Retirement: A Full-Time Job

My Decision to Retire

I have spent the past several months excitedly telling friends, family and perfect strangers that I will be retiring at the end of this year at the age of 44.  The responses from people have sometimes been surprising to me.  Some don't understand why I would want to retire at such a young age, some wonder what I will fill my time with, and a few seem to very much disapprove of my decision.  It's almost as if I have offended them in some way.  This reaction surprises me the most.  I feel very proud of myself that I achieved a goal that I have hoped to attain since early in my career.  So it is hard for me to understand the viewpoint that I am doing something that warrants disapproval.

It just occurred to me, though, that each person's view on retirement is influenced by his own life experience.  And I have a vantage point that not many other people share.  In two weeks, I will turn 44, the age at which my own mother died of cancer.  While I have never really worried that I would die young, it has given me a perspective that life is short and so you should try and make the life for yourself that you really want, not the one others think you should live.  You shouldn't have to wait until you are 65 to retire if that's what you want for yourself right now.  Life can be too short to wait until later to do the things you would really like and are able to do now.  I'm figuring on having another 50 years in front of me, but why not start living them the way I want to if I can make it work financially?

I had a goal and consider myself extremely lucky to have been able to achieve it.  Most of my friends are happy for me, many would also love to retire.  My dad seems very proud (especially since he has always preached that it's most important to make sure you are having fun) and is happy I will have more time to spend with him in his own retirement.  I think my mom would feel the same, and would very much approve.

Retirement and the "B" Word

This weekend we had our annual post-Thanksgiving lunch with our friends down in LA.  As usual, the leftovers were great and the wine was fabulous (not to mention the conversation and the company!)  We got to talking about my upcoming plans for retirement and they asked me if I'm going to be retired, like never-work-again retired.  That is the plan at this point, but as usual, I tell them "unless I find myself getting bored" (which I always say, but I don't really believe possible), or "unless I find that I love money more than I think I do" (which I fear, may actually be possible).

Which brings me to the "B" word:  budget.  I recently read a fellow retiree's blog in which she talks about how much money one needs to retire (more than you think) and wondered how I will really feel about living on less money.  I think to many people, the budget whose confines my husband and I must live within would sound very generous, indeed.  But it does take our current level of spending and shave it a fair amount.  Some aspects of that don't worry me--we've lived in this house for three years now and so won't have the new house expenses of furniture, landscaping, and artwork.  We should be done with all that.  I'm also figuring that clothing expenses will go down as I switch from professional clothes (Ann Taylor) to putting-around clothes (Old Navy), not to mention the corresponding dry cleaning bills.  We'll (or should I say I'll) be making certain sacrifices--saving on the cost of house cleaning and gardening to do these things myself.  While I'm planning on having far more time to read, I'm planning on patronizing the library rather than the bookstore.  When I have the time to paint my own walls, I actually enjoy that, hiring a painter was more out of lack of time than my lack of desire to do it myself.

In retirement we will also have more time to travel, which means more trips, but will require less expenditure per trip.  We have slowly migrated over the years to nicer and nicer hotels, sometimes splurging on suites and ocean front rooms.  The new budget will simply not allow this.  Seems a small price to pay for the increased time to travel, but I wonder will I still feel that way after several trips?  Will I enjoy road trips or will I be yearning to just jump on a plane to get us there NOW?

I think back to when I first graduated from college and started working.  I had a cute little apartment on the top of Nob Hill, for which I paid more than one-half of my take home pay.  That left me little more than $500 per month for my car payment ($100), groceries, utilities, clothes, transportation and what little travel and entertainment I could afford.  As you might imagine, my credit card balance grew steadily over those first years.  I would never have bought a cup of coffee on the way to work, or a magazine to read on the bus ride home, it just wasn't in the budget!  But I compare my more free-spending life now with my budget-restrained life back then and find I wasn't any more or less happy than I am now.  As I do now, I loved my life back then.  Of course I always looked forward to the future when money would not be as tight, but it's not the additional money that made me happy, I was already happy!

When I look back at those days and compare them to the budget I will be required to live on in retirement, I have to laugh.  Gosh, if I survived that I can certainly survive a budget that includes wine, travel, fine dining and many other extravagances I didn't have back then.  And the biggest difference of all, back then I had a tight budget AND was working; with the retirement budget, it may be tight, but it doesn't including working!

My Path to Retirement

I recently stumbled upon an interesting blog, Millionaire Mommy Next Door.  She retired at 40--very impressive, huh?  She discusses financial issues surrounding the path to financial independence.  While I will also be a young retiree at 44, I feel I really can't, in good conscience, offer too much in the way of financial advice on this blog.

