The Many Roads to Retirement

“Work, work, work, work, work, work. Retire.”

That's how New York University professor Sewin Chan described the traditional retirement path at a symposium several years ago. However, that path may be changing. Her research indicates that approximately one-third of retirees from 1992 to 2004 reversed their retirement. Today, the path might look more like this (as Chan illustrated in her PowerPoint presentation): “Work, work, work. Retire (for a bit). Work. Retire?”

I re-discovered these little quotes by reading through past issues of my newsletter, which is about planning for — and living in — retirement. However, as I've written before, I'm a retirement expert who doesn't plan on retiring. I'm not sure it's best for most people's health or wealth. And it might be just too dang risky. Plus, I like what I do, where I do it, and the people I do it with. Of course, I still save for retirement because who knows if I'll feel the same way 30 years from now.

On the other hand, “work, work, work, work, work, work” doesn't sound like much fun, either. But as Chan's presentation suggested, the traditional work/retire chronology may not be the best model. Rather than saving all the retirement for the end of your life, perhaps it's possible to rearrange the order by taking a break mid-career, gradually ratcheting down the work week, or working fewer weeks out of the year.

With this in mind, I flipped through the pages of my newsletter (eight years' worth), looking for examples of people who have taken the retirement road less travelled. Here are a few tales I uncovered.

That “Work Just 48 Minutes Each Weekday” Guy
The first example came from an article I wrote in 2008, about a book you've likely heard of: The Four-Hour Workweek by Timothy Ferriss. How was then-30-year-old Ferriss able to support himself on less than a day's worth of work per week? He created his own business and then outsourced everything else. Ferriss checks email just once a week. Another option he suggested: Become a key employee, and convince your boss to let you work from home. But instead of being at home, you're in Berlin, Beijing, or Buenos Aires. Again, outsource as much as you can by engaging the services of companies such as Your Man in India, and email your work to the office.

While not a realistic plan for most people, Ferriss makes some worthwhile points for those looking for an alternative to “9-to-5 till you're barely alive.” He distinguishes people who are “deferrers” — those who lead hard-charging careers in pursuit of the Holy Grail of retirement that is decades away — from the “New Rich,” who have loads of time and flexibility, and “distribute recovery periods and adventures (mini-retirements) throughout life on a regular basis and recognize that inactivity is not the goal. Doing that which excites is.”

“Personally,” he writes, “I now aim for one month of overseas relocation or high-intensity learning (tango, fighting, whatever) for every two months of work.”

My first reaction to reading his book was: Clearly, this person doesn't have children. (I have four — that I know of.) But beyond that, Ferriss makes some provocative arguments with some catchy phrases. There's much more to his philosophy, tips, and tricks. You can read more of what Ferriss thinks of retirement from this this interview J.D. did with him in 2008.

Supersave Your Way to Early Retirement
I've spilt a good deal of cyber-ink writing about safe withdrawal rates in retirement — the amount retirees can spend each year and be reasonably sure their portfolios will last as long as they do. For many years, I cited the work (and the actual words) of John Greaney, who retired from his engineering career in 1994 at age 38 and founded RetireEarlyHomePage.com. How did he do it? Once his school loans were paid off by age 25, he began saving 25% of his salary. As his income increased over the years, his savings rate reached 40% to 50%.

Reduce Living Expenses, Retire Sooner
Fred Brock, author of Retire On Less Than You Think, moved to Kansas after retiring from The New York Times. He sold his house in New Jersey and bought a newer house in Kansas with cash. “The absence of a mortgage payment was effectively an increase in salary,” he wrote. “In addition, our property taxes dropped from $9,000 a year to about $2,700.”

Live All Around the World
Keeping housing costs down is also how Ferriss is able to work so little, but he does it on a global scale. He calls it geoarbitrage — “to exploit global pricing and currency differences for profit or lifestyle purposes.” This strategy is also used by Motley Fool contributors Akaisha and Billy Kaderli, who retired at age 38 and live on less than $30,000 a year by staying in low-cost but exotic countries, such as Thailand, China, and Ecuador. You can read more about how they do it in this GRS interview from last summer.

Reduce Living Expenses by Living on Wheels
You know the cliché about people retiring to an RV? People really do it — and it's inexpensive. Ron and Barb Hofmeister did it for 14 years after retiring in their 50s. They explain in their book, Movin' On: Living and Traveling Full-Time in a Recreational Vehicle, that their living expenses ranged from $1,500 to $3,000 a month, but it can be done for much less. “The lifestyle can be adjusted to almost any income,” Barb told me in 2005. Those numbers have likely risen bit over the past seven years, but not drastically. One strategy they used: When gas prices were high, they stayed in one place longer.

Change Careers Instead of Retiring
A few years ago, Sheryl Garrett, founder of the fee-only Garrett Planning Network, told me the story of a 52-year-old woman who made just $13,000 a year. She had saved $55,000, and asked Sheryl what to do with it. Sheryl asked her, “What would you really like to do in life?” She responded, “I have always wanted to be a nurse.” After running the numbers, they decided that spending that money on a nursing degree was the best investment. Now the woman has a higher income and a new career, one she says she could enjoy well into traditional retirement age. As even Ferriss conceded in The Four-Hour Workweek, “Full-time work isn't bad if it's what you'd rather be doing. This is where we distinguish ‘work' from a ‘vocation.'”

