Retirement: A Full-Time Job

The Trinity of Retirement

 (Photo details:  Doug serving my birthday martini last week in what I call the Christmas Room (the living room)--an admittedly underused room of my house.)

Thanks again to JP for contributing this post last week.  I love the conversation it spurred in the comments section.  There is so much I wanted to comment on myself I think I’ll tackle a couple points here in a blog post. 

A few of you shared my admiration of JP’s attaining retirement at such a young age.  In my view that is what is most amazing.  One commenter expressed some skepticism about whether JP is really retired or just between jobs, and also about the $2 million she had amassed by the age of 28.  Another had issues with JP’s choice to live in only 325 square feet, and wondered whether she would be able to keep that up into her 40’s and beyond.  And with others, the conversation revolved around whether they would even want to retire in a big city in the first place.

On the first two issues, I know at least two people from the high-tech world who achieved that kind of money by the time they were 28, neither of whom is retired yet.  Because neither of them would have accepted the lifestyle choices that would have been necessary to live on that for the rest of their lives.  Or maybe they just love work, or maybe some combination of both.  As to whether JP is actually “between jobs” rather than retired--with five or six decades of life in front of her, who knows, maybe JP would do some work for money again in the future.  I did for a couple years at one point during my eight years of retirement.  That doesn’t mean I wasn’t retired before I did that, or that I’m not retired now. 

On the issue of living in 325 square feet—again, who knows whether she will always live in 325 square feet in the future.  That’s the metric that works for her right now, but like I said five or six decades is a long time.  She points out that in real estate a “trinity” of factors is in play:  price, location, and size, and “you can have any two . .  but not all three.”  Maybe at some point JP will swap size for location if she feels a need for more space and less city.  These are the tradeoffs most people have to juggle in life, JP is no different. 

In fact, the exact same thing can be said about retirement, except the trinity of factors for retirement is work, assets, and lifestyle. 

I myself am a city girl, yet I live in the suburbs.  Oh yeah, and in 4,000 square feet.  Had I decided to retire to a studio apartment in San Francisco, I probably could have retired at least ten years earlier.  But, at least right now, I enjoy the space.  Will I want all this space when I’m 70 or 80, probably not.  So I’ll move!  Could I have afforded a 4,000 square foot house in San Francisco instead of the suburbs?  Sure, but I would have had to work probably 20 more years to achieve that. 

Work, assets, and lifestyle.

If you want to retire young, actually at any age really, you fiddle with the give-and-take between this trinity of factors.

You want to stop work but don’t have enough assets to continue your current lifestyle?  Well then you’re going to have to adjust your lifestyle to fit your current assets.  The lifestyle you have now is non-negotiable?  Then you’re going to have to work until you amass the assets to support that lifestyle.  Or maybe you cut back on work and cut back on lifestyle in some way to make the numbers work without having to choose one or the other.

Maybe you live in the city of your desires in 325 square feet, or an hour away in 4,000.  You just have to jiggle the pieces of the puzzle together until it makes the picture you want for your own life.

Related Posts:

            Another Retirement Formula

            Guest Post:  Radical Retirement

            Free New York:  Well Worth the Price of Admission

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Guest Post: How to Retire in a High Cost of Living Area

I'd like to introduce you to a fellow retirement blogger, JP over at The Money Habit.  She retired at the age of 28 after working at an investment firm for seven years.  She shares tips for getting to your retirement goal at her blog and has contributed this post about how to make it happen even in a high-cost city like New York City (my own favorite city, as most of you know).

 

One of the biggest conversations in early retirement circles centers around location. Many plan to move to a lower cost of living area when they retire. That’s a fantastic move and it can serve a lot of people well.

But me? I adore big city living.

The food! The people! And best of all, every kind of class, workshop, and hobby group to pursue my interests.

The one downside is the incredible cost.

Fortunately, you can counter this issue with some judicious compromises. I’ve lived and worked in New York City since I graduated college. At 28, I’m retired and still living in the Big Apple.

Here are the strategies I use to keep my costs low.

Housing

Housing is the perfect place to start, given that it’s generally the largest expense line in the budget.

The trinity of factors in housing are price, location, and size.

General advice says you can have any two, but you cannot have all three.

My decision to live in New York City was about valuing the amenities. Because of this, location was paramount in my decision. As early retirement has long been a goal of mine, cost was the second most important consideration. That’s how we ended up in our current apartment.

It is a 325 square foot unit. Many people would cringe at the thought of two people and a dog sharing 325 square feet. We have lived in the same building for five years, and it’s been very pleasant.

The thing I’ve realized is that most people (including myself!) are bad at living in efficient spaces because we have had very little practice, and we have not learned how to optimize the space.

Just like any skill, it takes investment. Here are some space-saving tips I learned from Hong Kong and Tokyo magazines:

• Loft the Bed – That’s 150 cubic feet of storage instantly
• Fill Suitcases – You doubtless have a few bulky items like suitcases to store. Make sure you fill them with other items that need to be stored
• Thin Hangers – You have no idea how much space they will save you.
• Shelving – Pick up floating shelves and extra shelving for your cabinets at any hardware store.
• Expandable Everything – Inflatable mattress for guests, expandable table for company, you want anything that can expand.

Food

• Ethnic Grocery Stores – One of the benefits of living in your super expensive city is the diversity of grocery stores--your local ethnic stores are where the best deals can be found. I go to Chinatown for all my produce, meat, and seafood.
• Value Grocery Stores – Trader Joe’s is my lifeline. This is where I pick up everything else (frozen meals, milk and eggs, cereal). Between the Chinese grocery store and Trader Joe’s, we eat like kings for less than $450 a month.
• Regular Cafe/Coffee Trips – Part of the reason I live in the city is my enjoyment of the ambiance, and there’s nothing like writing on my laptop at a local mom & pop coffee shop. For $4 a week, I can make this a regular occurrence. There are an insane number of unique beverage-focused locales to soak up ambiance. Places that only focus on ciders, roof top bars, beer gardens, wine bars. When I want ambiance at a lower price tag, I opt for something on this list. Not cheap, but definitely workable into the budget. It’s also great to use coffee shops as the venue to catch up with friends over restaurants.

Purchasing on Craigslist

When you are making a purchase, you can use the advantages of your city (density, diverse incomes) to scout for great deals on Craigslist.

One guy who bought a PC part from me told me he always tries to buy his stuff from the fancier neighborhoods--you’ll find steals in the thrift stores in the fancy neighborhoods.

Discounted Entertainment

One of the huge benefits of living in your fancy city is the amenities, so use them! I’ve had my eye on Hamilton tickets, which have an insane scalper market snatching up all the inventory. If you check secondary ticket sites on the day of the event, though, you will see that when it gets to within an hour or two of the event, you can get reasonably priced tickets.  

Your entertainment options on Groupon and Living Social are going to be vast and varied. As long as you check the deal against yelp reviews to ensure good quality, these are worthwhile considerations. There are also a million completely free things to do like walking the Brooklyn Bridge, free museum nights, and new bands to check out.

The world is your oyster, even in a high cost of living area. Hopefully these tips will help others who are considering taking a job or retiring in a high cost of living city.

The Money Habit is a blog that believes anyone can retire decades before the average. The blog focuses on the 20% of money management techniques that will deliver an 80% impact to get you there.