The Money Mustache Community

General Discussion => Welcome and General Discussion => Topic started by: sol on January 14, 2015, 08:07:08 PM

Title: "One More Year" strikes the rich the hardest
Post by: sol on January 14, 2015, 08:07:08 PM
One More Year syndrome is the unfortunate tendency for a person on the cusp of retirement to hold out just a bit longer.  For that added bit of security, people willingly trade a little bit more of their short lives away.  And then they do it again, and again, like a slowly boiling frog, because they can't see when enough is enough.

But since I'm a huge spreadsheet nerd I've been looking at how OMY syndrome affects people of different income brackets, and I've decided that it's much worse for high earners.

If you only make $20k/year and have saved up your nest egg over a 30 year working career, then one more year of your savings contributions is probably dwarfed by the market returns on your investments.  It just won't matter much.

If you make $1,000,000/year and have saved up the same sized nest egg over the past eight months, then one more year of your savings contributions will more than double your nest egg regardless of market returns, and thus have a huge impact on your post-retirement lifestyle.

Most of us are somewhere in between, but I think the end-members illustrate the point well.  The more money you save every year, and the shorter your saving history, the more beneficial OMY is for you.

I'm currently struggling with this problem.  We could probably retire at the end of this year and be just fine, with some modest lifestyle adjustments.  But if I work one more year our total nest egg goes up like 20% and I probably don't need to ever make any adjustments, and I could enjoy a much more luxurious retirement.  If I work two more years, I can live that life of luxury and fund college educations for all of my descendants forever.  If I work three more years I can endow a university fellowship, or build a rural school in Nepal, or save the lives of 1000 children in Africa.

People on this forum like to think they'll be immune to OMY syndrome because they know how much they need survive and they claim they don't see any utility in additional money.  I think that's unimaginative BS.  MMM says money can't buy happiness, but that's only true if you're talking about your own happiness.  It can TOTALLY buy happiness for a lot of people who are less fortunate than you.

My lifestyle wouldn't change, but if I can save the lives of 1000 children by sitting in my cubicle for another 12 months, how many annoying meetings and TPS reports could I suffer through to accomplish that goal?  How many homeless drug addicts or abandoned puppies or acid-burned girls can I help for each awkward performance appraisal I endure?

At a high earning job, that fire hose of cash can do a lot of good in the world once your own expenses are met.  That's the OMY problem I'm struggling with. 
Title: Re: "One More Year" strikes the rich the hardest
Post by: Skyhigh on January 14, 2015, 08:21:11 PM
What about working one more year and then changing careers to something else?
Title: Re: "One More Year" strikes the rich the hardest
Post by: Emilyngh on January 14, 2015, 08:38:47 PM
One More Year syndrome is the unfortunate tendency for a person on the cusp of retirement to hold out just a bit longer.  For that added bit of security, people willingly trade a little bit more of their short lives away.  And then they do it again, and again, like a slowly boiling frog, because they can't see when enough is enough.

But since I'm a huge spreadsheet nerd I've been looking at how OMY syndrome affects people of different income brackets, and I've decided that it's much worse for high earners.

If you only make $20k/year and have saved up your nest egg over a 30 year working career, then one more year of your savings contributions is probably dwarfed by the market returns on your investments.  It just won't matter much.

If you make $1,000,000/year and have saved up the same sized nest egg over the past eight months, then one more year of your savings contributions will more than double your nest egg regardless of market returns, and thus have a huge impact on your post-retirement lifestyle.

Most of us are somewhere in between, but I think the end-members illustrate the point well.  The more money you save every year, and the shorter your saving history, the more beneficial OMY is for you.

I'm currently struggling with this problem.  We could probably retire at the end of this year and be just fine, with some modest lifestyle adjustments.  But if I work one more year our total nest egg goes up like 20% and I probably don't need to ever make any adjustments, and I could enjoy a much more luxurious retirement.  If I work two more years, I can live that life of luxury and fund college educations for all of my descendants forever.  If I work three more years I can endow a university fellowship, or build a rural school in Nepal, or save the lives of 1000 children in Africa.

People on this forum like to think they'll be immune to OMY syndrome because they know how much they need survive and they claim they don't see any utility in additional money.  I think that's unimaginative BS.  MMM says money can't buy happiness, but that's only true if you're talking about your own happiness.  It can TOTALLY buy happiness for a lot of people who are less fortunate than you.

My lifestyle wouldn't change, but if I can save the lives of 1000 children by sitting in my cubicle for another 12 months, how many annoying meetings and TPS reports could I suffer through to accomplish that goal?  How many homeless drug addicts or abandoned puppies or acid-burned girls can I help for each awkward performance appraisal I endure?

At a high earning job, that fire hose of cash can do a lot of good in the world once your own expenses are met.  That's the OMY problem I'm struggling with.

