More Work = More Security?

[Spanky]

If you don't really have anything compelling you need to spend you time on other than work, I can see why retiring early would not be important. This is truly a case of "to each his own". Some people find their careers very fulfilling and not interfering with other priorities. Those people should definitely keep working.

The government definitely wants more people to feel that way. These people will continue to pay taxes to support social security and public pensions (the payout of which is larger than the payroll of all government employees).

 

[Meadbh]

It's all about a balance between actual and perceived financial security and personal satisfaction. Given similar circumstances, people make different choices. And it is all about choice.

While it's foolhardy to ER when the numbers don't work, optimists may choose to ER when they just barely work, whereas people with a more cautious risk profile will tend to want a cushion before they "perceive" that they are financially secure.

Some people ER so they can spend more time on the activities that they find satisfying. Others find satisfaction in their work and given the equivalent degree of financial security, will tend to work longer. I have seen a number of people in my profession (medicine) take this too far, retiring only when they are pushed out because their clinical practice is getting too behind the times, only to go into a decline.

I think the best way to handle the perceived financial security is to LBYM and be as well informed as possible about managing one's finances. That includes nursing a portfolio through a bear market or two before quitting!

The best approach to personal satisfaction, I think, is to nurture interests and connections outside w*rk that one can carry into ER.

 

[Razor]

Some jobs, like mine, (police officer) require that a high level of physical fitness be maintained. .

My city must have different standards for it seems most cops here are pushing three hundred pounds. And they ain't all that tall. They should walk the beat more.

 

[Marquette]

As far as specifics, I plan to retire with about a 3%-3.5% safe withdrawal rate. I'm not counting on SS as I think it will be means tested by the time I need it. I'm also not counting on medicare and am budgeting for private insurance.

Things may change in the future, but I feel like I have more freedom and flexibility now living the way I do now, regardless of when I actually plan to pull the ripcord.

You should go through the retirement calculator from hell series and then look at what your planned retirement lifestyle is, what your sleep at night factor is, and whatever else you need to do to plan your escape. Part-time work may be a better option than no work. Having a larger nest egg may be better than having a smaller nest egg if you predict a divorce in your future.


We're frugal but not obsessive. For us it's more about not wasting money on things that would only marginally improve our life (briefly had a cook but realized I liked doing the cooking more, would never dream of living in a big house or driving a luxury car, etc).

 

[rogersteciak]

FIRE is a journey with you as the captain of your own ship

... the point is the long term future a retiree faces is uncertain to be sure, a lot can (and will IMO) change in 30-40 years. A larger nest egg invested more conservatively would be preferable if possible no? Wouldn't it be very hard if not impossible to generate meaningful income to recover at 80 or 90 years of age if you were wrong with your FIRE assumptions?

You can depend on the future not being what it used to be (as once observed by Yogi Berra). Whatever scenario about the future you dream up and figure out out to survive can be trumped by a new and different scenario that will wipe you out.

If you have achieved the ability to FIRE with a 1:1 margin of safety and also believe future returns in the stock market might be significantly below historic returns, for exampe, then wait until you can FIRE with a 2:1 (or more) margin of safety to cover the possible downsides of a lower future total return. But if we should happen to experience hyperinflation at some point in the future, however, it probably won't matter what your margin of safety was at the time you FIREd or the fact that you might even be still working because almost all of us will likely be wiped out by the hyperinflation.

The other way to look at FIRE is this: FIRE is a journey with you as the captain of your own ship. You don't know what kind of future situations you will have to navigate through at the time when you initially leave port. At some point in the middle of a financial storm, you might wish you had accumulated a much greater margin of safety before you set sail; at other times when the wind is at your back, you might wonder why you accumulated such a higher-than-necessary margin of safety before you started. You can only know in hindsight.

You might also encounter a future situation that might sink your FIRE ship that you could have never foreseen or would have taken seriously (e.g., hyperinflation, a worldwide plaque that makes you seriously ill and uses up all of your capital for medical expenses, Congress raising payroll and income taxes to very high levels to make up for severe budget shortfalls, Congress severely cutting Social Security and Medicare benefits because the system becomes bankrupt, the Federal Reserve raising interest rates to very high levels to kill inflation even if it destroys the economy in the process, and so forth).

I remember reading about people who retired in 1970 using the approach that worked well for the previous 20 years: buy investment-grade corporate bonds and live off the interest. People who took that approach didn't see the stagflation of the 1970s coming and ended up having their retirement funds depleted by 1980.

The best you can do is deal with the [-]squalls [/-]challenges as they arise and hope you are able to survive them so that you can continue on with your journey.

 

[Khan]

It's been almost 4 years, and I'm spending less than my pension. My withdrawal rate is still at 0%. I think of my retirement accounts as my $400K emergency fund. I need to start pulling out some money when I turn 60 just to avoid required withdrawals at 70.

