Author Topic: FI shortcut / semi-retirement. Do you have plans, experience, or thoughts?  (Read 6072 times)

ModernIncantations

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The benefit of drastically reduced consumption is that it allows us to trade our productivity advances for more free time
rather than Tahoes and private school. It seems to me that we (mustachians) could just work less from the get go rather than
pile a stache and live on the interest.

Does anyone have any good resources for planning this alternative, semi-retirement? That is, just working part-time, or side gigs, to pay
the bills instead of relying solely on investments? Do you currently live like this?

A brief forum search yielded no obvious results. I'd love to hear your thoughts on this. I'm certain it has crossed your minds.

sarah8001

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My fiance and I are planning on doing this. Our plan is that after he finishes school he will probably be making 80-100 thousand per year, and we'll work hard for about ten years and put away about 400 or 500 thousand (we spend 30-40 thousand a year and expect that to go down as we pay off debt and advance in Mustachianism). That will give us a very nice buffer, so then he will go part time (I'll already be a SAHM hopefully) and we'll raise our future children together. If we are careful and take good part time jobs, we might even grow our nest egg while still spending most of our time at home. After our kids get older and more self sufficient, we plan to travel extensively. With a little luck and a lot of badassity, we could retire fully at 50ish with a very nice stache and very few expenses :)

Khan

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I do agree with the idea of not saving it all up for one go at retirement, but living a free'er life from the get go. Say you have a choice: Work till 40 and be FI'd, or spend a year travelling through Europe, a year acting as a crewmember on yachts, or *insert dream here*, and FI at 50. Don't like your job? You have enough FU money to retrain, move, etc. You don't have to charge till the end.

However, the problem with doing such from the get go, is twofold:
1. You don't know how long you're going to be able to work.
2. The biggest component in investment returns is one thing: Time. Ignore that at your peril, and risk your financial future.

And there is a third, semi-important reason(likely to be less important to Mustachians)
3. Studies show that wages top out around 40. It's important to build up skill sets and connections when you're on the younger side of that IMO.
http://blog.penelopetrunk.com/2011/02/07/salaries-top-out-at-age-40/

FU money could be as simple as having enough to laugh your way out the door as your employer lays you off. That's still such a huge, amazing peace of mind to have.

Fishingmn

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I think I must be semi-retired now.

I'm a Realtor but don't really proactively seek out new clients. I will probably sell 8-12 homes this year. This maybe means working about 1 week/month. In addition, I manage our 11 rental properties but that probably takes 1-2 days/month at the very most. My DW does work full-time with a good salary and benefits. She plans to retire in 2 1/2 years. She's pretty happy that I make her coffee every morning, keep the house in order and have dinner ready at night.

While we both plan on being "retired" at the end of 2016 (both 54 then) I think it's quite likely that I'll keep my real estate license to help family, friends and past clients. I already charge less than most but I could see charging a really low commission just to help people out and stay engaged.

Not sure I'm a great example for you though as I did work a conventional corporate job for 20+ years which has gotten us to a very good place financially that allows us to dial it back now at an early age.

Rollin

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I think it is a good idea.  It may not be as stable as the 40 hour a week stuff for 30 years, but you sure can live a good life (more options with your time at least).  I have a 40 hour week with good pay and benefits, but would prefer a 3 day work week.  Right now we work 9 days in a pay period (80 hours total), so we get every other Friday off (for me at least, others are Monday) and I love that three day weekend.  I can get so much done and then enjoy the next two days (relaxing and recreating).  Or, play Friday and Saturday and cut the grass, etc. on Sunday.  I would like to have that option every week.

Now, if you are talking work 3 months hard and then recreate for the rest, I could really dig that!

happy

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I've worked part-time for the last 19 years. These days I call it semi-retirement, but originally it was to still see my kids and stay sane as a sole parent. I'm still stashin and will retire from this career fully in the next few years when its convenient. Even then I might take on a little enjoyable part-time work  in a different field if I feel like it. Intermittently working might be fun.

Work/life balance I think is hard to achieve..its a fairly gnarly concept to chase in reality.

Working full-time I always felt dissociated from real life. On the weekend if I wasn't working I'd kind of blink and look around and be surprised there was sunshine and happy people around.

These days semi-retirement allows me to learn to grow my own food, cook from scratch, make laundry detergent, collect my own wood for heating and so on. I've travelled a lot in the past, so I don't have itchy feet. More a homesteader than a nomad.

Piper

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My husband and I were talking about this very thing just last night. We are new to the ER concept and are therefore still developing our plan. We have a healthy chunk of investments and savings that would easily allow for part-time work, temporary *retirement,* etc. With talks of having a kiddo soon, this type of flexibility is exciting.