This is a very interesting point; thanks for sharing it.

I have no real advice, although if you really truly would use the difference in earnings from staying one more year for doing such good for others, I can definitely see your argument. 

 I can also see a similar argument from others who have perhaps lower income jobs, but jobs they really feel make a difference.
Title: Re: "One More Year" strikes the rich the hardest
Post by: firewalker on January 14, 2015, 08:43:50 PM
Sounds like it's a variation of the question of what one wants to do with their life. One person sees that they would do well  working to help a cause in a hand-on manner. To give them the time to do so, they plan to retire early from the paying job. The next person sees that they would do well funding the same cause. To do so, they stay with the paying job and contribute financially. Both are doing what they want with their time. What do you WANT to do with YOUR time?
Title: Re: "One More Year" strikes the rich the hardest
Post by: rocketpj on January 14, 2015, 10:31:09 PM
I see it in my uncle, who is quite wealthy but can't quite manage to retire despite having more than enough assets.  He isn't happy in his work, he just can't quite commit.

It breaks my heart in some ways, he's worked his butt off for decades.  He is badly unhealthy physically, I worry he won't make it.  But I don't know if he can figure out what to do next.
Title: Re: "One More Year" strikes the rich the hardest
Post by: innerscorecard on January 14, 2015, 11:23:14 PM
If you want to help people, you can almost definitionally do a lot more of it when you're not trapped in an office for the whole day. Throwing money at people isn't the only way to help them.
Title: Re: "One More Year" strikes the rich the hardest
Post by: RFAAOATB on January 14, 2015, 11:43:03 PM
For high incomes, retirement has a higher opportunity cost.  Although it doesn't sound like it in your case, are higher paying jobs more likely to fulfill an individual's self actualization needs?
Title: Re: "One More Year" strikes the rich the hardest
Post by: steveo on January 14, 2015, 11:43:40 PM
You are much more altruistic than I am.

I figure I get to FI and then work for at least another couple of years to build up a good safety margin. I intend to simply work less.
Title: Re: "One More Year" strikes the rich the hardest
Post by: Guesl982374 on January 15, 2015, 06:56:52 AM
I completely agree that the OMY syndrome affects more high income earners than low income earners. Even though I am years away from FI, I already know I'll be affected by this. Personally, once my wife and I hit FI we will want to take some time off but I can't see us ever stop producing in some form. The extra money will further accellerate the stash to fund both some extra lifestyle luxuries (travel, classic car maybe?), education for decendents, and other charity work.

Its definitely a balance between one's own selfish desires (time for happiness now or working longer for more luxuries later) vs. selflessness (time to take care of aging parents or young kids, working more to fund charities) that everyone has to answer on the path to FI. There's no right or wrong answer, its a personal choice.
Title: Re: "One More Year" strikes the rich the hardest
Post by: DoubleDown on January 15, 2015, 07:00:02 AM
Definitely agree that a higher salary makes it harder to leave, along with other "golden handcuff" features like pensions, generous health care plans (especially for Feds who can carry health care coverage into retirement, forever, if they stay until retirement age), company vesting, etc.

Plus in my case (and I suspect others), you can get significant family/spouse or social pressure in the form of, "Are you kidding me? You're giving up that plush job with the outrageous salary -- and for what?!" Other forms are, "I would kill for that job and salary, and you're just throwing it away?!"

I found that not only is there OMY, you can even get into SMM (6 more months -- not S&M, unless that's your thing) or even OMM (one more month). If you earn $15,000/month, just OMM can cover the cost of a new roof on the house, a new car, a year of college tuition, etc.

I don't have the solution. I worked longer than likely needed in order to build up a safety margin. But I suspect I would have been quite uneasy in retirement leaving the exact day or month or even year I hit FI. It's already a difficult enough hurdle without adding in uncertainty about whether you're skating too close to not making it.
Title: Re: "One More Year" strikes the rich the hardest
Post by: brooklynguy on January 15, 2015, 07:11:47 AM
The corollary to this rule is that the rich can retire much more quickly.  In your example, the million dollar earner can do it in eight months while it would take the $20k earner three decades.  So even if the million dollar earner suffers a multi-year bout of OMY syndrome, he or she has still traded away much less (in both absolute and relative terms) of his or her short life than the $20k earner who is immune to OMY syndrome.  This simply explains why working OMY even after reaching "enough" may be a more rational decision for high earners than for low earners.