Turn Your Hobby Into Your Income
Back in the early days of my newsletter, a subscriber named Doug Short became very active on our discussion boards, providing excellent answers to a whole range of financial questions posted by other subscribers. Doug started out as an English professor, and then became a consultant for IBM, mixed in some work at GlaxoSmithKline, and eventually retired. Along the way, he built up his website construction skills and financial know-how, eventually combining the two to create a little site that conveyed economic data and history visually. It eventually showed up in places like CNN and Barron's, and the site was bought by Advisor Perspectives (which now pays Doug to actively maintain the site in his “retirement”).

Closer to home, the founder of the very site your eyes now gaze upon might have a thing to say about turning a sideshow into the main event.

It may take years, and may never completely replace a full-time salary, but having a source of income from doing something you enjoy can add a very interesting variable to your retirement calculus.

The Retirees, They Are A'Changin'
We will see a continued variance in what “retirement” looks like over the next couple of decades. Some of that, frankly, will be due to millions of people not having enough to retire, and fewer traditional defined-benefit pensions to save them. But it will also be due to people re-thinking the whole idea of retirement. According to the Kaufmann Institute, the 55-64 age group accounted for 20.9% of new entrepreneurs in 2011, compared to 14.3% in 1996. Starting businesses isn't just for young folks.

And you? What kind of retirement do you have planned? Know of any other examples of folks who worked a different path? Perhaps we'll start a retirement revolution!

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Saving mom
Saving mom
7 years ago

Strange that neither Mr. Money Mustache or Jacob of Early Retirement Extreme were mentioned.

Nicole
Nicole
7 years ago
Reply to  Saving mom

Didn’t Jacob unretire?

Joe @ Retire By 40
Joe @ Retire By 40
7 years ago
Reply to  Saving mom

Hey, what about me? I retired last month. 🙂
Traditional retirement is on the way out. It’s much better for me to – work, work, work, retire, part time work, retirement home.
We saved all my income for many years now and that enabled me to quit my job.

Nicole
Nicole
7 years ago

I’d like to second the retire by 40 blog– there are a ton of really great recent articles there that do a fantastic job of looking at issues surrounding early retirement. (Credit scores, life insurance, social security benefits etc.)

Elizabeth
Elizabeth
7 years ago

Joe, I liked your blog post about what it means to be retired. I find it interesting that you say you’re “retired” but you’re a stay at home parent with a working spouse who is self employed. That doesn’t mesh with the traditional view of retirement, but is a great example of “financial independence” or “financial freedom”.

I say I’m planning for “retirement” because I don’t really know what else to call it. What I really want is to reach a point where I can decide if and under what circumstances I work.

Looking forward to more of your posts!

Josetann
Josetann
7 years ago
Reply to  Elizabeth

Ok, I checked his site…he’s now a stay at home dad and his wife still works…wow, that means I’ve been retired since, um…28 methinks. Wonder how that’ll make my wife feel? 🙂

Dallas saver
Dallas saver
7 years ago

Didn’t realize you retired. Congrats!

Russell
Russell
7 years ago
Reply to  Saving mom

Mr. Money Mustache & Early Retirement Extreme would both fall under the category of “Supersave your way to early retirement”. They lived on a very small fraction of their (admittedly high) incomes and were able to use the rest to generate income through investments. Both have a somewhat flexible view of “retirement” and tend to lean towards the term “Financial Independence”, where you can work if you want to, but don’t ever need to work for money if you don’t want to.

Lance @ Money Life and More
Lance @ Money Life and More
7 years ago

Right now I plan for a traditional, maybe early, retirement. However, I’m only in my mid-twenties so I fully expect things to change. I am saving 25% of my salary just in case this is what I want to do and increase my contributions by half of my raise every year… Maybe I’ll take an early retirement, work some more, then retire for good at normal retirement age… time will tell!

Holly@ClubThrifty
7 years ago

We live off about 40% of our income and pay off our mortgage/save the rest. We will be debt free soon then plan on continuing to live off a percentage of our income until we reach the magic number when we feel we can stop working altogether.

We do have rental properties and will likely be buying a few more so I suppose we won’t completely retire. However, there will come a day when I don’t set my alarm and leave for my 9-5…and I am counting down to that day!