I gotta admit though, I think I'll have a hard time calling it quits on one or both of our jobs when having two solid-paying jobs is really helping the nest egg grow quickly. I think I'm starting to become too caught up with hitting a particular number which, at the moment, makes me want to push through the next 5 years or so and continue accumulating while we have such lucrative situations (good pay and benefits, and flex time). I'm kinda betting on the fact that having a kid will change our thoughts on this (i.e., wanting to spend more time with junior). Plus, I don't super love my job; therefore, my mood on this changes depending on how crappy of a day I have at work...

Nancy

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Thanks, happy, I appreciate your perspective and can definitely relate to the strange otherworldly feeling on the weekends while working full time.

My husband and I are planning to take a hybrid route to FI, involving semi-retirement, since there is so much we want to do and see, and we both would like to keep working in some capacity in the near future anyway.
The plan:
1.) Work full time at our high paying jobs for 9 years (6.5 years down). Pay off student loans (done). Sock away as much money as possible for FI (going strong).
2.) Move abroad and work full time due to visa requirement (total time-about three years). Live off money we make and sock away money while working full time. By this point, we'll be FI for essentials, but we won't be touching the stache.
3.) Semi-retirement stage: work part-time, live off wages, travel, repeat. We will likely continue to save because that's just how we roll.
4.) If necessary/desirable, go back to working full time to reach our desired nest egg, so working will be completely optional.


SondraRose

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We already do this.  I'm 51, DH is 58.  Both life coaches who work part-time from home.  600 sq foot home (with two largish outbuildings and an edible perennial garden.)

No debt whatsoever. 

Car is a 2006 Scion xA.  We live in walking distance to most amenities in our small town.

Between us, we need about 10 client sessions per week to cover our expenses, taxes and savings. 

We intend to work more than that for the next ten years to save money to buy a couple of rental homes for income when we want to stop seeing clients and do more traveling.

Both of us have already travelled a fair bit already and I am definitely loving nesting.  DH will be traveling for some of his work, so he won't get itchy feet.
« Last Edit: July 22, 2014, 08:52:05 AM by SondraRose »

aneel

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I plan to do this by teaching math at a community college.  1-2 classes per semester was enough to get by in grad school, so it should cover the basics in the future, while giving a flexible schedule and summers off.

ModernIncantations

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Some great comments so far. Some of you are so gung-ho about 10 more years of saving. Whenever I think about it I feel like I'm staring into the abyss.

In a year we'll have about 100k in retirement and taxable accounts, two houses (and two mortgages totaling about 200k, one going towards a rental). I plan on doing something like 6 months on (contract web development) 18 months off. I want solid blocks of time to concentrate on other things. The Mrs will work 3 days per week year round (less copious vacation time).

It's scary and it's not "real" FI, but we'll have 3 - 4 years of living expenses saved, our part-time jobs, and whatever side businesses I can cook up in my free time to support us. Worst come to worst I'll just get a real job again.

My thinking is that after one or two cycles of this I will have a low maintenance business that will start paying my share of the income. I'm ready to take some risks and start living my values. 7 more years of mandatory work might just suck me dry.

As one of you has said, it will delay my complete FI date, but I will be living closer to where I want to be until then and that makes all the difference.

I'd love to hear your stories!
« Last Edit: July 22, 2014, 08:47:30 PM by ModernIncantations »

Ynari

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I've got a nice spreadsheet witha bajillion scenarios in it. My favorite right now is the one where I work for five years until I reach bare minimum savings (enough for very frugal food and rent and a bit of travel money ), take some time off, then go back to work either part time or in a different field or position. I like the security, the freedom, and the balance of work through all stages of life while still leading a life of luxury. Luckily, sabbaticals aren't unheard of in my field so I may even be able to go back after a year or two off if I so choose.

The scenario where I work 8 years for a luxurious lifestyle is also nice but too 'safe'. The one where I work for five years and never again is boring and unrealistic. The one where I work until I'm 55 is for shits and giggles. Spreadsheets are fun. :)

MsRichLife

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Does anyone have any good resources for planning this alternative, semi-retirement? That is, just working part-time, or side gigs, to pay
the bills instead of relying solely on investments? Do you currently live like this?

I think this is going to be the way we do it. Husband is currently a SAHD, and has no plans to re-enter the workforce. As our Son gets older, he'll start to increase the money he earns from side gigs.

We are using my wage to keep adding to the Stash for at least a few more years. I'm currently on a one-year study sabbatical and the thought of going back to full-time cubicle work is starting to fill me with dread. However, we are now at a point where I can cut back to working 5 days a fortnight, keep paying the bills and saving a bit and retain all the other perks of my job.

