What if your career pays too well?

[Andre1969]

I think eventually, your retirement portfolio will hit critical mass, escape velocity, or whatever they call it, where it will grow so quickly, thanks to compounding, that suddenly your income will seem inconsequential.

I just looked up my income history. Compared to ten years ago, my salary has gone up about 60%. My retirement portfolio, however, has gone up 369%.

10 years ago, my ratio of retirement portfolio:annual salary was about 4.8:1 Today, that ratio is about 14:1. And over time, that ratio will most likely keep rising, unless I start raiding my savings, or we have a severe downturn. Eventually, my j*b is going to seem like it's just a waste of time.

[Travelwanted]

It certainly is a dual-edged sword. The income can lead to great savings and therefore opportunities to FIRE. On the other hand it is the call of the Sirens...

[Texas Proud]

As some has pointed out.... at some point and time you should have so much saved that you do not need another cent for anything... after that, you have to decide what is more important to you.... working or not working...

Look at Jerry Seinfeld... walked away from $10 mill IIRC... he is still working, but on his schedule and not some network....

If you like doing lawyer stuff... then do some consulting cases... IOW, pick the work you like the most and do it how many hours a week you want...

[Rick_Head]

There are two amounts of money you can have for retirement: enough and not-enough.

Your mission, should you decide to accept it, is to define "enough".

Good luck and bonne chance.

[bingybear]

Quote:

Originally Posted by CSdot Here is my question, what if you are in a career (I am in law), where it is a shame to let so much money go. I am not having second thoughts, but has cutting the cord been hard for some here? The answer may be that I make a good deal of money, but it's at the cost of having to deal with others headaches.

you know, golden hand cuffs are just that -- hand cuffs.
I understand the feeling although I'm likely making much less. But for me it feels the same. If I leave... I likely could not get back in for anything near what I make now. I just reviewed the job req for my replacement.. I'm out in about 2 months. btw, I'm 53.

Look at what is important to you... you need to make the decision.

Likely the most important rule to remember... he who dies with the most gold.. looses. (you can't take it with you).

have some fun, do some good in the world.

and if you are like me.... your pacemaker comes in 6 years.

keep it ticking

[Senator]

I am in IT, not as much money as an attorney, but we do OK.

When you are younger, you have more time than money. When you get older, you have more money than time.

I do not have kids. No one to leave anything to except my older sister that is in worse shape than me. I am in decent shape.

So, at some point the pile of money is big enough. Just six months ago I wasn't sure either. The more I evaluate things, the more I can't wait to FIRE.

When you are ready to lock in your lifestyle, jump off the rat race wheel.

[stepford]

Interesting that several posters mention 20:1 as the NW/income ratio where OMY becomes unjustifiable. I'm right at that point beginning my (last) OMY.

Just like a missing object always ends up being in the last place you look, the last year of your career (and the one when you're usually most ready to leave) is usually the most lucrative. So it's tough to just leave that money on the table, but there may be a compromise available if you can work part time.

Aside from the benefits of freeing up time to more smoothly transition to retirement and reducing stress to allow you to tolerate those last few years at work, many times you may find that part time provides a more favorable work/compensation ratio than full. In my final OMY I'm working about 65% time but collecting about 90% of total FT compensation. Tired though I am of work it's hard to pass up that opportunity.

[Rick_Head]

Quote:

Originally Posted by stepford Interesting that several posters mention 20:1 as the NW/income ratio where OMY becomes unjustifiable. I'm right at that point beginning my (last) OMY. Just like a missing object always ends up being in the last place you look, the last year of your career (and the one when you're usually most ready to leave) is usually the most lucrative. So it's tough to just leave that money on the table, but there may be a compromise available if you can work part time. Aside from the benefits of freeing up time to more smoothly transition to retirement and reducing stress to allow you to tolerate those last few years at work, many times you may find that part time provides a more favorable work/compensation ratio than full. In my final OMY I'm working about 65% time but collecting about 90% of total FT compensation. Tired though I am of work it's hard to pass up that opportunity.

Or, think of the alternative where your mega/mini/micro corp isn't there for you if and when something bad happens?