William @ Drop Dead Money
William @ Drop Dead Money
7 years ago

Great article! While you’re waiting for some “magic age” to roll around when you can ring a bell and tell the boss to pound sand, there is another something out there can dramatically impact your ability to retire. And that something is the economic cycle. If you are one of the 25% of people whose mortgages are underwater you know what I mean. Buying a house at the wrong time can wipe you out. Buying one or more houses when prices are low, and when most people wouldn’t even consider it, is totally different. Same house – way different outcome.… Read more »

Debbie M
Debbie M
7 years ago

If you’re staying in the house at least until you pay it off, it doesn’t matter when you buy it so long as you can afford it. Buy it, pay it off. If you buy it at the top of the cycle, at least your property taxes go down. Back when I bought my house, I only saw housing prices going up. That was in 1996. They continued going up for over a decade after that. In my area, we didn’t even have much of a bubble popping phenomenon. So, if I’d waited for prices to go down, I’d still… Read more »

DOTTIE
DOTTIE
7 years ago
Reply to  Debbie M

We paid our mortgage off very early also. Had a paid off house when the bubble hit.
Does not matter what my house is worth. It is my home not an investment. It is worth a little less than a slightly bigger house in a nicer neighborhood… always has been, always will be.
However, when the bubble was over I did reap the rewards of purchasing three dirt cheap rental properties

Josetann
Josetann
7 years ago

“This strategy is also used by Motley Fool contributors Akaisha and Billy Kaderli, who retired at age 38 and live on less than $30,000 a year by staying in low-cost but exotic countries, such as Thailand, China, and Ecuador.” I’ve crunched the numbers…we can live comfortably on $18,000 in rural Tennessee (about a 30 minute drive to Wal-Mart). That’s $50/week for eating out, all utilities, doing some fun things throughout the year, and our normal vacation consisting of 3-4 days of DisneyWorld and a week+ cruise. Just sayin’, you don’t have to move to Ecuador to live cheaply. “My first… Read more »

Kingston
Kingston
7 years ago
Reply to  Josetann

And what do you do about health insurance?

Josetann
Josetann
7 years ago
Reply to  Kingston

Right now, we have Medicare (woohoo for Universal Healthcare). In the US, we had a crappy insurance plan, one of those that had a $15,000 or so maximum yearly benefit. But, it was independent of any employer, so we didn’t have to worry about switching employers, using COBRA, or anything like that. Yes, bit of a gamble, I admit, and not for everybody.

Kingston
Kingston
7 years ago
Reply to  Josetann

I’m confused. Are you in Tennessee? In Australia? If you’re in Australia, is Medicare available to non-citizens?

Josetann
Josetann
7 years ago
Reply to  Josetann

“I’m confused. Are you in Tennessee? In Australia? If you’re in Australia, is Medicare available to non-citizens?” I have no idea where we’re from anymore. We have a house (paid off) in Tennessee, have driver’s licenses there, etc. At the moment we live in Australia, rent a house, have driver’s licenses here, etc. Medicare is available to all permanent residents and citizens. We’re permanent residents (specifically, we have a 175 visa). If we move back to the US and let our PR visa expire (yes, it’s permanent but only as long as you stay in the country), then no more… Read more »

Jerome
Jerome
7 years ago

Not totally serious but you missed a VERY important one: Why not marry somebody who makes or owns a lot of money! 🙂

I was lucky enough to marry a wife who now makes a lot of money. When we married we were both poor students and we didn’t own one cent among us. But her company has become very successful and this allowed me to retire at 41 and enjoy life.

Nicole
Nicole
7 years ago
Reply to  Jerome

My husband will be taking some time off to figure out what it is he wants to do, and we can do that because we can live on my income alone. Marrying someone who is good with all aspects of money is definitely beneficial!

Jamie
Jamie
7 years ago
Reply to  Jerome

Ha! I always thought I’d end up with someone richer than me so that I could keep doing what I love but live a wealthier lifestyle… I ended up with someone who makes considerably less than me, so *I* ended up the breadwinner! At least I ended up with someone I love, and working a job I love… But oh, the irony!

Savvy Scot
Savvy Scot
7 years ago

I agree that it is a fantastic book! My plan is to continue in a career that I enjoy and that excites me. That way it is not really work! At the same time, I continue to save with a goal to retire at around 55… Therefore getting the best of both worlds!

El Nerdo
El Nerdo
7 years ago

I looooove this article. Nice to see a clear breakdown of the various options– a good blueprint/reference to look at repeatedly. I have little to add really, I just wanted to say it– great article.

TB at BlueCollarWorkman
TB at BlueCollarWorkman
7 years ago

Doing construction/carpentry, I know that I’ll probably have to work a long time. I’m not sure if I”ll ever fully retire, although I’ll definitley retire from working for a company! I hope when my retirement gets beefy enough that I’ll be able to “shift down” and mow people’s lawns, clean gutters, and plow their driveways until I’m too feeble to get out of bed.

Elizabeth
Elizabeth
7 years ago

A good overview! I can’t see myself fully retiring so long as I’m physically and mentally able to work.

And that’s what scares me. I’ve seen friends of the family retire early due to health problems and disability, and have seen people succumb to cancer or Alzheimer’s by age 70. (And yes, their spouses ability to work has been affected as a result.)

I think it’s prudent for me to plan on fully retiring and then if I can keep working or change careers, it’s a bonus!