 

[unclemick]

Hmmm - If I can cheat a little and go back to Nords post on 'be' vs 'do' without plagarizing too much:

In one sense I never did work - ala the late Joseph Campbell's 'follow your bliss' I went from college into 'beat those dang Ruskies!' American Space Program.

Did it degenerate into 'crap this is work' once in a while over the next 29 yrs - Yea once in a while.

I still remember when the stuff hit the fan periodically - Sam (retired AF): "this is soo much fun, if they didn't pay me to show up, I'd have to buy a ticket and come watch!"

If you are FI - can you honestly call it a hobby? Well can you?

Always liked that Clint Eastwood quote.

heh heh heh - .

 

[Rich_by_the_Bay]

Two other factors to consider (from personal experience) :

- you can like or even be passionate about your work but simply not want so much of it. 60+ hours a week of anything leaves little room for life balance, even if your work is rewarding.

- you can love some aspects of your work, and not enjoy others. FI may allow you to focus on what you enjoy most, in return for a lower income.

I hope in ESR to rebalance not only my asset allocation but also my "job description" allocation. It's easy for me (and provides endless hours of entertainment for some of my forum friends ) to keep working. It's the hours thing rather than the generic "job" thing that will drive the timing of my ESR.

But for folks who really found work to be nearly intolerable, seems it's more of a black and while decision: gather enough money and then out.

 

[ladypatriot]

This is not meant to be provocative as you might think on first read, but I expect I might get blasted anyway.

Why not work as long as possible even after you reach FI to further enhance your security and standard of living in retirement, even if it's 200-300% of what you think FI is? I am not advocating living a much grander lifestyle in retirement --- the point is the long term future a retiree faces is uncertain to be sure, a lot can (and will IMO) change in 30-40 years. A larger nest egg invested more conservatively would be preferable if possible no?

I am not thinking of anyone in particular or asking anyone to defend their particular case - it's a general question.

Personally, I don't find it a provocative question. It seems to be a question about prudence, preparedness and caution. But therein lies the problem. During the short time I've been here, it seems that most people on this forum have unique histories and circumstances that have led to their choice of early retirement. Naturally, each person's measure of prudence, preparedness and caution will differ as widely and uniquely as they themselves.

One could easily ask whether 200-300% of proposed FI is enough "security." Perhaps it should be 300-400%? How much larger a nest egg? Your question is not provocative as much as it is unanswerable, since everyone's answer must begin with, "It depends...."

It depends on how important your job/work is to you. It depends on your present and/or desired lifestyle. It depends on how you measure quality of life. It depends on your state of mind and body. It depends on whether you are an optimist or a pessimist. It depends on what gives meaning to your life.

You can ask a general question, but I don't think you'll get a general answer.

 

[growing_older]

As far as specifics, I plan to retire with about a 3%-3.5% safe withdrawal rate. I'm not counting on SS as I think it will be means tested by the time I need it. I'm also not counting on medicare and am budgeting for private insurance.

Ah, and that is another concern for how can someone know if they are really FI or not. You have to make a great many assumptions about the future. You can shade your SWR below 4%. You can make conservative assumptions about asset allocation and expected future returns. You can try to anticipate a wide range of future inflation. But you will never really know what the rules of the game are in the future and they are subject to change (at least tax laws, SS, health insurance, etc all are). So a little longer working means a little bigger portfolio and a little more safety, but there's no limit to that either. I can "just one more year" myself forever.

Someone commented about hyperinflation, and while that would be very bad in general, I'm not sure that's too threatening to someone with a retirement stash bigger than the average person (which is sadly not all that big). Fixed income investments would be clobbered, but shouldn't equity stakes be pretty resilient? x% of ABC co is still x% of a real company. Ownership of rental units still have real value, even if rents are measured in funny money. Governments would have to do something in the face of an entire population's cash becoming worthless, just as they would have to respond to other disasters of that magnitude. I think this is impossible to model and impossible to protect against - just as would be trying to protect against an unspecified, unknown, unexpected and previously unheard of black swan.

 

[cute fuzzy bunny]

Simple answer: someday you'll run out of tomorrows. Nobody ever regretted not putting in enough time at the office on their deathbed.

I solved the "what if my plan is off and I run out of money at 95" problem.

 

[Khan]

Simple answer: someday you'll run out of tomorrows. Nobody ever regretted not putting in enough time at the office on their deathbed.

I solved the "what if my plan is off and I run out of money at 95" problem.

If I'd stayed at work until I had a stroke at 60 or so, I would have had no problems outliving my money.

 

[Cattusbabe]

Like you, I also can't recall anyone suggesting that they should either find a job they are better at, would enjoy more, or upgrade their skills to get promoted. Instead, the solution is to declare oneself financially independent, live very "frugally," and retire. Don't worry. Be happy.