The truth is, I can't claim to have scrimped and saved to reach this goal.  Nor can I say I've given up much in the way of luxuries to achieve retirement.  I do not profess to be some sort of investing genius, nor have I made much in the way of hard choices along the way.  The way it happened for us is really, mostly, non-transferable.  (And no, I'm not a trust fund baby--that one would make my dad laugh out loud, I'm sure!)  Our path to retirement looked like this:

My job made it easy:

Seventeen years ago, I landed the job of my dreams.  I was excited to leave the world of public accounting for a new and interesting job in venture capital.  The environment was wonderful, my job was challenging in new ways, and the people I worked with were fun, interesting, and appreciative.  It also turned out to have a lot of up-side potential (which was not actually apparent until after I had already been there for five years).  As you can see, there's no advice I can really offer here except to say go get a job you really like and hope for the best . . .

My husband lost his job:

Obviously, this is not an approach I would recommend.  My husband worked for a dot-com which bombed and he found himself without a job.  The experience was a tough one and so he took some time off to decide what to do next.  What we then learned during that time was that we not only could live comfortably on just my income, it was how we wanted to continue living our life.  (The advantages of a stay-at-home husband are beyond the scope of this post, but you can imagine how easy my life is because of it!)  It was a forced way for us to find ways to live on less, which I guess is a good exercise for anyone considering retirement (if, like for us, retirement will provide for a fixed budget within which you must live).

We don't have kids:

Another obviously non-transferable method, either you want kids or you don't.  You can't really use this one as a retirement planning tool.  It's just something that wound up, indirectly, putting us at a financial advantage.  We didn't have the day-to-day expense of kids or the financial burden of saving for college (that money went to buy a vacation home--which will be sold to help finance retirement!)  But here, we didn't feel like we were giving up anything because neither of us ever wanted kids.  So, no take home message here either.

We saved all the gravy:

Which brings me back to my job and the upside I mentioned.  The only real advice I can offer that applies to most everyone is to sock away the gravy.  You know, the unexpected windfalls, bonuses, and other remuneration beyond regular salary.  Not everyone has gravy, so this may not be possible for everyone.  But I do observe that for many people, as there is more money available, more money gets spent.  I include myself to a certain extent here because I never was one to "save the raises" and continue living a lifestyle of the previous year's income.  But we did save the gravy.  Saving the raises is certainly also a good approach, but we opted to grow our lifestyle with each raise.  We've enjoyed many luxuries because of that.  If we had not done that, we would certainly have a bigger nest egg now, but everyone has to balance their own current level of enjoyment with their future goals.  Striking that balance is an art, not a science, and requires a different formula for each of us.

The big challenge now will be living within the new budget.  But that's a subject for a future post . . .

You Know It's Time To Retire When . . .

Ok, a serious article about how you know it's time to retire.  I thought I would add a few of my own:

1. When even cleaning your own toilet seems more appealing than going to work.
2. When you check your "retirement spreadsheet" at least five times a day.
3. When you've been obsessed with retirement, basically since the day you started work.
4. When your finances make it even remotely possible to catch up with your obsession.
5. When you regularly start violating your own no-drinking-on-week-nights policy.
6. When your spouse has been retired for 4 years and you're starting to harbor feelings of intense jealousy toward him.
7. When you don't even care that your first Social Security check is 25 years away.
8. When you don't even care if there will still BE Social Security in 25 years.
9. When you don't care which assets you will have to sell off to make it happen.
10. When you even start thinking that perhaps your next car should actually be an RV!

I Might Not Be Wanting to Retire if I Were Generation Y

I too, watched the 60 Minutes segment last night about the "Millennials" (aka "Generation Y") entering the work force.  And here's the thing, I'm jealous!  I know, they sound a bit, shall we say, high-maintenance, requiring constant praise, meaningful work, and having the nerve to put their friends and personal interests (or as I like to call it life) before work.  It appears they do not look to the sacrifices their parents made as something they would like to replicate.  And there is a certain truth to a fellow blogger's response to that:

The interesting part is that the little snot nose didn’t say that the reason mom and pop spent so much time and sacrifice is to run the little sh!t around to soccer, piano, etc and get trophies for just showing up.

Admit it Boomers and Gen Xers:  wouldn't it be great to receive constant praise at work?  Hey, I would be delighted to receive ANY praise at work!  I work in an environment where everyone does a great job, so we all take it for granted (and sometimes are taken for granted).  How great would it be to be part of a generation that is so needed (in terms of the absolute numbers in the workforce) that they can dictate that their employer actually tell them when they did a great job.  How fun it would be to actually feel that valued!  Maybe retirement wouldn't look so attractive to me if employers were fawning all over me!

USA Today (thanks for the link) quotes an expert:

"Generation Y is much less likely to respond to the traditional command-and-control type of management still popular in much of today's workforce"

Well, shoot, I think I would be much less likely to respond to that than the be-nice-to me type of management style they are requiring. 

Perhaps they are on to something.  I can't help but think, 30 years from now when this generation is ruling the world, it's  going to provide a work environment that is just much nicer than the one we Boomers have created.