John
John
7 years ago

I had a negative net worth when I started working in state government at age 40, I am now 52 and single. I lived in a cheap apartment in a lousy neighborhood for 11 years in order to build some savings, then moved to a better apartment. I now have no debt and am putting 20% of my gross pay into my deferred compensation account, which just reached 6 figures. Just yesterday I did a rough calculation based on staying in my job until age 67 and continuing the 20% savings. I determined that my pension, social security, and an… Read more »

Elizabeth
Elizabeth
7 years ago
Reply to  John

I think that’s why some people pursue a different line of work or a money-making hobby in retirement. Unfortunately, a lot of pension plans are geared towards people leaving for good, not transitioning into retirement.

I would say that’s going to change in the future but I fear it already has — fewer workers actually have pension plans anymore.

John @ Married (with Debt)
John @ Married (with Debt)
7 years ago

Not a fan of this article.

A “retirement expert” who tells people that retirement is “just too risky” for their wealth? You gotta be kidding me.

What’s the point of working…to build wealth? Maybe for you, but not for me. The goal of work for me is retirement.

I’ve said this before: most financial planners and retirement experts have one thing in mind: keeping you working as long as possible. Keep that in mind when reading articles like this.

Elizabeth
Elizabeth
7 years ago

Hmmm. Maybe in the U.S. There’s research going on in Europe about how people are changing their career structures. Rather than work until you retire, people are taking more time off during their career and delaying retirement. So they might work 40 years over a 45 year period and take sabbaticals to travel, raise kids, etc.

The idea of traditional retirement is changing, but that’s a good thing because we have more options. If people want to work and then call it quits for the rest of their lives, that’s a good option too!

John @ Married (with Debt)
John @ Married (with Debt)
7 years ago
Reply to  Elizabeth

It’s no surprise to me that people are changing their attitudes, given the long-term campaign by the financial industry to change their attitudes about work. I’m not sure you’d see many people from the Greatest Generation saying things like “I hope I never have to retire!” If you scan the comments on this post, you will see many of those types of sentiments.

The memes from the Retirement Industry are taking hold. They preach about Social Security going broke, taxes, anything to get you to think that retirement isn’t an option (but you should save for it anyway, of course).

Robert Brokamp
Robert Brokamp
7 years ago

John, I admit, it’s rather ironic. I would, however, make a few points: 1. The No. 1 goal for investors is retirement, so financial planners have a vested interest in encouraging retirement. Also, retirees are a huge segment of the financial-planning market, so advisors like retirees, too. 2. If I could, I’d change the word “retirement” to something more like “financial freedom.” Some folks have relabeled it “re-wirement,” as in, it’s an opportunity to do those things in life you always wanted to do (and maybe you don’t have to wait until your 60s to do it). But retirement is… Read more »

John @ Married (with Debt)
John @ Married (with Debt)
7 years ago
Reply to  Robert Brokamp

Robert, thanks for taking the time to respond.

I guess I’m just bogged down by the general sense of negativity around retirement, a collective “everybody is screwed so it’s ok” attitude. I think people are going to be better off than they think, but only if they can have a change of mindset, live more slowly and intentionally, and avoid the temptation of lifestyle inflation that comes with aging.

You are right; the notion of retirement is changing.

Good luck on getting your Master’s. I like the idea of using a divorce to pay for a new direction.

Jez
Jez
7 years ago

I agree. Financial planners are just like regular workers. They’re running the treadmill just like all other office plebs. Except I think some of them ‘assume’ they’re financially fit because they have the title ‘financial’ planner. Whearas most rich folk will tell you to stear well clear of these people. I’ve been to three before and would never go back.

Kim
Kim
7 years ago

I am planning to slowly wean myself from work. Thankfully, as a nurse, I have great part time options. By the age of 50 (5 years from now), I would like to be working 32 hours per week. I would like to decrease to 24 hours per week by the age of 55. I envision needing to work 24 hours per week for the following decade to maintain health insurance until I’m eligible for Medicare (if it’s still around). As far as full retirement, I have not set a specific age. I’m leaving it open to factors beyond my immediate… Read more »

CincyCat
CincyCat
7 years ago
Reply to  Kim

Several years ago, I tried to “wean” myself – and our income – from my full-time work schedule after my first child was born. I had negotiated a work-share arrangement that let me work 2 or 3 days a week, which worked great for over a year; but then my department got reorganized, and that option went away (I had to go back to full time) – just as I found out I was expecting #2… 🙁

Lisa Aberle
Lisa Aberle
7 years ago

While I am eventually planning to stop working at my job, I never plan (as long as I’m able) to stop working entirely. I have a couple of side gigs now and a business idea that I want to try. Life seems too short to retire!

AMW
AMW
7 years ago
Reply to  Lisa Aberle

I feel the exact same way. My husband never want to “retire” in the rocking chair on the porch kind of way. We plan on working until we can not, just want it to be doing something we want to do and the hours we want to do it on.