[bingybear]

"Interesting that several posters mention 20:1 as the NW/income ratio where OMY becomes unjustifiable. I'm right at that point beginning my (last) OMY. " (sorry... the quote option is timing out...)

In general this is a meaning less metric. There has to be some assumptions built in here. Maybe someone could elaborate on the assumptions to help me understand.

It is likely much more important to have NW/annual spending in retirement.

You could have people who are living on everything they make, then inherit their 20:1 and have to pay for health care that was previously covered by their employer. On the other had you could have someone living on 20% of the income and will have health insurance covered in retirement.

There seems to be this assumption that income always goes up over the years. Events like the tech bubble and housing bubble changed income levels greatly for many. DW has not exceeded her income level from pre-tech bubble (partially due to our geographic needs for taking care of a aging parent).

Many my be like us where we had company sponsored health insurance and will need to fund our own health insurance in ER... which starts in 2 months (@53!)

Further reality would likely require the ratio include not only NW:expenses, but also expected number of years to support. I do realize that one can complicate this beyond comprehension.

[pb4uski]

The OP's dilemma was also a slight sticking point for me especially since there was no going back (or at least it would be very difficult to go back) and I actually enjoyed my job, colleagues and clients.

In the end, I decided that I had enough and working longer was only enriching our heirs (not that that was horrible) and I decided that I would prefer to have the freedom to do what I wanted when I wanted than to continue being constrained by work and being on-call 24/7/365.

[Car-Guy]

Quote:

Originally Posted by CSdot I am 45 and plan to retire at age 54. Here is my question, what if you are in a career (I am in law), where it is a shame to let so much money go. I am not having second thoughts, but has cutting the cord been hard for some here? The answer may be that I make a good deal of money, but it's at the cost of having to deal with others headaches.

Been there, done that. I was about ten years older than you when I was faced with the challenge. I stayed a few more years (OMY syndrome) after I was well passed FI, just to rake in a lot more cash. Looking back, I'm not really sorry I did that but I''ll never get those years back. As far as dealing with others headaches, isn't that what work is for the most part, no matter if it's an individuals headaches or companies headaches.

[kcowan]

I think OP is anticipating a great problem to have, but with 9 years to go, there is no basis to decide now. Just make sure to LBYM so that OMY does not become too desirable.

20:1! Forget it, DW and I were making too much. And it took her longer to adapt. But the portfolio has performed well in the intervening 12 years.

[tuixiu]

Quote:

Originally Posted by CSdot Here is my question, what if you are in a career (I am in law), where it is a shame to let so much money go. I am not having second thoughts, but has cutting the cord been hard for some here?

We're with you... I'm software engineer, wife is an attorney. Causes much mental anguish leaving behind two six figure salaries and a monthly savings rate over 10k to start living on a retirement budget. Additionally I feel this is the golden age of software dev jobs, could probably easily find a well paying job in any medium to large city in the country right now and take my career wherever I want it to go.

That said, have given notice and only four weeks left of work.

Fishing license renewed for 2015? Check.
Kindle stocked? 200+ books check.
Mountain trails in surrounding area listed and mapped? Check.
Steam Holiday Sale cheapo video game gorging? Check.
Dates finalized for five week trip to Peru? Check.

Onward and upward, good luck!

[Whisper66]

Quote:

Originally Posted by CSdot Here is my question, what if you are in a career (I am in law), where it is a shame to let so much money go. I am not having second thoughts, but has cutting the cord been hard for some here? The answer may be that I make a good deal of money, but it's at the cost of having to deal with others headaches.

If you love the job, stick with it. If not, consider how much money you really need to retire and cut the cord then. I was in a good paying job that I really enjoyed. Made a lot more than we needed so saved quite a bit. And there's always more money to be made and saved for other wants / needs. The job changed a bit such that I didn't enjoy it as much anymore. Could have stuck with it so it wasn't that bad....just didn't feel the strong want to stay there anymore. In the mean time, you get to thinking of all the other things you could be doing if not tied up with work all the time. It's hard to keep saying honestly you'll do these things later as you age and realize there is an end somewhere down the road. Pretty soon it starts to gnaw on you and cutting the cord becomes quite easy. Good luck with your decision!

