In 1988’s Cashing In on the American Dream, Paul Terhorst wrote about retiring at age 35. Although his aim was to show readers the path to early retirement, he also sang the praises of temporary retirement — retiring young with the idea that you might go back to work later in life.
As I mentioned a few days ago in my article on the five types of retirement there’s another way to mix work with financial independence. In Work Less, Live More, Bob Clyatt makes the case for semi-retirement.
The Way to Semi-Retirement
In many ways, Work Less, Live More (published in 2005) reads like an updated (and more detailed) Cashing In on the American Dream. Even the author bios sound similar. Here’s how Clyatt describes his background:
In 2001, after 20 years of sustained high-pressure work, the last seven spent battling in the Internet wars, my wife Wonda and I chucked it in, mothballed our suits, rented a small summer house in Italy, and began our new lives as early retirees.
But early retirement was no paradise for Clyatt and his wife. They were stressed, and their friends were stressed too. Did he really have enough money saved? What about the sluggish stock market? He began to question his assumptions: Had he made a terrible mistake?
Ultimately, he realized the worst-case scenario wasn’t so bad. He probably did have enough to stashed away to sustain his early retirement, but even if he didn’t the downside was that he might have to do a little work. This realization allowed him to embrace the idea of semi-retirement.
“Doing some amount of engaging work offers a comfortable transition between full work mode and full retirement mode,” Clyatt writes. “With a modest income from part-time work, early semi-retirees may not have to face the dramatic downshifting in spending and lifestyle that so often confronts those who live only on savings or pensions.”
Here’s an extended explanation from the book:
Semi-retirement — reclaiming a proper balance between life and work by leaving a full-time job — offers a way out of the madness of overwork. By reducing spending and switching to a pared-back but more satisfying lifestyle, less money goes out the door.
Tapping into accumulated savings in a sensible way provides a steady annual income. Any shortfall can be filled with a modest amount of work, done in an entirely new state of mind: With less need to work for the largest paycheck possible, you can find low-stress work that you truly enjoy, on a schedule that gives you time to breathe.
Clyatt divides Work Less, Live More into eight chapters, each of which explores one of his rules for semi-retirement:
- Figure out why you want to do this.
- Live below your means.
- Put your investing on autopilot.
- Take 4% forever.
- Stop worrying about taxes.
- Do anything you want, but do something.
- Don’t blow it.
- Make your life matter.
Let’s take a closer look at the semi-retirement approach to creating work-life balance. [Read more…]