High earner OMY syndrome

[DawgMan]

Question for higher earners who made the decision to RE early as well as those approaching a potential early RE... how did/will you reconcile giving up the bigger income? While I know "high earner" is a relative term, my assumptions here are you are making consistently over $500k, don't hate your job, are financially prepared in your early/mid 50's to launch. I know these are "rich people" problems, but I would suggest it is tougher to make the transition for higher earners earlier assuming the above which often results in a higher probability of OMY. In my case and I would assume the same for most others who have higher incomes, stopping work cold turkey for a year or more would have a significant affect on the ability to jump back in and replace the high income again, if you decided to go back in the workforce. While going part time for some may be an option, in my case, I need to be fully engaged in my business to keep the income level up. I am more curious as to how the big earners quit on their own terms (not part time) early got comfortable going from a "producer" to a "consumer" of their assets?

 

[Travelwanted]

I tend to agree with the premise that high income earners have a harder time fully walking away. I think it is far more than just money, however. I think we become associated with the identity and gain self-worth from these high income professions.

Here is what I am doing: mid 40's, was making 7-figures, sold my business. Have at least 55x spending. I went PT a while back now. Income now equals yearly burn rate. I am enjoying what I do again but have tons of free time for family and hobbies. When it becomes a hassle I will walk away. Until then, the transition is helpful. I could not have gone from 100 to 0 overnight.

 

[marko]

I was a high earner who loved my job. Neither RE nor OMY was ever a consideration at the time. In my case, I was redundant after an acquisition.

To my surprise, coming back in to the work force after my 2 year non-compete (and 2 year severance) expired was impossible. Despite a stellar resume no one wanted a 53 year old. I never went back to work and, by then, really didn't care to unless it was going to be extremely interesting.

The market had moved on and so had I. I had created a new life.

It was the best thing to ever happen to me!! So, while I never suffered from OMY, my only offering is that leaving it all behind was a blessing beyond words.

 

[DawgMan]

I tend to agree with the premise that high income earners have a harder time fully walking away. I think it is far more than just money, however. I think we become associated with the identity and gain self-worth from these high income professions.

Here is what I am doing: mid 40's, was making 7-figures, sold my business. Have at least 55x spending. I went PT a while back now. Income now equals yearly burn rate. I am enjoying what I do again but have tons of free time for family and hobbies. When it becomes a hassle I will walk away. Until then, the transition is helpful. I could not have gone from 100 to 0 overnight.

Agree on the identity part which is not always easy to recognize as a factor keeping us in the game, but none the less an obstacle to fully retiring.

I'm self employed and have thought about ways to throttle down perhaps similar to what you have done, but struggle with the OMY syndrome. I am sure big part of it is defining what I would be retiring TOO and the physiological switch from producing/saving income to living off my assets... despite the fact that I know that is exactly what they are there for and what I have been working towards all these years!

 

[DawgMan]

I was a high earner who loved my job. Neither RE nor OMY was ever a consideration at the time. In my case, I was redundant after an acquisition.

To my surprise, coming back in to the work force after my 2 year non-compete (and 2 year severance) expired was impossible. Despite a stellar resume no one wanted a 53 year old. I never went back to work and, by then, really didn't care to unless it was going to be extremely interesting.

The market had moved on and so had I. I had created a new life.

It was the best thing to ever happen to me!! So, while I never suffered from OMY, my only offering is that leaving it all behind was a blessing beyond words.

I have a couple of friends who went through something similar and also said it was blessing in hind sight. While they didn't go out on their own terms, they don't regret the fact they didn't go back to work a few years later. In my case, there is no one to fire me except for me.

 

[athena53]

I left when politics got toxic- I was 61. If I'd stayed as planned till age 64 my assets would have been another million or so between investment income and what we were putting away from my salary. I've gone through the numbers a lot and I think it mostly would have meant I'd leave a bigger estate. Other than travel, my tastes are modest. No regrets at all- DH died late last year and we got in some wonderful trips while he was healthy and I was there when he needed me at the end. Now I"m free to pick up when I want and travel to see new places or visit family (2 grandchildren 3 hours away).