In reality, neither Hubby or I will cope well with too much leisure time. We are both entrepreneurial by nature and probably won't be able to stop ourselves from doing something to make a bit of money on the side. 'Semi-retirement' probably suits us best.

MRL

Cassie

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2 years ago we retired & after 6 months were bored. Each of us decided to work p.t. for ourselves in our previous occupations.  It has truly been the best of both worlds. WE are not young 55 & 60 but still wanted to use our minds. Volunteering was fine which we still do but not the same as working.  Having extra $ is also nice. 

backyardfeast

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This is our loose plan too.  I don't actually think we need that big a 'stache, we just need to keep our expenses as low as comfortable.  I'm just starting to earn decent $, and DH is older than me at ~50.  So the plan is for him to downscale work a bit in the next couple of years, I will work full-time for the next 10 or so (I get great vacation time and perks) until I'm 50.  He can go to part-time whenever he wants in that time; at 60 (we're 10 yrs apart), he starts drawing social security, to which he can add side-gigs if he wants to stay busy.  At that point, I'll likely continue to work at least part-time (which would be 2 days/week, 8 months/yr), but I'll be building a pension, so could keep at full-time if I'm still up for it.  Then, given our age difference, we'll see how things play out with health, etc.  But between my pension, social security, a paid-off house, a small stache and low expenses, the future looks pretty good.  But we're older, so ymmv, of course!

Cassie

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You do need less of a stache  when you have pension, ss, etc to look forward too. It really is the best of both worlds. We are fortunate to have professions that will allow us to work forever as long as we still have our minds:))

Emilyngh

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The benefit of drastically reduced consumption is that it allows us to trade our productivity advances for more free time
rather than Tahoes and private school. It seems to me that we (mustachians) could just work less from the get go rather than
pile a stache and live on the interest.

Does anyone have any good resources for planning this alternative, semi-retirement? That is, just working part-time, or side gigs, to pay
the bills instead of relying solely on investments? Do you currently live like this?

A brief forum search yielded no obvious results. I'd love to hear your thoughts on this. I'm certain it has crossed your minds.

We live like this. We actually lived in the suburbs of a big city saving 50%+ of our high salaries for 4 years.   We then moved to our low COL dream location, DH quit to SAH with our daughter, and I took a dream job working PT hours.   

We still have a savings rate of around 25% (and it should go up in the next few years as we stop paying child support), so that in the next 10-15 years (based on this savings plus what we have growing from before) we should be FI just in case I ever want to quit.    I'm 33 years old and would like the freedom to be completely FI in my 40s.   

So, while I do personally advocate semi-retirement as a good option, it's even sweeter if one can work for a few years first to get a stache to grow in the background.


ModernIncantations

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Does anyone have any good resources for planning this alternative, semi-retirement? That is, just working part-time, or side gigs, to pay
the bills instead of relying solely on investments? Do you currently live like this?

I think this is going to be the way we do it. Husband is currently a SAHD, and has no plans to re-enter the workforce. As our Son gets older, he'll start to increase the money he earns from side gigs.

We are using my wage to keep adding to the Stash for at least a few more years. I'm currently on a one-year study sabbatical and the thought of going back to full-time cubicle work is starting to fill me with dread. However, we are now at a point where I can cut back to working 5 days a fortnight, keep paying the bills and saving a bit and retain all the other perks of my job.

In reality, neither Hubby or I will cope well with too much leisure time. We are both entrepreneurial by nature and probably won't be able to stop ourselves from doing something to make a bit of money on the side. 'Semi-retirement' probably suits us best.

MRL

That's excellent. You've helped me refine my own thinking. If we're going to be generating income through some kind of work in full FI anyway, it just doesn't make sense to wait until our stash is that big to get started.

The only possible reason to wait for full FI if you have this personality type is to guard against super-catastrophe, but we mustachians shouldn't harbor those kinds of negative, unrealistic thoughts anyway.

ModernIncantations

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The benefit of drastically reduced consumption is that it allows us to trade our productivity advances for more free time
rather than Tahoes and private school. It seems to me that we (mustachians) could just work less from the get go rather than
pile a stache and live on the interest.

Does anyone have any good resources for planning this alternative, semi-retirement? That is, just working part-time, or side gigs, to pay
the bills instead of relying solely on investments? Do you currently live like this?

A brief forum search yielded no obvious results. I'd love to hear your thoughts on this. I'm certain it has crossed your minds.

We live like this. We actually lived in the suburbs of a big city saving 50%+ of our high salaries for 4 years.   We then moved to our low COL dream location, DH quit to SAH with our daughter, and I took a dream job working PT hours.   