As a high earner approaching FIRE within a few years myself, I've struggled with this same issue.  Ultimately I decided that I'm going to pull the FIRE trigger the moment I hit my number (but we'll see if I get gun-shy when the time actually comes).  For me, the primary factor resolving this internal debate is the reality that even a barebones 4% WR retirement plan with a modicum of built-in flexibility provides so much cushion that the odds overwhelmingly suggest that you will still end up with a ridiculous fortune (to use for philanthropic purposes, if you choose) by the end of your life.  And I believe that my generosity may have a tendency to decrease in inverse proportion to the length of time I spend working in a job I'd rather not be doing instead of pursuing my real goals in life.  In an extreme case of OMY syndrome, a frugal high earner in a soul-crushing desk job can spend an entire lifetime working and amass a Rockefeller level nest egg.  But we refer to some jobs as "soul-crushing" for a reason.  When this person emerges from his 50-year cubicle-cocoon, he may have metamorphosized from an altruistic mensch with lofty ambitions of saving the world's abandoned puppies and acid-burned girls into a miserable old fuck who doesn't give a damn about himself or anyone else.
Title: Re: "One More Year" strikes the rich the hardest
Post by: Numbers Man on January 15, 2015, 08:26:24 AM
.........I'm currently struggling with this problem.  We could probably retire at the end of this year and be just fine, with some modest lifestyle adjustments.  But if I work one more year our total nest egg goes up like 20% and I probably don't need to ever make any adjustments, and I could enjoy a much more luxurious retirement.  If I work two more years, I can live that life of luxury and fund college educations for all of my descendants forever.  If I work three more years I can endow a university fellowship, or build a rural school in Nepal, or save the lives of 1000 children in Africa.

People on this forum like to think they'll be immune to OMY syndrome because they know how much they need survive and they claim they don't see any utility in additional money.  I think that's unimaginative BS.  MMM says money can't buy happiness, but that's only true if you're talking about your own happiness.  It can TOTALLY buy happiness for a lot of people who are less fortunate than you.

My lifestyle wouldn't change, but if I can save the lives of 1000 children by sitting in my cubicle for another 12 months, how many annoying meetings and TPS reports could I suffer through to accomplish that goal?  How many homeless drug addicts or abandoned puppies or acid-burned girls can I help for each awkward performance appraisal I endure?

At a high earning job, that fire hose of cash can do a lot of good in the world once your own expenses are met.  That's the OMY problem I'm struggling with.

In your case it's not OMY; your humanity is evolving.
Title: Re: "One More Year" strikes the rich the hardest
Post by: Jon_Snow on January 15, 2015, 08:36:14 AM
I worked 4 more years after I hit FIRE. I am a very risk averse person and wanted lots of "buffer" in my ER plan. I wanted to limit the "do I have enough?" thoughts as much as possible.

Now ER'ed and looking back, I'm not sure the physical and mental toll of those 4 years was worth saving another 400k or so. In hindsight, probably should have quit my job the MOMENT I hit the number.
Title: Re: "One More Year" strikes the rich the hardest
Post by: Spork on January 15, 2015, 08:48:49 AM

I think the original post is mostly on target, but I'm going to suggest a twist.

Yes, those that earn more are probably hit the hardest, but I'll wildly postulate it has more to do with the fact they have higher planned retirement expenses.

I wouldn't say I am rich.  I would say that, compared to the more badass around here, I probably have high annual expenses.  (Compared to my peers, I am thought to be over-the-top frugal/cheap.)  At some point I traded several one-more-years to try to maintain something close to my current expenses.  Whether this was a good idea or a bad one is left to the reader as an exercise.

...but I think I've convinced myself I'm good to go now.  I believe OMY is now 5MM.
Title: Re: "One More Year" strikes the rich the hardest
Post by: GoodStash BadStache on January 15, 2015, 10:22:22 AM
I agree that having a good savings rate while earning significant wages is hard to walk away from, but I think One More Year syndrome can be an evolving psychological battle.  Part of the "problem" my wife and I have faced is advancing in our careers and taking on more responsibility with higher pay.  If a theoretical couple is making $50,000 each at the start of their careers and 10 years later are making $100,000 each while living a similar lifestyle, their savings rate will go up significantly (excluding effects of taxes, life changes, etc.).  By the time 10 years has passed the couple will likely be saving more each year than their combined earnings at the start of their careers, which could be difficult to walk away from.
Title: Re: "One More Year" strikes the rich the hardest
Post by: lackofstache on January 15, 2015, 10:23:08 AM
I think this is spot on; the older a person is, the longer they've put time towards their goal & the more $ someone is making probably all contribute a bit to OMY. I do think there are other factors than just the $, though. I imagine after 20 years of working your way from $35k/yr up to $125k/yr or something similar it would be difficult to give up once you're there. If you start out making $150k/yr when you're 22, it's probably much easier to stop working at 30...
Title: Re: "One More Year" strikes the rich the hardest
Post by: Mississippi Mudstache on January 15, 2015, 10:28:27 AM
...but I think I've convinced myself I'm good to go now.  I believe OMY is now 5MM.