Barb
Barb
7 years ago
Reply to  AMW

I would only observe that there is a huge difference between sitting in a rocking chair and working. You may want to read some of the retirement blogs out there. Most retirees I know will tell you they have no idea how they ever had time to work. Personally, Im on a fixed income and I feel the same way, so its not a rich thing. I go to school, I travel, i garden, I do geneology, I hike, I read, I go out to lunch in the middle of the day with friends. I do work very part time… Read more »

Nicole
Nicole
7 years ago

I love Sewin Chan. That 1/3 number you’re reporting though isn’t just reverse retirement, it also includes “bridge jobs,” which includes going directly from a full-time career in investment banking to say, working at the cheese counter at Whole Foods part-time. Unretirement (or reverse retirement) is an increasing phenomenon but it’s a bit smaller than that. Nicole Maestas is the expert on reversing retirement and has a great recent paper on the topic. (On that last point with entrepreneurship– Julie Zssismopolous has several working papers on the topic of older worker entrepreneurs.) Great article, btw. Glad to see you’re back… Read more »

sjw
sjw
7 years ago

I’ve seen many well-respected senior people pushed out of companies when they’re in their mid-50s, so I’m assuming that around that time I’ll likely be moving to consulting/part time/another career.

This is part of the reason I’m pushing to be mortgage free sooner. Once we have that commitment taken care of, I’ll be more free and not as beholden to any given job.

As for actual retirement, it’s still too far away, I’m just focusing on giving myself as many options as possible, knowing that it likely won’t be completely up to me (economy, health, family, industry, company, etc.).

Holly
Holly
7 years ago

I would love to retire at 55, but I have to wonder how the people who do that get health insurance.

The cost of insurance on the individual market is ridiculously high. And with the spectre of Medicare vouchers in my retirement makes me fear I’ll never be able to afford retire at all if I want health care.

lmoot
lmoot
7 years ago

My current early retirement plan is more like WORKWORKWORK reeeettttiiiiiirrrrreeeeeee I have the energy now to work hard, and work multiple jobs, and I just save like crazy. I am working towards obtaining investments that will provide me with income(rental properties) that will sustain me until I am ready to get into my 401k. My plan is to max my ROTH each year and keep my current full time job for the 401k matchup. I want to semi-retire at 37 and plan on using a combination of my ROTH contributions, parttime job, and my investments as income, and to continue… Read more »

Jez
Jez
7 years ago
Reply to  lmoot

Like our next door neighbour right now. Hes just built a giant shed, and I also saw the big furniture store truck roll up yesterday. Home equity, guaranteed to keep you working longer! How sad is that.. You should never borrow against your home loan, the shed isn’t too bad because it adds value but for lifestyle stuff? NEVER. Unless you’re old and need a reverse mort

Joanne
Joanne
7 years ago

I have a slightly different view of retirement than most have expressed so far. I’m a teacher in Canada, so I have a good defined-benefit pension and health coverage, the latter of which is a huge benefit that most Americans don’t have. I’ve been working part time for five years due to some health issues and that has changed how I see work and retirement. I like the idea of working well into my golden years but also having some time in my younger years (I’m 42, with a partner, no kids) to enjoy life. I feel that my health… Read more »

Oleron
Oleron
7 years ago
Reply to  Joanne

@Joanne: That is SO true about taking care of your health. It’s the one thing only you can control. Of course, regular medical care plays a part, especially if you have a persistent physical issue. But the most content older people I know are the ones who stay in shape. No, they don’t take expensive classes or hang out at a gym. They’re not trying to lose weight (no need — they’re already at an appropriate weight and are not trying to impress anyone) or build up their abs,for pete’s sake. They walk, they swim when they have access to… Read more »

Marcy
Marcy
7 years ago
Reply to  Joanne

I have a defined-benefit pension, too. I had to retire last year due to my husband’s health issues. I am so fortunate that I had saved five months of leave and then was able to retire at the end of the school year.

I may have grumbled a little bit when I saw all that was deducted from each paycheck while I was working, but am thankful now to have this pension.

A person never knows what life will throw at them.

Lori Blatzheim
Lori Blatzheim
7 years ago

Hello Robert Brokamp,

You are so really right on with this post. I found it particularly helpful.

I’m not surprosed that many people (I think you mentioned 1/3) retire and then try working again.

To be fair, I think it is difficult to determine how we will really feel about retirement before a we take the big step.

We project how much money we will need to live a reasonably comfortable life and hope for the best. Sometimes, the “best” doesn’t happen.

Thank you for mentioning strategies that others have used.

Lori Blatzheim

Rail
Rail
7 years ago

I think most people now days understand that retirment is not going to be all travel in Europe, fishing 24/7, quilting, or starting a vinyard. Some sort of income stream other than SS/401k will be needed. That said those of us in physicaly/mentaly challanging jobs (ie Railroad/Fire/police/constuction) want to retire ASAP and find a different vocation. I have interests and hobbies that can bring in some money to offset retirement “costs” but worry about the 500 lb. gorrila in the room that is Health Insurance. Im 42 and can retire in full at 60, but then have to find insurance.… Read more »

Barb
Barb
7 years ago
Reply to  Rail

Well, yes and no, lol. I live on a fixed income. I quilt, I travel (here and in europe), I play golf instead of fishing, I also go to college part time, and a gazillion othger things. I do have a small income stream, but thats cause for now choose to keep the 2400 square foot house. Yes, there may be some adjustments, but giving up hobbies and the life you planned are not always necessary.