Oh, yeah- I would have been eligible for $50/month more SS!

 

[marko]

Agree on the identity part which is not always easy to recognize as a factor keeping us in the game, but none the less an obstacle to fully retiring.

Agree on the identity part. You become what you do to a [-]certain[/-] great extent. That took me several years to overcome.

Finally it just hit me that I wasn't a title, I was just 'me'. From that day on I had moved on. I still remember the day.

 

[mystang52]

I have 2 high-earner friends, my age (64). One an endodontist, the other a cardiac surgeon with his own practice (and a big kahoona at the hospital as well).
I ER'd at 60. The endo ER'd 1 year after I, and he told me more than once it was me that inspired him to pull the plug. But he had something to retire to. He now does volunteer work at a horse therapy farm (he's an avid equestrian). And when he's not doing that he has other activities to keep him happy.
The cardiac surgeon is still w*rking, because, as he told me just last week, he has no idea what he would do if he retired.
In both cases, money is of course not the issue. First, high earner or not one needs to answer the question what he/she will do. That is, to stay happy in retirement. But the money issue is different.
Again, high earner or not, there will always be an income drop when one retires. But if you've already won the financial game, that shouldn't be an issue. Otherwise, you can argue that you need to w*rk until age 99.

 

[flyingaway]

If your life style is in line with your earning, people at all levels will have the same problems when decide to retire. I think those who live on paycheck to paycheck also have difficulty to make a retirement decision. They just don't discuss it here.

 

[Toocold]

I'm targeting 2020 as my RE date before I turn 50. I'm already FI (~72x annual spend), so I guess technically I fall in the OMY or 3MY category. In addition to those things mentioned above, there are company vesting cycles that handcuff the employee. For me, I'd be giving up close to 7 figures if I walk away now given the recent run-up in stock prices. I also want to accomplish couple more things professionally and personally before I go explore something else to do, but once I pull the trigger, I highly doubt I'd look back.

 

[DawgMan]

I'm targeting 2020 as my RE date before I turn 50. I'm already FI (~72x annual spend), so I guess technically I fall in the OMY or 3MY category. In addition to those things mentioned above, there are company vesting cycles that handcuff the employee. For me, I'd be giving up close to 7 figures if I walk away now given the recent run-up in stock prices. I also want to accomplish couple more things professionally and personally before I go explore something else to do, but once I pull the trigger, I highly doubt I'd look back.

For those of you who have 30, 40+, and in your case 72x spend rate put aside, how have you avoided the "creep" in your life style expense? As a high earner, you obviously can afford a few vices. What's driving you when you are so far ahead?

 

[Danmar]

This was a big issue for me. Difference is I started to dislike my job around age 53 around the time I became very FI. Took me a few years to negociate my way out and accelerate the training of my successor. My retirement date was extended twice much to my displeasure, but I felt I really wasn't in a position to disagree.

The way I look at it, it's the relationship between how much more you can put aside vs how much you already have. If this is a large proportion then you will have a fairly large incentive to keep working. Once this ratio falls to say 5-10% it becomes much less of an incentive. When I retired it was in this (5-10%) range. If it had been in the range of 20-30% say it would have been much more difficult.

Another consideration is how elastic is your spending? That is, if you had more would you be happy, or even able, to spend it? Many people profess to not wanting to up their spending. I had little trouble upping my spending to match my means and indeed during the financial crises was quite happy I had worked a few years more.

Agree that often your identity will be closely connected to your career. Mine certainly was. I think it is hard to earn these kinds of comp without being totally committed to your career. It took me about 3 years I think to get "over myself" and reinvent who I thought I was. It takes time and hard introspection, but necessary and certainly worth it.

Bottom line is at some point you just have to put a pin in it and make the leap into it. Good luck on your decision.