I assume that means 5 more months? Because i first read that as 5 million ("M" being the Roman numeral for 1000) and almost choked on my Dorito.
Title: Re: "One More Year" strikes the rich the hardest
Post by: Tyler on January 15, 2015, 10:33:26 AM

If I work three more years I can endow a university fellowship, or build a rural school in Nepal, or save the lives of 1000 children in Africa.

...

My lifestyle wouldn't change, but if I can save the lives of 1000 children by sitting in my cubicle for another 12 months, how many annoying meetings and TPS reports could I suffer through to accomplish that goal?  How many homeless drug addicts or abandoned puppies or acid-burned girls can I help for each awkward performance appraisal I endure?

At a high earning job, that fire hose of cash can do a lot of good in the world once your own expenses are met.  That's the OMY problem I'm struggling with. 

Just curious - do you do all of these altruistic things today?  (Sorry if you've talked about this before - I honestly don't know).

If you do, that's great. I can see how maintaining your income to sustain your charitable endeavors remains true to who you are. Even then, I imagine there's room to cut back and continue to help others while finding balance for yourself. Money is not the only way to help those in need, and some of the toughest problems can't be bought out.

If not, it's important to consider that retirement doesn't change you. In my experience, you will be the same person you are today, only with more free time to do what you enjoy. Don't let the thought of who you "could" be with more time or money make you forget who you are today. A vision of the future not true to your nature will not be sustainable.
Title: Re: "One More Year" strikes the rich the hardest
Post by: CommonCents on January 15, 2015, 10:41:10 AM
You're assuming the millionaire salary person is saving the same quantity of money as the other person, rather than only saving a similar percent.  I've noticed *most* people with high salaries tend to increase their spending substantially as the salary rises, and thus don't save so much.

That said, what you've described screams utilitarianism to me.  That theory says you should maximize the overall unhappiness.  While it may make you a little unhappy to work one more year, it would make the 1000 in Africa a lot happier not to be starving, so that is the right action to take.  One criticism of that ethical theory is that there is no end point to it so it can be quite demanding.  (Essentially it constantly demands OMY).  If it would make 1000 people in Africa happy to work one more year, it would make 2000 happy to work two more years (or however your numbers work out), and so on.  Probably not the best summary but here you go: http://en.wikipedia.org/wiki/Utilitarianism (scroll to "too demanding")
Title: Re: "One More Year" strikes the rich the hardest
Post by: Spork on January 15, 2015, 10:43:54 AM
...but I think I've convinced myself I'm good to go now.  I believe OMY is now 5MM.

I assume that means 5 more months? Because i first read that as 5 million ("M" being the Roman numeral for 1000) and almost choked on my Dorito.

Yes, 5 more months, though 5 million would also be fine with me ... as long as I can get that in 5 more months.
Title: Re: "One More Year" strikes the rich the hardest
Post by: rocketpj on January 15, 2015, 11:04:05 AM
Well, I don't see myself in any danger whatsoever of OMY syndrome personally.  I have no intention of doing nothing when I stop working, so it is more about FI than anything else.  Once I am there then I will not work one more day than I wish to.
Title: Re: "One More Year" strikes the rich the hardest
Post by: Copperwood on January 15, 2015, 11:31:33 AM
my grandpa was an engineer and made really good money.
when it came time for retirement at 65, his company offered him double his salary for OMY.

he turned them down.

/impressed
Title: Re: "One More Year" strikes the rich the hardest
Post by: sol on January 15, 2015, 11:31:48 AM
Just curious - do you do all of these altruistic things today?  (Sorry if you've talked about this before - I honestly don't know).

The relevant discussion of this topic has been quiet for a while, but is still full of some interesting perspectives: http://forum.mrmoneymustache.com/welcome-to-the-forum/your-mustache-might-be-evil/ (http://forum.mrmoneymustache.com/welcome-to-the-forum/your-mustache-might-be-evil/)
Title: Re: "One More Year" strikes the rich the hardest
Post by: Pigeon on January 15, 2015, 11:48:15 AM
Quote
You're assuming the millionaire salary person is saving the same quantity of money as the other person, rather than only saving a similar percent.  I've noticed *most* people with high salaries tend to increase their spending substantially as the salary rises, and thus don't save so much.

Also in the OP's hypothetical case, the rich person has only been saving for less than a year.  I would be worried about those frugal habits not being ingrained, because the rich person has a much longer time of being used to living large than the $20K/year person.
Title: Re: "One More Year" strikes the rich the hardest
Post by: stuckinmn on January 15, 2015, 12:13:27 PM
I'm feeling the effects of OMY syndrome and the OP is exactly right.

I hit my target in July 2014 but due to the fact my salary has a heavy bonus component payable in December, I had always planned to stay through December just to add a margin of safety.  Now I'm in January, sitting at about 112% of my target and i can feel that little voice in the back of my head saying "think of how set you would be if you just stayed through next December." 

