his element, he was around what he loved, and at that dealership it was never a dull moment.

I keep wondering what I'll do once I pull the plug. Maybe I can sell used cars...

here's the thread if you are interested...

http://www.early-retirement.org/forums/f29/fire-isnt-for-everybody-20347.html

 

[FUEGO]

So the odds are good that they *do* have enough, but uncertain times with low confidence cause people to reach for -- and cling to -- all the security they can find, and that means holding on to jobs they probably don't *need* to keep.

I would say if they need to keep working because they don't feel like their portfolio would have a high enough chance to support their spending, then they aren't quite financially independent.

Otherwise I guess I could say I am financially independent today. Yet I choose to continue working. Why? Because historically my portfolio would have failed to support me more than half the time. And I would have to cut out a lot of spending that enriches my life - sacrifices I'm not willing to make. Am I financially independent? Not in any meaningful way.

 

[ziggy29]

I would say if they need to keep working because they don't feel like their portfolio would have a high enough chance to support their spending, then they aren't quite financially independent.

True. But I guess what I was addressing was the ER part separate from FI. In other words, when the economy is great and jobs are sprouting up all over the place, you don't need to feel quite as FI in order to take a chance on pulling the plug. But when the job market is horrible and made worse by the rampant age discrimination which exists in a lousy job market, you're likely to require a lot stronger feeling of FI before you're willing to call it quits.

 

[FUEGO]

True. But I guess what I was addressing was the ER part separate from FI. In other words, when the economy is great and jobs are sprouting up all over the place, you don't need to feel quite as FI in order to take a chance on pulling the plug. But when the job market is horrible and made worse by the rampant age discrimination which exists in a lousy job market, you're likely to require a lot stronger feeling of FI before you're willing to call it quits.

I agree - being "financially independent" is a rather subjective status. It can depend on what you have, what you spend, and the relative safety of the expense-to-net worth ratio.

For some it means an old VW bus, $100 for gas and a spirit of adventure. Others, like some here, require multi-million dollar portfolios that can support their expenses with a 2% withdrawal rate, a paid off house, and no other debt. Most fall somewhere in between.

I would say that anyone who doesn't feel their invested assets can support them with an acceptably high degree of expected success is subjectively not financially independent yet.

 

[ChrisC]

How do I know the people I work alongside are financially independent and can retire and yet still work because (1) they think work is better than not working at this time, (2) they like passing the time at the job and the job is like their social network, (3) they truly like working, or (4) they don't feel comfortable socially or professionally not working, especially if they have a spouse that would continue to work.

I know this because many of them have Federal retirement pensions (CSRS or FERS), where in some CSRS cases they will draw 60-70 percent of current gross income, they also have matching 401K plans (agency plus TSP) where their employer contributes up to 10 percent of their salary subject to IRS limits and many have principal balances in excess of $500K-$1million, and several of them are, in fact, already collecting social security benefits at 66 (for FERS) or military reserve retirement pay! They also travel a lot on vacation and accumulate 5 weeks of leave each year. Each one has told me he or she is financially able to retire -- I take them at their word. And many are married to spouses with high income levels too with the house already paid!

When you compare the net salary they deposit each month vs. the monthly retirement annuity they would receive the difference is so marginal, like 7-15 percent for CSRS participants. When you add the draw they could get from their 401Ks, they are truly in a sweet spot. And it's not like these folks are working for their heirs.

On the private sector side, I know Federal or State retirees working in private practice at outrageous compensation levels just for more money and for a different environment. And some who have come back to the Government as re-employed annuitants, after stints in private practice; the economy has not driven them back to the workforce, but the hunt for more challenges. They simply don't know what to do without work!

 

[Amethyst]

where in some CSRS cases they will draw 60-70 percent of current gross income, they also have matching 401K plans (agency plus TSP) where their employer contributes up to 10 percent of their salary subject to IRS limits and many have principal balances in excess of $500K-$1million,

Well, CSRS is a good deal, but let's not exaggerate...No matching TSP contributions for CSRS. No SS, either. And the high-3, on which the pension is based, is only as high as the not-very-high salary.

Anyway. Where I work, there is considerable peer pressure to retire and return as a contractor - because not to do so, would be "leaving money on the table" which somehow = Loser. I have never heard anyone say they've come back because they love the work, or even that they need the money.

As for my attitude about all that, my profile comment about peer pressure pretty much says it all....

Amethyst

 

[ChrisC]

Well, CSRS is a good deal, but let's not exaggerate...No matching TSP contributions for CSRS. No SS, either. And the high-3, on which the pension is based, is only as high as the not-very-high salary.