Rail
Rail
7 years ago
Reply to  Barb

Hi! I guess I didnt mean for it to sound like we should strive to live in a cave when we get older, and if you have the means then please use them how ever you see fit. I just worry what the hell the world economy is headed for. Real buying power in the U.S. has fallen over the last 35 years and I dont see much improvement in the next 35. Keep yer’ powder dry, pilgrim!

Jamie
Jamie
7 years ago

You know, I can always find *something* to take away from each personal finance article that I read… But this one is fantastic. I feel enlightened, I feel inspired, I feel like there’s a whole world of possibilities! I have retirement through my work (more than I’ll need), and in addition I put a little away each month– About 10% of my take-home pay. I have to keep reminding myself that I’m working hard to get out of debt, and that’s my priority right now, and it’s okay for the moment that I’m not putting more away for retirement. I’ll… Read more »

Lmoot
Lmoot
7 years ago
Reply to  Jamie

I LOVE the Roth. I only contribute up to my company’s matchup for my 401k, then I start contributing (okay, WILL start…gotta keep myself honest) to my existing ROTH. I cannot believe how many people who are eligible for ROTHS and don’t even know it exists. It’s the perfect vehicle for those that plan on retiring early. You can take money out penalty-free, as long as you don’t take out more than you’ve contributed. Also, it’s a GREAT thing for youngish people like myself who expect to be in a higher tax bracket when they retire since the ROTH takes… Read more »

Tyler Karaszewski
Tyler Karaszewski
7 years ago

He calls it geoarbitrage – “to exploit global pricing and currency differences for profit or lifestyle purposes.” This strategy is also used by…

It is also used by giant multinational corporations who find it cheaper to produce goods in China and Southeast Asia where there are little in the way of regulations to protect workers or the environment compared to places like the U.S. and western Europe, where the cost to build things, but also the quality of life (at least for the moment), are higher.

It is smart capitalism, though.

Elizabeth
Elizabeth
7 years ago

True, but isn’t it possible within your country as well? I’ve seen numerous cases where people from Toronto, Calgary, etc. sell their high-priced paid off homes and move somewhere where the cost of housing and living is far less expensive. They don’t have to go halfway around the world — just a few hours outside of major city centres.

CincyCat
CincyCat
7 years ago

“Rather than saving all the retirement for the end of your life, perhaps it’s possible to rearrange the order by taking a break mid-career, gradually ratcheting down the work week, or working fewer weeks out of the year.”

Sounds like a little bit of heaven, to me…

I’ve often wondered why it is that universities see the value in allowing professors to take extended time off every few years on sabbaticals, and other countries let you take siesta during the day, but the corporate world of the US won’t even let you have 30 minutes for lunch sometimes.

smh…

getagrip
getagrip
7 years ago

I do not believe it’s the traditional working at the 9 to 5 until you’re 65 as an option that’s a problem for most people who do retire that way. It’s usually not having a vision of what you are going to do once your days aren’t structured. That’s where I see many people struggle. Think of it this way. If you plan on living at the same level you’re living at now, basically doing many of the things you do on weekends and with, say, 3-4 weeks of vacation time a year, what you’re forgeting is that you will… Read more »

Ramblin' Ma'am
Ramblin' Ma'am
7 years ago
Reply to  getagrip

Definitely agree with this. Seems like a lot of people feel “lost” after retiring.

Personally, I do want to do the traditional “work until my 60s and then retire” thing. I am not an entrepreneurial type and am fine working at an office job until then. But in retirement I’d like to then get a volunteer gig, or maybe work part-time for just 10-15 hours a week, just to give my life structure.

mary w
mary w
7 years ago

I did the work, work, work, work, retire. I love “traditional” retiremen and should have done it 5 years earlier (I retired at 55). I’ve had lots of opportunities to go back to work part-time as a contractor but have turned them all down.

Amanda
Amanda
7 years ago

http://web.mit.edu/newsoffice/2012/end-of-life-financial-study-0803.html

Looks like the best thing you can do to plan for retirement is stay married.

Ru
Ru
7 years ago

New Scientist ran an article a couple of years ago talking about how the most expensive part of space travel wasn’t getting people up there or onto to moon/mars, but getting people back safely. They proposed that perhaps in the future astronauts may have the option to retire in space- on a space station or a moon base or Mars base. I know it sounds absolutely ludicrous, but part of me really wants to retire on Mars. I could have a little garden under a biodome, maybe even make some ceramics out of martian clay! Wouldn’t that be amazing? So… Read more »

Gina
Gina
7 years ago

Being in my late 40s, 5 years post-divorce and finally getting some momentum going on my 401(k), I feel I will fall into the category of working part-time at something I want to do vs being able to retire from working completely. Oddly enough it reduces the stress I have about getting older. I am investigating what I could “diversify” into now and build on that.