It's counterintuitive, but if another year of working did not substantially help my portfolio, I wouldn't be having this problem.   I just need to run the numbers and nut up.   
Title: Re: "One More Year" strikes the rich the hardest
Post by: dude on January 15, 2015, 12:22:47 PM
Agree with Sol.  I'm pretty sure I won't fall prey to it because I'm probably way oversaving in the first place, but for sure if the market were to crash on or about my intended retirement date (Jan 2020), I'd probably stick it out another year.  But other than that, I'm going as intended, and I'm pretty confident that down the road as I age, I should have significant excess income that I can use to do a lot of good. So I guess that's a way of saying I should have far in excess of 25x expenses, so I won't be cutting it close to the bone when I retire.
Title: Re: "One More Year" strikes the rich the hardest
Post by: Tyler on January 15, 2015, 12:25:38 PM
It's counterintuitive, but if another year of working did not substantially help my portfolio, I wouldn't be having this problem.   I just need to run the numbers and nut up.   

For me, what pushed me over the edge to retiring was when I stopped feeling the need the run the numbers any more and started thinking seriously about what I really want in life.  While reaching FI unlocked the career door, walking through it was ultimately not about money.  When you're ready, you'll know. 
Title: Re: "One More Year" strikes the rich the hardest
Post by: dude on January 15, 2015, 12:30:47 PM
Definitely agree that a higher salary makes it harder to leave, along with other "golden handcuff" features like pensions, generous health care plans (especially for Feds who can carry health care coverage into retirement, forever, if they stay until retirement age), company vesting, etc.


Yep, that is my case. The pension and health benefits are critical to FIRE for me, so my FIRE date is a function of that my eligibility date. 
Title: Re: "One More Year" strikes the rich the hardest
Post by: CheapskateWife on January 15, 2015, 12:36:13 PM
Plus in my case (and I suspect others), you can get significant family/spouse or social pressure in the form of, "Are you kidding me? You're giving up that plush job with the outrageous salary -- and for what?!" Other forms are, "I would kill for that job and salary, and you're just throwing it away?!"


Arrrggghhh!  This idea kills me...as a federal, I can't move up until someone ahead of me retires or gets promoted...so these folks who keep working just because they want to and not necessarily need to, means that there is one more person like me who's potential growth is stunted. 

My last employer had a GS12 who was 79 years old and napping for half the day in his cubicle...but he was given all the defference in the world and noone did anything about it.  So he sits and takes up space, and keeps other folks from being able to move in there and be productive.

Your OMY syndrome doesn't just affect you, it affects all those who want to follow in your footsteps but just need you to get the hell out of the way.
Title: Re: "One More Year" strikes the rich the hardest
Post by: DoubleDown on January 15, 2015, 12:41:28 PM
For all you fellow high earners, here's our First World Problem

(https://i.imgflip.com/gfkks.jpg)
Title: Re: "One More Year" strikes the rich the hardest
Post by: CryingInThePool on January 15, 2015, 02:09:22 PM
Building off what Pigeon said above.  There is an overlooked ancillary syndrome that is probably also more challenging for high income earners.  It needs a plucky acronym but essentially the length of time youíve lived on your retirement expense plan. 

I donít know about everybody else but even though Iíve been FI for 3-4 years based on expected withdrawals I wasnít actually living within my retirement budget during the first couple of years.  It wasnít until 2014 that I really lived on my expected withdrawal and have the YNAB data to back it up.    Maybe itís a goalpost definition problem in that I shouldnít have declared myself FI based on expected retirement needs but on actual expenses?   I just know that all the non-expected/work/FIRE prep expenses that you deduct to justify making the math work feeds OMY syndrome as you donít have the confidence in your retirement spend that you should.   

So for me itís not necessarily how much more luxurious will life be if I work another year or two but what will living on that budget actually feel like - the reality of it needed to be experienced.  Which took four OMYs in order to achieve.   Iíve written about fears that feed my OMY syndrome in previous comments which I wonít repeat here but I will say finally having a full year of expense data for 2014 is helping to combat them even more than I expected. 
Title: Re: "One More Year" strikes the rich the hardest
Post by: brooklynguy on January 15, 2015, 03:49:18 PM
The relevant discussion of this topic has been quiet for a while, but is still full of some interesting perspectives: http://forum.mrmoneymustache.com/welcome-to-the-forum/your-mustache-might-be-evil/ (http://forum.mrmoneymustache.com/welcome-to-the-forum/your-mustache-might-be-evil/)

Very interesting perspectives indeed.  That thread appears to be an early entry in the sol canon, many of which (including the thread at hand) share the recurring theme of trying to reconcile our own selfish pursuit of happiness with our moral imperative to improve the world (thankfully, in many cases there is overlap between accomplishing the two).