 

[Toocold]

For those of you who have 30, 40+, and in your case 72x spend rate put aside, how have you avoided the "creep" in your life style expense? As a high earner, you obviously can afford a few vices. What's driving you when you are so far ahead?

Avoiding lifestyle inflation has been relatively easy. We bought a nice $350k house when my first child was born and we never "upgraded" to a bigger 750k-1M house - I find the more space we have, the more things we need to clean. When we paid off the mortgage about 6 years ago, we were already living a "upper middle class" life, so we didn't see a need to change. At work, I traveled extensively so I got to experience flying first class, staying at fancy hotels and eating high priced meals, but I found that I like simple tastes. And all this while I continued to get promotions at work.

I like what I'm doing at work, because I'm working on one of most complex and important issues in society, mainly around healthcare, and hopefully I can contribute in a small way to improve it.

 

[timemoveson]

We crept up to a high level, by any rational standards, about 20 years ago in our early 30's. That is, perhaps yearly after-tax cash flow requirements (including mortgage payments and normal government sponsored retirement savings) of $250K.

At the beginning of that period, that was pretty much all of the after-tax we would have had. But we pretty much stuck there and held the line, even as the gross income escalated steadily over the years to 7 figures. It all went to saving for FI and eventual complete freedom.

In North America, I think $150-250K net can buy a very good-to-great lifestyle under most circumstances with no debt, no requirement to save more for retirement, kids paid for, etc.

It certainly wasn't a hardship holding the line, looking back on it from this perspective.

 

[kcowan]

I had the benefit of a pension when I worked as a business change consultant for 10 years. This lead to some interesting work because a company will not pay those big bucks unless they have big problems. I had contracts with 5 companies and twice was pressed into an executive position.

I knew I could continue taking new contracts but my retirement planning was telling me that I had enough. So when the last contract was completed, I simply took down my shingle. There were nice goodby parties and many good words from the board so all in all it was very positive.

In hindsight, we have more money than our lifestyle will ever need so we made the right decision. Just do not do it without a plan.

 

[Sojourner]

The cardiac surgeon is still w*rking, because, as he told me just last week, he has no idea what he would do if he retired.
In both cases, money is of course not the issue. First, high earner or not one needs to answer the question what he/she will do. That is, to stay happy in retirement. But the money issue is different.

My former boss had exactly this mentality. He is in the 9 figure NW category, so clearly he is fantastically wealthy, yet when I asked him many years ago why he didn't take longer vacations or spend less time at the office, he just looked at me in kind of a puzzled way and said "I guess I just have no idea what I'd do with myself if I didn't come into this office every day." And by every day, he literally meant every day. I would occasionally go in on the weekend for some reason, and inevitably I'd find him there, at his desk, intensely working on something or on the phone talking business with someone.

I think some people are so thoroughly consumed with work and their work identities, it has pushed aside pretty much everything else. And I think this is probably true especially of extremely successful entrepreneurs (like my former boss) and highly skilled, specialist doctors. It almost seems to be some sort of subtle psychological condition that might be called "personal-professional identity disorder".

 

[flintnational]

Congratulations! Rich problems are good problems. I mentioned it in another post, but what we found to be one of the best aspects of FI is choice. With respect to w*rk, as you know, all options are on the table. In my case, I simply saw the large salary, stock options and bonus as the tools to ensure my early retirement. The DW and I made the decision to work toward FIRE over thirty years ago. FIRE was our priority and not continuing to w*rk after our financial needs were met. Obviously everyone's goals are different.

I think you are correct that it may be difficult to replace a large income in your 50's if you wish to return. If you can get comfortable with the pay cut, you have options. I have high-income friends that left C-Suite jobs in their 50's/60's. One became the President of a charity. One went back to school for a professional designation and consults in a new field. One (a lawyer) helps a child's law practice.

Go Dawgs!

 

[Blue Collar Guy]

.... While I know "high earner" is a relative term, my assumptions here are you are making consistently over $500k,...