At What Age To Retire - That Was Not Our Choice To Make

(Thanks to my first guest contributor:  DD (Doug's Dad))

How the working world has changed.  I remember when no one talked about retiring in their 40s.  My experience was pretty typical of those of my generation who worked for big corporations.  The time from age 40 on up was like a crapshoot - who would get the axe and who would live until another round of cutbacks.  No one thought, hmm, it would be nice to retire at 40 or 45.  Will I have the money to do it?  That answer would have been emphatically no.  By the time I was in my late 50s and the axe fell on me, I was in a financial position to be retired thanks to the generosity of the severance plan that my company offered.

Money wasn’t the problem.  Being unceremoniously kicked out the door was.  We, of my generation, fully expected to work until age 65 or thereabout. It was a blow to my self-esteem to be jobless. I now marvel at, and am a little envious of, the young people who can contemplate, plan and actually carry out retirement in their 40s.  The diametrically opposite psychology of the two generations is amazing.

After I was retired, I would wake up at the usual early hour that I had become accustomed to for all those years and realize that I didn’t have to go to work and wasn’t that awful.  I didn’t know what to do.  I tried getting another job, but at my age (59) and with no really specific skills, it was a frustrating and fruitless search.  I felt pretty useless and unhappy. Finally, I found a volunteer job where I could use my coordinative and managerial skills.  This made me feel much better about myself.  After about six months I began to realize that the corporate job that I had hadn’t been so important after all and I now had time to do many other things at a reasonable and, perhaps, inefficient pace.  But, hey, this is my life and I don’t have to answer to the corporation anymore. It’s been 13 years now and I certainly don’t regret getting out early anymore.

DD (Doug's Dad)

Am I Drinking My Retirement Savings Away?

I just read an article in the New York Times a couple days ago "Imbibers Add It All Up and Gulp".  With a finger pointed directly at me, the article asked ARE YOU DRINKING AWAY YOUR RETIREMENT DOLLARS? (OK, so maybe not those words exactly).

Interesting question though. I decided to do a little digging into our own drinking expenses.  The results--shocking!  It turns out we spend about $325 per month on wine, $175 per month on alcohol out (dinners, concerts, sporting events), and while I don't know this number exactly, I'll guess $100 per month non-wine alcohol (the hard stuff) at home.  That's six hundred bucks!  Over $7,000 a year!

I'm sure you are now inclined to recommend Alcoholics Anonymous rather than worry about the state of my finances.  So let me re-direct your focus to the issue at hand, retirement.  I'm 43 years old right now.  $7,200 per year socked away at 6% interest for 20 years is a nearly a quarter of a million dollars.  I kid you not.  Cutting back on this expense would surely guarantee that at 63 we would not be eating cat food for dinner.

But, alas, the obvious issue arises.  That 20 years wouldn't be nearly as much fun dry (not to mention just plain impossible for us to do).

But I do wonder:  when I'm not going to work every day, will this expense possibly decrease simply because I won't feel the NEED to drink as much?  Right now we have a (not-so) strict "no drinking" policy on week nights with the following exceptions:

1. If we go to someone's house for dinner,
2. If we go out to dinner at a restaurant, and
3. If we have people over for dinner.

(Note:  a bad day at work is NOT an exception, but you can also see how easy it is to get around that one--simply go out to dinner.  And I must admit that I have recently taken to just skipping that extra step and going straight to the bottle during this time of my growing impatience to reach the finish line at work.)

So, it will be very interesting indeed, to see how this budgetary item is effected by my upcoming retirement.

Retirement: Toward Freedom or Away From Unhapiness?

I read about job burnout today on About.com: 

"Regardless of how much you like your job there will come a time when you just don't feel like doing it anymore.  If you could choose between being sick enough to stay home (and not just lying about being sick) and going to work, you would actually chose to be sick."

Tonight, I realize that in my desire to retire, I'm not just running toward something (freedom, fun, "being the boss of me!") but also running from something, my job.

As this article points out, there are several ways to fix job burn out, the most obvious being quitting your job.  At some point, the job I loved became unfulfilling to me.  I know, at that point, most people would just get a new job, something that fulfills them.  But when I got to this point, I reached the conclusion that if I was going to have to have a job anyway, it might as well be this one, nice people, pleasant environment, and very financially rewarding.

So the real question became, did I have enough saved to take the option of not doing any job?  Well, working more years and amassing more wealth certainly would make that decision more comfortable down the road.  Or would it?  I have a tendency, as more money comes in to expand my lifestyle along with that.  Would it just be a never-ending cycle, make more, spend more, make more, spend more?  I realized, that no matter when I cut that off, it would always involve a sacrifice of some sort. 

Working, I have more money than time, being retired, I will have more time than money.  Living on what I have right now means I'll have to turn some of that time into money (not paying someone to clean my house, take care of my yard, or paint the walls of my house).  That may sound distasteful to some people, but I want the freedom more than I want out of cleaning my own toilet.  I want to wake up without an alarm more than I want to keep my vacation home.  And I want to spend more time traveling more than I want to stay in super fancy hotels during the limited time I am currently allotted for vacations.

It's true "The Start of Personal Finance Isn't About Money", it's really about choices, what you think is more important and what is less important.  It all boils down to a choice about what I want to escape, and what I'm willing to give up for that.