I agree with the responses above that the best you can do is find the balance that makes you comfortable.

In this thread (http://forum.mrmoneymustache.com/welcome-to-the-forum/why-do-you-still-work/), you asked a related question focused on the opposite end of the spectrum--not delaying retirement by OMY, but expediting retirement to the soonest practicable date.  If you'll pardon my indulgence in the vice of self-quotation, in that thread I stated:

Sol, the point you are making is a good one but I think the question you are asking is rhetorical.  You could have "retired" before your working career even started to a life of living under bridges and eating cat food and STILL been the envy of a significant subset (maybe the majority?) of the world's population who have an even worse lot in life.  But that's not enough for you, is it?  Since everything is relative, of course it becomes difficult to know where to draw the line.

The same point also applies to your questions here.  Yes, you can buy additional happiness for others by delaying your own retirement.  How much net good can you impart on the world by continuing to work for one more month?  One more decade?  Fifty more decades?  You have to draw the line somewhere.
Title: Re: "One More Year" strikes the rich the hardest
Post by: SugarMountain on January 15, 2015, 03:50:38 PM
Part of it also has to do with how easy it would be to re-enter the workforce at the same income.  If you make $50,000 a year and a couple of years in discover that you are going to have a shortfall, you can probably fairly easily find another job that is close to what you used to make, and even if you can only get a minimum wage job, that will likely be enough to cover any shortfalls.  If you are making $1,000,000 that opportunity will likely be gone forever when you retire.
Title: Re: "One More Year" strikes the rich the hardest
Post by: zinnie on January 15, 2015, 04:17:48 PM
I'm currently struggling with this problem.  We could probably retire at the end of this year and be just fine, with some modest lifestyle adjustments.  But if I work one more year our total nest egg goes up like 20% and I probably don't need to ever make any adjustments, and I could enjoy a much more luxurious retirement.  If I work two more years, I can live that life of luxury and fund college educations for all of my descendants forever.  If I work three more years I can endow a university fellowship, or build a rural school in Nepal, or save the lives of 1000 children in Africa.

People on this forum like to think they'll be immune to OMY syndrome because they know how much they need survive and they claim they don't see any utility in additional money.  I think that's unimaginative BS.  MMM says money can't buy happiness, but that's only true if you're talking about your own happiness.  It can TOTALLY buy happiness for a lot of people who are less fortunate than you.

My lifestyle wouldn't change, but if I can save the lives of 1000 children by sitting in my cubicle for another 12 months, how many annoying meetings and TPS reports could I suffer through to accomplish that goal?  How many homeless drug addicts or abandoned puppies or acid-burned girls can I help for each awkward performance appraisal I endure?

At a high earning job, that fire hose of cash can do a lot of good in the world once your own expenses are met.  That's the OMY problem I'm struggling with.

I am with you here; I think about this a lot. $1M is quite sufficient for my own needs. However, if I worked an extra ten or twenty years beyond that we are talking about $10M-$30M. I often think about the greater impact on the world that kind of money would afford me. I could donate huge amounts of money to worthy causes; I could even start my own worthy cause and hire dozens of people to accomplish it. These are not small considerations to me and while I can't wait to have some free time I also wonder if maybe starting a second, more enjoyable career with more free time wouldn't be a better choice while continuing to save for the really big bucks.
Title: Re: "One More Year" strikes the rich the hardest
Post by: Beric01 on January 15, 2015, 06:23:57 PM
Just curious - do you do all of these altruistic things today?  (Sorry if you've talked about this before - I honestly don't know).

The relevant discussion of this topic has been quiet for a while, but is still full of some interesting perspectives: http://forum.mrmoneymustache.com/welcome-to-the-forum/your-mustache-might-be-evil/ (http://forum.mrmoneymustache.com/welcome-to-the-forum/your-mustache-might-be-evil/)

Thanks for posting this! I spent an hour reading it and it gave me great food for thought.

I have to take Bakari's perspective on charity - I view donating with my hands as far more useful than donating with money, and hence view "one more year" as not a big issue for me - the sooner I FIRE the sooner I can have more time to volunteer and make a difference. That's also why I'm heading towards FIRE with less safety margin than some here - I'm fine with 4% withdrawal. My living requirements are fairly frugal ($15-$20K/year), so once I hit $500K I'm out. I see no meaning in working for any additional money if additional money doesn't give more happiness.
Title: Re: "One More Year" strikes the rich the hardest
Post by: MrsPete on January 15, 2015, 06:31:22 PM
I'm currently struggling with this problem.  We could probably retire at the end of this year and be just fine, with some modest lifestyle adjustments.  But if I work one more year our total nest egg goes up like 20% and I probably don't need to ever make any adjustments, and I could enjoy a much more luxurious retirement.  If I work two more years, I can live that life of luxury and fund college educations for all of my descendants forever.  If I work three more years I can endow a university fellowship, or build a rural school in Nepal, or save the lives of 1000 children in Africa.
I can't build up much enthusiasm for the two hypothetical workers, but in your real situation . . . I think I'd say, "Two more years, and that's it."  Why?  Because the idea of not needing to make adjustments (and being more safe) in retirement appeal to me.  Likewise, I'd be motivated to work another year so that I can gift my grandchildren and great grandchildren with an education.  The other potential goals sound "too far away from me" to motivate me to work a third year. 
I see it in my uncle, who is quite wealthy but can't quite manage to retire despite having more than enough assets.  He isn't happy in his work, he just can't quite commit.