Wow, I dont know for sure, But that level is the real 1 %ers. Unless Im delusional there really cant be too many individuals in here that raked in that kind of money.

 

[Blue Collar Guy]

If your life style is in line with your earning, people at all levels will have the same problems when decide to retire. I think those who live on paycheck to paycheck also have difficulty to make a retirement decision. They just don't discuss it here.

+1

 

[Blue Collar Guy]

My former boss had exactly this mentality. He is in the 9 figure NW category, so clearly he is fantastically wealthy, ".

Yeah, I would categorize that as fantastically wealthy too. Thats bigger than most lottery jackpots before the taxes. wow.

 

[Gumby]

Ten years ago, I had a very lucrative practice at a big NYC law firm. One day, it occurred to me that my life consisted of very little but riding the train and working at all hours of the day and night. And the sum total of what I did professionally was to make already rich people even richer.

I looked at our investment account statement and decided that, if given about five years to compound, it would be more than enough to retire. All I needed to do was pay the bills over those five years. So I took an enormous pay cut and went into public service. The work is interesting, I am solving real problems for real people, my life is much more relaxed and the paycheck is still more than enough to pay the bills.

Sadly, the 2008-09 Great Recession both 1) sharply reduced the amount of money we had and 2) convinced us that we really should plan on more of a buffer in the event it should occur again. So I am still working. We are probably good to go now, but if I stick around until the end of the year, we'll get almost free retiree health care. The young wife is a teacher who will never retire in the middle of a school year, so that means next June at the earliest. We might put in one last year to pay for first class tickets when we travel, but certainly no later than June 2019.

These past ten years have given me the opportunity to recognize that I am not, and never was, such a big deal. When the day comes next year or in 2019, I'll be ready to let go.

 

[marko]

For those of you who have 30, 40+, and in your case 72x spend rate put aside, how have you avoided the "creep" in your life style expense? As a high earner, you obviously can afford a few vices. What's driving you when you are so far ahead?

In my particular case, as an insider I knew that we were shopping the company for several years. I suspected that when we sold there was a possibility that I wouldn't be part of the executive team going forward.

We lived (and still do) very well compared to most folks but we're glad we never succumbed to the temptations of overspending.

We just knew it wouldn't last.

What drove me? It wasn't the money. The job itself presented an extraordinary travel lifestyle which DW and I embraced. I had a lot of freedom, a fair amount of power and few hassles. As a 'founder' of sorts I had a drive to see my baby succeed.

 

[steveark]

I was a high earner and hung around a couple of years past when it stopped being fun because I was able to sock away half a million more in investments. I also had fears of losing my identity and of not being able to get back in the work force if I changed my mind. But I found a compromise, I work a day or two a week at four side gigs and that pays our entire cost of living and keeps my brand/identity fresh. It is perfect for me although I know it isn't right for others. I also worked for one of the Forbes 200 richest guys in America and that guy still goes to work at the office every day at 90!

 

[Meadbh]

The way I look at it, it's the relationship between how much more you can put aside vs how much you already have. If this is a large proportion then you will have a fairly large incentive to keep working. Once this ratio falls to say 5-10% it becomes much less of an incentive. When I retired it was in this (5-10%) range. If it had been in the range of 20-30% say it would have been much more difficult.

I was never a "high earner" according to the OP's definition, but Danmar expressed exactly how I felt after reaching FI. When the financial incentive to work another punishing year became just incremental, I knew I was ready to ER.

 

[Dd852]

On the financial side, for several years we had only spent 50% of my take home pay each month, so we saved half plus the bonus (90% of yearly salary) and the stock (65% of salary) so in other words we saved at a huge rate. Neither of us have much of a taste for luxury - travel and food are our vices but by some people's standard we are still modest: I'm generally happier with great street food than a three star restaurant!

It was the stuff that was non financial that took more work to get used to: losing status, losing the spotlight (such as it was), realizing that a lot of people had answered my calls or associated with me because of what I was, not who I was. That hurt some. But I got over that pretty quickly - somewhere between three and six months.