No cat pictures!

chacha1
chacha1
7 years ago

We don’t yet have what I would call a “plan” but we definitely have a concept. The concept involves purchasing a retirement property in a low-cost but desirable area, and having it paid off well before I reach age 65. When we leave Los Angeles and our full-time work here, our income needs will plummet. We will have the option of continuing to work, as much as we might want to, in our new area. I don’t believe either of us (at this time) contemplates stopping work entirely before that’s physically necessary, since our immediate observation is that the retired… Read more »

Jacq
Jacq
7 years ago
Reply to  chacha1

Chacha, I don’t know about the retired life vs working life and being unhealthy. What I do know is that when I was voluntarily off work for 6 months last year, I lost something like 25 pounds easy peasy (even traveling!) and 15 of them have come and found me in the last 7 months since I’ve been back to work. My pedometer readings during periods of work are 1/2 of what they were when not working and I know I definitely eat better when not working. I also sleep about 2 hours per night more when I’m not working… Read more »

Jerome
Jerome
7 years ago
Reply to  Jacq

Yeah, Totally agree! Provided you stay active in retirement there are not health risks. But usually less stress and enough time to cook as healthy as you want.

chacha1
chacha1
7 years ago
Reply to  Jerome

These are very good points, but we are both looking at family histories of long-lived, substantially-disabled people. Most of those who went downhill the fastest *without being actually sick* (and who therefore stayed alive in poor condition the longest) should never have stopped working in the first place, because they never replaced that activity.

Individual situations are always unique. However, we know ourselves well enough to know that the scenario of watching 8+ hours of TV per day, as we see many, MANY people do in retirement, is all too likely.

Barb
Barb
7 years ago
Reply to  chacha1

And here I go again…………I dont know any retiree who is idle and if they do its their choice. WHY are these discussions about retirement always about “working full tiem vs sitting on the porc? Seriously??

Nicole
Nicole
7 years ago
Reply to  chacha1

Empirically there’s mixed evidence on what happens to your health when you stop working (and, of course, it varies by gender, age, and marital status). The correlation is that people who stop working have worse health than those who stay working. But obviously people with bad health are more likely to stop working, and that’s reverse causality. Women, with their stronger (on average) social networks seem to do just fine when retired. Men do not do as well. Unmarried/unpartnered men tend to do worst. That could be because of social networks or it could be because of selection into these… Read more »

chacha1
chacha1
7 years ago
Reply to  Nicole

To me, this just underlines my point. DH and I are very healthy (and happy) now in a scenario of working full-time jobs and participating in a demanding sport that brings us into an active social network.

Given that these factors are interrelated, and given that maintaining good health is a very strong value for us, why would we want to change how we live?

We don’t want to stop working entirely. We just want to stop working in L.A. 🙂

Barb
Barb
7 years ago
Reply to  Nicole

That would not be my experience, anecdotally or otherwise. My experience is that people who keep active stay healtheir. but work is not neccesary for activity. NOt only that, but often people are MORE active in retirement, depending on the type of job they have had.

Stu
Stu
7 years ago

How do early retirees afford health insurance? My wife has a pre existing condition as does my daughter. Currently I can only get insurance for them by staying on the job. If ACA is not over turned I may have a chance – I cannot see why any thinking person would oppose ACA.

alcie
alcie
7 years ago
Reply to  Stu

Unfortunately, I think the reality (at least in the US) is that many people cannot. My parents can easily afford to retire, could have afforded it probably 5 yrs ago, except for the health insurance. They both have preexisting conditions, and effectively cannot get individual health insurance. My Dad’s is simply due to his genetics, and Mama’s is due to the nature of her job (she’s a nurse and has had a lot of injuries as a result). So Mama will continue to work until she’s old enough for medicare, since she’s the one with the job that has health… Read more »

Josetann
Josetann
7 years ago
Reply to  alcie

“She would like to retire, and my parents did everything right as far as saving a large % of their income, but health insurance is the real barrier to retirement.” My wife is/was a travel nurse, so I’m a bit familiar with that. Many nurses will take a short assignment (8-13 weeks) with an agency that provides good health care, then COBRA it until the next assignment (COBRA is good for at least 18 months). Now…make sure the insurance is good (many agencies have utter crap for health insurance), and make sure there’s no lapse (so pre-existing conditions aren’t an… Read more »

Rosa
Rosa
7 years ago
Reply to  alcie

when I had my son, I had a nurse who was so unsteady on her feet I literally had nightmares she was going to lose her balance and put her hand on my (c-section) belly to stop falling.

There really are professions where people should not be working until they’re 65.

UC
UC
7 years ago
Reply to  Stu

I agree. I find it very puzzling that the healthcare act is held up as a barrier for small businesses when I find so many people afraid of venturing out and starting their own businesses only because they are worried about giving up their health insurance with their jobs. My husband and I were discussing our retirement/change of career plans. We have only been living in the US for 5 years and would like to continue for a few more but the thought of having to deal with US health care outside the safety net of a job makes us… Read more »

Jenna, Adaptu Community Manager
Jenna, Adaptu Community Manager
7 years ago

I like the idea of partial retirement, still working because I’m loving what I’m doing or volunteering and traveling throughout retirement.