Anyway. Where I work, there is considerable peer pressure to retire and return as a contractor - because not to do so, would be "leaving money on the table" which somehow = Loser. I have never heard anyone say they've come back because they love the work, or even that they need the money.

As for my attitude about all that, my profile comment about peer pressure pretty much says it all....

Amethyst

Not exaggerating at all. Some agencies provide their own 401k in addition to TSP, so some Federal employees can take advantage of CSRS plus an agency funded 401k plan with matching contributions. And some of these same agencies are off the General Schedule, like the Federal banking agencies, the SEC, the Smithsonian (for some employees), etc, so the salaries exceed, in many cases Cabinet Secretary, levels. In essence, the salaries/grades are about 30 percent higher than comparable salaries/grades at GS or SES levels.

Well, I have loads of "retreads" back in my workplace. Not contractors either.

 

[ziggy29]

Well, CSRS is a good deal, but let's not exaggerate...No matching TSP contributions for CSRS. No SS, either. And the high-3, on which the pension is based, is only as high as the not-very-high salary.

Knowing what I know about CSRS, if I were in it and I felt confident I could get a secure 30+ years in, I'm not sure I'd be too concerned about my TSP, and pretty sure I wouldn't worry about how stock market performance would impact my retirement.

Let's put it this way: How many of the "Hi, I Am" introductions among new retirees have been from private sector people in their late 40s, 50s or even early 60s with no pension? I don't begrudge them what they've earned, but I think it's pretty clear a good, legacy pension is *the* main differentiator between the early retirement haves and have nots in this day and age.

 

[Leonidas]

I knew a man in his mid to late 70's at my (former) agency, who would have received a hefty pension had he retired. He wasn't motivated to work too hard. His job was not especially stressful, though it was repetitive since he was more or less a glorified clerk.

I worked with a man who is similar - except he's 92-93 and still working. He has been saying for years that the only reason he won't retire is because he is convinced he will die. The lump sum portion of his retirement has to be close to a million dollars, and the annuity would be the max of 75%. But he comes to work every day and flirts with all the 20-something clerks.

I find this topic very interesting though. I really don't know anybody who is FI and just loves their job so much that they stick with it. If anything, the folks I know in the public sector doing what I do are "just putting in their 30 years" to a greater extent than folks in the private sector. And this spans a number of government agencies in different disciplines and at different levels that I have worked for or currently work with (as a private consultant). To a person, I can't think of anyone who had their 30 years and just couldn't help but stick around running up the clock. I'm sure they exist somewhere, I have just never encountered them personally. Maybe professors would fit into this category, but of the many that I know/have known, most of them hang it up around 30 years or shortly thereafter.

I guess it depends on the job and the person.

Most of the people that I knew that stuck around were there because they weren't FI and really needed the paycheck. But there were a surprising number of people who became FI and stayed (like me), or were FI before they ever got the job.

The 92-year-old I referenced above is number one in seniority at my former agency. Number two is just a few years behind him, and I didn't realize how old he was until I recently read an article describing him as crime fighting legend - in 1954. He still comes to work every day, and as far as I know he still arrests crooks. His kids are all grown, his grandkids are almost all grown, and he lives in an old house that he paid for years ago. He just can't see himself doing anything else.

I can think of half a dozen or more former co-w*rkers who were similarly situated financially (for a variety of reasons from extreme wacky LBYM to great investments, or marrying a rich woman) who still came to work long past their pension eligibility because they liked the job that much.

There were some who clocked out the first second they could. Like a guy I worked with who married a woman he stopped on traffic one night - she was worth $20 million by the time he retired at 20 years and 1 second. She begged him to leave long before that, but he really wanted that pension.

I might still be w*rking if I hadn't been promoted to the point where I was no longer doing police work, but managing the lower level managers of the people who supervised police work. At the time I hit 20 I was doing wild and exciting stuff that maybe only a couple of dozen people in the country were doing. And even though I had been saying for years that I was leaving at 20, when I hit that mark I was having way too much fun, and had to stay. Getting promoted to management two years later beat all the fun out of the job, and I was gone two years after that.

 

[GoodSense]

I know at least a few public sector employees who have the financial means to retire (pensions) but don't. Like others said, they are bored at home, and work is all they know. Some also enjoy the politics.

The majority, though, would gladly leave employment if they had enough to live on. The "golden handcuffs" are what's keeping them working. I would venture to guess at least 80% of the public sector employees I know fall into this category.

 

[friar1610]

I'm retired from the military although I worked for 6 years after leaving the Navy. So, at 58, I wasn't that much of an early retiree. Since everyone knows that military folk retire relatively early from their military careers, I just said, "I was in the Navy for almost 30 years and now I'm retired." People seem to accept that without the need of more questions.