We still have a savings rate of around 25% (and it should go up in the next few years as we stop paying child support), so that in the next 10-15 years (based on this savings plus what we have growing from before) we should be FI just in case I ever want to quit.    I'm 33 years old and would like the freedom to be completely FI in my 40s.   

So, while I do personally advocate semi-retirement as a good option, it's even sweeter if one can work for a few years first to get a stache to grow in the background.

Thanks for the inspiration. I'm glad it's worked out so well for you. Your path and my direction sound pretty similar. I think we'll have a decent head start at 100k net worth (hand waving the mortgage debt, which could disappear in the event of a personal financial crisis).

MsRichLife

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The only possible reason to wait for full FI if you have this personality type is to guard against super-catastrophe, but we mustachians shouldn't harbor those kinds of negative, unrealistic thoughts anyway.

Oh don't get me wrong. I am the personality type to need to guard against super-catastrophe. My Stash is big, but I'm still not 100% comfortable. :)

LifestyleDeflation

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Great question, and something I wish we'd see an article from MMM on.

I worked one of the worst of the worst cube jobs for about a year (software qa), and have since decided that I am willing to make some lifestyle sacrifices to avoid working behind a desk at all costs. Presently, I run a seasonal business that generates enough income to put a little away every year and spend most of the rest of my time goofing off (traveling, working as a snowboarding instructor, and other fun stuff).

While I'm not making much this summer (I was lazy in planning things), I have high hopes of putting away 6 figures after taxes next year, then working a very low stress job 30 hours a week that includes free housing in an amazing area within biking distance of just about everything I need. My tentative plan is to work there for a while while dividends compile, and probably acquire a sailboat for cheap/free which I can use for a bit of privacy from my roommates when I need it, and also hone my skills for when I eventually leave that job so I can do some extensive trips.

No regrets so far. I'm putting money away, have tons of free time, and for the most part keeping myself marketable in case I ever change my mind. Good luck in your quest!

Rollin

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You do need less of a stache  when you have pension, ss, etc to look forward too. It really is the best of both worlds. We are fortunate to have professions that will allow us to work forever as long as we still have our minds:))

I see news stories that relate to this all the time.  "You need at least $X to retire comfortably."  That is usually much higher than I have and I get a little fright each time I read one of those headlines, until I talk through my situation.

So, for those that have a little income coming in on the side wouldn't you simply do the math that equates to that big "you need $X" figure?  So, if I have a $16,000/year annuity coming in (tax free) that would equate to $400,000 in a stash (pulling at it with a 4% SWR) right?  Rental property bringing in $8,000 would be another $200,000 right?  I could add that to my $400,000 stash and say I'm at $1,000,000 in equivalent $$ right?

I'd like to semi-retire as well, but don't have the seven figures set aside, but do have multiple sources of income plus, a pension, ss, and some stash $$.

Sorry if this derails the OP...

ModernIncantations

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You do need less of a stache  when you have pension, ss, etc to look forward too. It really is the best of both worlds. We are fortunate to have professions that will allow us to work forever as long as we still have our minds:))

I see news stories that relate to this all the time.  "You need at least $X to retire comfortably."  That is usually much higher than I have and I get a little fright each time I read one of those headlines, until I talk through my situation.

So, for those that have a little income coming in on the side wouldn't you simply do the math that equates to that big "you need $X" figure?  So, if I have a $16,000/year annuity coming in (tax free) that would equate to $400,000 in a stash (pulling at it with a 4% SWR) right?  Rental property bringing in $8,000 would be another $200,000 right?  I could add that to my $400,000 stash and say I'm at $1,000,000 in equivalent $$ right?

I'd like to semi-retire as well, but don't have the seven figures set aside, but do have multiple sources of income plus, a pension, ss, and some stash $$.

Sorry if this derails the OP...

Yes it is practically equivalent except in the mysterious case of the super-catastrophe. Wife kidnapped for ransom? Brother in REALLY deep with the mob because of gambling debt? Tornadoquakenamifire destroys all of your rental units and your insurance company simultaneously goes out of business?

I'm pretty sure I saw a "10 ways the mob could ruin your retirement" article on Yahoo Finance the other day. Serious stuff.

arebelspy

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The common term for this is semi-retired, or semi-ER.

It's very popular, especially among certain ERE types.

I'm of the "buckle down, finish off, and have complete freedom" variety, but I also enjoy my job.  For someone that doesn't, I could see switching to part time job forever, rather than full time job for a fixed amount of time.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (occasionally) blog at AdventuringAlong.com.
You can also read my forum "Journal."