[gauss]

When I read the first 20:1 post, I interpreted it as NW/(increase in NW due to OMY savings). This is different than NW:income as some have also commented about (unless you are somehow in the envious position of being able to save 100% of your earned income. )

Obviously the golden measurement for retirement planning is based on spending - current and anticipated.

That being said, for someone who has not done a detailed spending analysis, perhaps the above ratio might have the potential to be an initial screen or rough estimate given that at least of a few of us have experienced it. More analysis would need to be done to determine under which conditions that it would be useful. Perhaps someone can start a new thread if there is interest in discussing this measure.

-gauss

[2B]

Quote:

Originally Posted by gauss When I read the first 20:1 post, I interpreted it as NW/(increase in NW due to OMY savings). This is different than NW:income as some have also commented about (unless you are somehow in the envious position of being able to save 100% of your earned income. )

If I followed your explanation correctly, I passed 20:1 a long time ago.

[FinanceGeek]

Quote:

Originally Posted by gauss When I read the first 20:1 post, I interpreted it as NW/(increase in NW due to OMY savings). This is different than NW:income as some have also commented about (unless you are somehow in the envious position of being able to save 100% of your earned income. ) Obviously the golden measurement for retirement planning is based on spending - current and anticipated. That being said, for someone who has not done a detailed spending analysis, perhaps the above ratio might have the potential to be an initial screen or rough estimate given that at least of a few of us have experienced it. More analysis would need to be done to determine under which conditions that it would be useful. Perhaps someone can start a new thread if there is interest in discussing this measure. -gauss

The 20:1 I proposed was the ratio of one's NW to the amount by which the added capital saved during OMY of working would increase NW. There is an implied assumption that the OMY is "optional" in terms of meeting your retirement budget (e.g. SWR), and you are contemplating it to build in margin to your financial plan.

Thanks for jumping in to clarify, I might start a new thread to discuss further!

[Turn_the_Page]

Can you do what you really want to and keep working?

Are you living where you really want to live while you're still working?

Will you be able to do all the things you put off to retirement? Or will poor health/aging prevent it?

These are the issues for me. I likely don't make the $$ that you do, but I do quite well. I can't live where I want and work in this career. I have things that I want to do, but I just can't get around to it while I'm working. I want to travel, but I'm scared I'll be too crotchety or whatever, if I wait too long.

[MRG]

Quote:

Originally Posted by CSdot I am 45 and plan to retire at age 54. I have a dedicated amount per month going to my Roth 401(k), and a dedicated amount per month going to my non tax deferred bridge account (to carry me from 54 - 59.5), and my house is scheduled to be paid off at age 54, so everything is shaping up according to plan. Here is my question, what if you are in a career (I am in law), where it is a shame to let so much money go. I am not having second thoughts, but has cutting the cord been hard for some here? The answer may be that I make a good deal of money, but it's at the cost of having to deal with others headaches.

A mentor of mine used to say money wasn't a motivation. He was a SR. VP. so it was easy to think he was wrong. He had money, I later learned he was LBYM.

Then years later FI hit, combination of many things going well. My point is(as many have said) there is a tipping point where you realize that more money isn't more happiness. I think it's different for each of us.

My bs bucket got full due to many things. Most of the C level execs left, VPs, directors many of them my mentors. Then a whole mentality change due to changes at the top. I can still tell you the exact event that triggered my choice bit there's no value in it.

In the end it was the answering the question: "What are my priorities? ".

About a year after I retired two of my former co-w*rkers passed away, one of them 50 yo. I think I made the right decision. Best wishes.

Sent from my SAMSUNG-SGH-I337 using Early Retirement Forum mobile app

[Texas Proud]

Quote:

Originally Posted by MRG A mentor of mine used to say money wasn't a motivation. He was a SR. VP. so it was easy to think he was wrong. He had money, I later learned he was LBYM.

I remember hearing that same comment from the CEO.... I told my manager (who did talk to him) to call BS... I said, 'Let's tell everybody that they are not going to be paid starting tomorrow and see how many people show up'....

I don't think my message was passed on