Michelle
Michelle
7 years ago

My father is able to work from home for at least some of the week. He has traveled to a variety of places, working from his hotel room over the internet starting early in the day. In the evening, he gets to explore and enjoy the local area. It’s allowed him to both travel and make a living.

cajh
cajh
7 years ago

Great article and comments! Thanks for keeping me motivated to pay off my debt so that I can start saving for retirement aggressively.

Megan
Megan
7 years ago

Excellent post!

I had a coworker who “retired” from the company, but only unofficially. He’d still come to meetings and was a consultant with the company because he truly loved the job. He knew he wasn’t cut out for the “golf/fish/do stuff around the house” sort of retirement, so he kept working, albeit with a bit lighter schedule.

I remember being so impressed with his outlook on his career, and although I was only 22 and fresh out of college at the time, I thought “THIS is the kind of retirement I’d like to have.”

Troy
Troy
7 years ago

I find these conversations so interesting. Most interesting is the collective agreement by most commenters that their work is a “job” A job being they are employed somewhere and work for someone else…an employee. I don’t have a job. I own businesses. I don’t have a 4 hour workweek, but I do own a several 40 hour businesses. I don’t outsource, I employ. The real shift in thinking about the steps in your financial life take place when your idea of freedom is taking on more responsibility, not less. In owning more producing enterprises, not escaping from someone elses. I… Read more »

FERPer
FERPer
7 years ago

Loved this article’s focus on changes in how we view retirement now. My path has both traditional and non-traditional elements. Just took advantage of my university’s faculty early retirement program which lets me work half time after retirement for up to 5 years. Allows me to ease out of the worklife I’ve known for 40 years. Have a defined benefits and healthcare package. Live in a state with a precarious budget so don’t know if those benefits will sustain. Have safety net but it will be lean living. I’m 63 and going back for a second masters in a different… Read more »

bob jackson
bob jackson
7 years ago

i think the good Lord will determine when I retire.

Susan
Susan
7 years ago
Reply to  bob jackson

This response reminds me of the story about the guy who needed open heart surgery and kept refusing the procedure, stating the Lord would take care of him. When he died shortly thereafter as a result of a heart attack and got to the pearly gates he asked the Lord why he hadn’t taken care of him. The Lord replied, “I did! I sent you a doctor that offered a solution. Why didn’t you take it?”

We really do need to take charge of our own lives since the tools to do so are right there for the taking.

Carla
Carla
7 years ago

Retiring in the traditional sense went out the window when I was diagnosed with a chronic illness, went on state disability and eventually SSDI at 31. Before Medicare kicked in, I blew though most of my savings in medical bills, loss of wages, etc. You can say that I am “retired” now though I do work part-time to supplement my income now. With that said, I’m looking for ways to be independent from SSDI. I’m not sure how long it will last with the current political climate and its not enough to live on, especially since I’m still so young.… Read more »

Frank
Frank
7 years ago

My ideal retirement would be doing the things I enjoy doing the most like fishing and hanging around, having morning coffee and not worry about work and stress and commitments..ahh..The good life. I’m working towards that by building multiple streams of income only made possible by the Internet. Great article by the way..

Kraig @ Young, Cheap Living
Kraig @ Young, Cheap Living
7 years ago

I’m 28 and am under the mindset today that I want to be “able” to retire much earlier than 59.5, 62 or 65. I want complete career freedom by age 50 or even 45. I think it’s possible for most of us young people, but we need to start early, kick it in gear and find work we love. Who wants to work with their nose to the grindstone for 20, 30 or 40 years at something they don’t like. I like the idea of redefining retirement. I’m sure not thinking about it like people traditionally have. I don’t think… Read more »

Tamara
Tamara
7 years ago

I think the term “retirement” may need to be retired and replaced with FI (financial independence). Retirement seems to give the connotation that folk are living quietly and passively, just waiting to pass, which in no way whatsoever exemplifies how my husband and I live. We view retirement, or FI if you will, as an opportunity to craft lives that are deeply meaningful and exciting to us. In our case, we are pursuing higher education through a lifelong learning program offered by our nearby university, continually raising the bar on our own physical capabilities (we’re currently in training for our… Read more »

Chris
Chris
7 years ago

I don’t have much of anything to add but did want to thank Robert for this interesting post. I don’t have debts and am approaching retirement so this subject is of more interest to me than some of the other writers. I would be interested in learning more about how people found intereating and flexible part-time work and how difficult – or easy – buying health insurance before Medicare was.

Smart Money Zone
Smart Money Zone
7 years ago

I would go with reduce living expenses and save, save, save. It may take some time, but it can be done.

Jez
Jez
7 years ago

My Wife & I are due to retire at age 36. Have been investing and laudering away for the past 8 years so a total of 12 years from start to completion for us. We will then take 1 year off work to do whatever, maybe rent our house out at a cheaper rate to someone who would like to look after our beloved pets for a little more income. We estimate that after the 1 year mini retirement we will go back to some form of work and do two more years while we purchase more investments, then call… Read more »

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