And now for the obligatory disclaimers: Money does not buy happiness. Time is more important than money. No one has the right to judge anyone else, even if they are paying for their social programs. Not everyone's situation is identical. Some early retirees are very well prepared for retirement.

And now, back to our regularly scheduled programming...

This is an early retirement blog after all so it one is looking for a way to improve their work situation in order to stay in their longer they will have to look elsewhere. Although I have seen the recommendation to take a sabbatical of a lateral transfer numerous times for really toxic work situations.

I bailed out of nursing at age 50 because I was able to maintain my current standard of living via the income our investments throw off every year. What you call obligatory disclaimers were the exact reason I left when I could afford to do so. These are valid reasons. Further I have a husband who is 13 years my senior who had already retired. Waiting another 16 years 10 months for my full retirement to do all of the things we are able to do now would have been stupid. For what? Just to pad the bank account?

I think you are stereotyping early retirees as living a "frugal existence" to mean loads of self sacrifice and denial. You know sack cloth and ashes. I do not see that at all. Most of the folks I see here are having a great time living the way they want to on their terms. For some that does means a spartan existence.......Guess what these people were living that way while working. For others it means tripping the light fantastic. Its all good.

 

[cute fuzzy bunny]

I think you are stereotyping early retirees as living a "frugal existence" to mean loads of self sacrifice and denial. You know sack cloth and ashes. I do not see that at all. Most of the folks I see here are having a great time living the way they want to on their terms.

Dont mind the One Note Wonder. We're all living in poverty because Jeeves isnt polishing the Rolls out front right now.

 

[thaidyed]

I think the root of what we're getting to is if you are FI, you get to chose to RE. For many, many people its a no brainer choice because they do not like their work and can't wait to do the things work keeps interrupting. However, some people hit FI and realize they really really like what they do--not the money is provides. Work becomes hobby.

One of the things my father always told me that the job you don't have to show up at every day is much more likely to be a job you'll like and enjoy doing. And the job you wake and drag yourself to because you have to, is the one you're sure to loathe. So far, for me this has proved very very true.

 

[Spanky]

I still look forward to working on my project everyday except for the weekends.

 

[Spanky]

But if we should happen to experience hyperinflation at some point in the future, however, it probably won't matter what your margin of safety was at the time you FIREd or the fact that you might even be still working because almost all of us will likely be wiped out by the hyperinflation.

Will hyperinflation impact those receiving COLA pensions?

 

[CaseInPoint]

This is an early retirement blog after all so it one is looking for a way to improve their work situation in order to stay in their longer they will have to look elsewhere.

Many people in the forum are not yet retired. For example, the Young Dreamers who have their own forum here, and the many people who find the FIRECalc through Google. They come here in search of retirement planning information.

All too often I, and others like the OP, see the attitude of members who advise just dropping a job and retiring without enough financial backing. That just doesn't make sense to me. And, yes, I understand that you personally are able to FIRE without any problem.

Waiting another 16 years 10 months for my full retirement to do all of the things we are able to do now would have been stupid. For what? Just to pad the bank account?

Everyone can do their own math and decide what's right for themselves. Like I said in the obligatory disclaimer "Not everyone's situation is identical. Some early retirees are very well prepared for retirement."

But, some of the benefits of having more money at retirement include things like more peace of mind, a more comfortable retirement, ability to help other family members financially, ability to leave an inheritance to children, and better medical and nursing care -- just to name a few.

I think you are stereotyping early retirees as living a "frugal existence" to mean loads of self sacrifice and denial.
[...]
Guess what these people were living that way while working. For others it means tripping the light fantastic. Its all good.

I don't know if it's all good, but there is a lot of sacrifice and denial, as well as positive tradeoffs. I would still caution people thinking of early retirement to err on the side of being more financially conservative and not buy into the hype. In the end, the cost of living in retirement over a period of 20-30 years may turn out to be a very unpleasant surprise, if not properly prepared.

Dont mind the One Note Wonder. We're all living in poverty because Jeeves isnt polishing the Rolls out front right now.

Ah, the triumphant return of Mr. Mom, the only member of this forum who is able to pay a lower tax rate than Warren Buffet. Come on, ask him how he does it...

 

[samclem]

So, this boils down to: "I think people should have enough money before they retire from work."

I agree. I'll bet everyone here does.

What is not reasonable is to toil away for ten extra healthy years of your life in order to "have enough" to be prepared for a once-in-100-years catastrophe. Everyone needs to do the math themselves, don't let emotion drive a critical decision, then do what makes sense.

Like it or not, this riverboat ride ends the same way for all of us--over the falls and onto the rocks. We don't know if we'll hear the roar around the next bend, or after many, many miles. I want to get out and enjoy the view as soon as I'm sure the boat is safe. I damn sure don't want to spend the whole trip below decks applying sealant and installing backup bilge pumps for the backup bilge pumps.