It breaks my heart in some ways, he's worked his butt off for decades.  He is badly unhealthy physically, I worry he won't make it.  But I don't know if he can figure out what to do next.
Makes me think of a relative of mine (she's gone now) who worked super-hard and was very successful, especially for a woman born well before the time when women had real careers.  She really enjoyed her work, but she struggled a bit with leisure activities.  They didn't come as easily to her, and I think it was because she had to focus SO VERY HARD on her career as a young person.  She was always a bit . . . uncomfortable with vacationing, engaging in recreational activities, etc.  I think it made her feel somewhat guilty. 
Well, I don't see myself in any danger whatsoever of OMY syndrome personally.  I have no intention of doing nothing when I stop working, so it is more about FI than anything else.  Once I am there then I will not work one more day than I wish to.
Yeah, I don't think I'll fall prey to this either.  We picked a date based upon our personal circumstances; it's kind of a "sweet spot" between leaving NOW (even though that's possible) and staying one more year, one more year, one more year.  If something were to come up -- an illness, loss of a job, whatever -- we might re-evaluate, but if things run the expected course, I can't imagine us changing our date.

Title: Re: "One More Year" strikes the rich the hardest
Post by: sheepstache on January 15, 2015, 06:40:30 PM
...but I think I've convinced myself I'm good to go now.  I believe OMY is now 5MM.

I assume that means 5 more months? Because i first read that as 5 million ("M" being the Roman numeral for 1000) and almost choked on my Dorito.

Ha, I read it as 5 More Millennia.
Title: Re: "One More Year" strikes the rich the hardest
Post by: swiper on January 15, 2015, 07:12:23 PM
.........I'm currently struggling with this problem.  We could probably retire at the end of this year and be just fine, with some modest lifestyle adjustments.  But if I work one more year our total nest egg goes up like 20% and I probably don't need to ever make any adjustments, and I could enjoy a much more luxurious retirement.  If I work two more years, I can live that life of luxury and fund college educations for all of my descendants forever.  If I work three more years I can endow a university fellowship, or build a rural school in Nepal, or save the lives of 1000 children in Africa.

People on this forum like to think they'll be immune to OMY syndrome because they know how much they need survive and they claim they don't see any utility in additional money.  I think that's unimaginative BS.  MMM says money can't buy happiness, but that's only true if you're talking about your own happiness.  It can TOTALLY buy happiness for a lot of people who are less fortunate than you.

My lifestyle wouldn't change, but if I can save the lives of 1000 children by sitting in my cubicle for another 12 months, how many annoying meetings and TPS reports could I suffer through to accomplish that goal?  How many homeless drug addicts or abandoned puppies or acid-burned girls can I help for each awkward performance appraisal I endure?

At a high earning job, that fire hose of cash can do a lot of good in the world once your own expenses are met.  That's the OMY problem I'm struggling with.

In your case it's not OMY; your humanity is evolving.

+1
Title: Re: "One More Year" strikes the rich the hardest
Post by: Dr. Doom on January 15, 2015, 07:54:00 PM
original post...

Agree. 

In the end it's difficult for many people to to pull the trigger immediately after reaching FI - Harder, particularly I think, if you're under 50, you make good money as you mentioned, simply because of the way the math looks, and you enjoy your job.  Gotta say, if you really enjoy your job and aren't burning up with some desire to go and do something else, you should just keep at it and do exactly what you're thinking of:  Donate tons of money.  That would be incredibly awesome and a way to inject new meaning into continuing to do whatever it is that you do that apparently makes bank.
edited to stay on topic
Title: Re: "One More Year" strikes the rich the hardest
Post by: innerscorecard on January 16, 2015, 02:10:18 AM
This is such a liberal Western attitude, by the way. No one in China, or indeed among most in the world, would even think of these concerns, or feel guilty for having money or even spending it on nice things instead of giving it to others. It's not even a thing at all. That's not to say the rich never help the poor. But there isn't that excessive guilt for not giving everything you have to others.
Title: Re: "One More Year" strikes the rich the hardest
Post by: goodlife on January 16, 2015, 06:27:01 AM
One More Year syndrome is the unfortunate tendency for a person on the cusp of retirement to hold out just a bit longer.  For that added bit of security, people willingly trade a little bit more of their short lives away.  And then they do it again, and again, like a slowly boiling frog, because they can't see when enough is enough.