 

[Nords]

I find it hard to believe anyone dislikes work in general, but maybe I'm wrong.

I'll raise my hand.

I enjoyed doing submarine operations and teaching. I'm good at them-- I have the awards & citations to prove it, and although the skills may be perishable they can still be refreshed. The trusting younger generation also lacks my decades of cunning, deceipt, & dirty tricks.

When I went through all the retirement-counseling career assessments and self-interest surveys, they suggested that I'd make an excellent nuclear engineer and/or a middle manager. (Golly.) And when I retired I was offered several jobs involving... submarine operations and teaching.

There are plenty of other jobs out there. Hardly a day goes by that I don't see something and think "Hey, I could do that and make a pile of money at it." Maybe I'm right and maybe I'm wrong in my assessment, but the things I've tried so far... I've made a pile of money at them. They just weren't worth the hours of effort.

So I feel that I've resolved the questions of upgrading my skills or finding desirable employment. They're not the issue.

What I object to is the dissatisfiers of "overhead" and the hassle factor: commuting, wearing business-attire uniforms, meetings, projects planning, mandatory training, standing on my feet for long periods of time, meeting deadlines, liability insurance, risk assessment/management, crafting carefully-worded e-mails in response to taskers that I don't give a crap about, suffering fools gladly, emergencies... the list is nearly endless. Prove me wrong-- find me an occupation that avoids those hurdles.

I'm happy with the ER lifestyle. Power is not a motivator-- too much responsibility. Prestige is not a motivator-- had it, don't care. Money is not a motivator-- can't spend what I have now. Being a voice for change-- feh. Using my skills to make the world a better place-- hey, that's what our philanthropy is for.

When I evaluated my first job offer (teaching nuclear engineering to shipyard supervisors, what else?) I realized that I lacked a commitment to the mission, the co-workers, and the customers. Even worse, I feared that if I gave it a year or two then I'd send myself down the same old hyperachieving path of trying to be the best and most qualified engineer instructor I could be-- even if it took extra training, weekends, & midwatches. For no other purpose than to pound my chest and bellow that I was the best silverback in the pack.

I'm lazy but I'm not sedentary. I have no problem with doing 2-3 hours of yardwork, or home improvement, or fixing infrastructure at 2 AM, or volunteering for a school trip, or reading/writing/editing, or spending hours at taekwondo. But I'd rather not be hostage to a paycheck.

One of my criteria for evaluating a job has been: "If I decide that morning to take four hours off for surfing, will anyone care or even notice?" There's probably a good reason that the surfers in the Tuesday 9 AM lineup are on retired, on vacation, calling in "sick", or unemployed.

I enjoy surfing. I enjoy teaching surfing even more. But if I had to show up at 10:30 AM next Tuesday to teach someone at $__/hour, I wouldn't enjoy it anymore.

I could be wrong. In 10 years I could be so bored, unfiulfilled, and lonely that I'll be taking defense contracts. But I doubt it. If any of you can think of something that'd knock me out of my comfortable ER rut, I'm happy to consider it! But after six years of ageless exploration, I've pretty much concluded that ER is my avocation.

I used to have a work problem, but now I make enough money to avoid it...

 

[rogersteciak]

Will hyperinflation impact those receiving COLA pensions?

In theory, no. In practice, probably.

There is always a time lag between the increase in prices and the COLA adjustments (since the price increases have to happen first before the COLA can be calculated and then paid). For low rates of inflation (a few percent a year), this time lag is not a big problem even when COLA calculations are done on an annual basis.

But when inflation exceeds 50% a month (Hyperinflation - Wikipedia, the free encyclopedia), this time lag becomes significant. Even if the COLA calculations are done every month, they will be using last month's price increase information. By the time you get your increased pension money this month or next month, the actual cost of living will have gone up considerably.

 

[Frugality_of_Apathy]

That also assumes that whoever is paying your pension will be able to stay in business with hyper inflation happening. If we were seeing 50% increase a month I doubt even cities and states would be able to continue paying pensions adjusted for inflation.

 

[audreyh1]

I very much ditto Nords post.

I also dislike the concept of work in general - that your time, location, energy and priorities belong to someone else for MOST of your waking hours. To me, work is about earning a living, nothing more. Now that I no longer have to earn a living, I just really don't see the point (for me).

Audrey

 

[Cattusbabe]

All too often I, and others like the OP, see the attitude of members who advise just dropping a job and retiring without enough financial backing. That just doesn't make sense to me. And, yes, I understand that you personally are able to FIRE without any problem.

You will have to pull an example of a post like that. I have never seen anyone here give irresponsible advice like that. Sorry your gonna have to show me.

 

[cute fuzzy bunny]

Eh, he's just trolling us. Put him on ignore like I did.