But since I'm a huge spreadsheet nerd I've been looking at how OMY syndrome affects people of different income brackets, and I've decided that it's much worse for high earners.

If you only make $20k/year and have saved up your nest egg over a 30 year working career, then one more year of your savings contributions is probably dwarfed by the market returns on your investments.  It just won't matter much.

If you make $1,000,000/year and have saved up the same sized nest egg over the past eight months, then one more year of your savings contributions will more than double your nest egg regardless of market returns, and thus have a huge impact on your post-retirement lifestyle.

Most of us are somewhere in between, but I think the end-members illustrate the point well.  The more money you save every year, and the shorter your saving history, the more beneficial OMY is for you.

I'm currently struggling with this problem.  We could probably retire at the end of this year and be just fine, with some modest lifestyle adjustments.  But if I work one more year our total nest egg goes up like 20% and I probably don't need to ever make any adjustments, and I could enjoy a much more luxurious retirement.  If I work two more years, I can live that life of luxury and fund college educations for all of my descendants forever.  If I work three more years I can endow a university fellowship, or build a rural school in Nepal, or save the lives of 1000 children in Africa.

People on this forum like to think they'll be immune to OMY syndrome because they know how much they need survive and they claim they don't see any utility in additional money.  I think that's unimaginative BS.  MMM says money can't buy happiness, but that's only true if you're talking about your own happiness.  It can TOTALLY buy happiness for a lot of people who are less fortunate than you.

My lifestyle wouldn't change, but if I can save the lives of 1000 children by sitting in my cubicle for another 12 months, how many annoying meetings and TPS reports could I suffer through to accomplish that goal?  How many homeless drug addicts or abandoned puppies or acid-burned girls can I help for each awkward performance appraisal I endure?

At a high earning job, that fire hose of cash can do a lot of good in the world once your own expenses are met.  That's the OMY problem I'm struggling with.

This is a really good point and something that I have thought about and struggled with myself. In fact, I think it is more of philosophical life question that I struggle with. In three years time at the young age of 33 I will be FI and could retire. But I do wonder whether this is the morally right thing to do or if I have a larger social obligation that I should fulfill. If I keep working, then like you say, I could do a lot of good in the world with my surplus earnings. I obviously have been endowed with certain skills and talents and I wonder whether there is something morally wrong with the idea to just accumulate as much as I need and then call it quits, move some place nice and just live of my earnings forever. Part of me feels I should do something greater with the gifts that I have been given and just retiring and not giving a f*ck anymore is kind of wrong.
Title: Re: "One More Year" strikes the rich the hardest
Post by: CommonCents on January 16, 2015, 08:05:47 AM
Yeah, I don't think I'll fall prey to this either.  We picked a date based upon our personal circumstances; it's kind of a "sweet spot" between leaving NOW (even though that's possible) and staying one more year, one more year, one more year.  If something were to come up -- an illness, loss of a job, whatever -- we might re-evaluate, but if things run the expected course, I can't imagine us changing our date.

Congrats!  You were at the Boston get together, weren't you?  I don't remember you sharing your date then, but I'm excited for you.
Title: Re: "One More Year" strikes the rich the hardest
Post by: Pigeon on January 16, 2015, 08:07:26 AM
This is such a liberal Western attitude, by the way. No one in China, or indeed among most in the world, would even think of these concerns, or feel guilty for having money or even spending it on nice things instead of giving it to others. It's not even a thing at all. That's not to say the rich never help the poor. But there isn't that excessive guilt for not giving everything you have to others.

In countries in many other parts of the world though, you are expected to take care of other people in a way we don't really do in the west.  In China, for example, it is still pretty common for people to see ageing parents as absolutely their responsibility, particularly for the sons.  Many of my Chinese friends in the US send a large percentage of their earnings back to support the old folk.    In many African cultures, generosity is much more highly valued than it is in the West.
Title: Re: "One More Year" strikes the rich the hardest
Post by: innerscorecard on January 16, 2015, 08:18:15 AM
This is such a liberal Western attitude, by the way. No one in China, or indeed among most in the world, would even think of these concerns, or feel guilty for having money or even spending it on nice things instead of giving it to others. It's not even a thing at all. That's not to say the rich never help the poor. But there isn't that excessive guilt for not giving everything you have to others.

In countries in many other parts of the world though, you are expected to take care of other people in a way we don't really do in the west.  In China, for example, it is still pretty common for people to see ageing parents as absolutely their responsibility, particularly for the sons.  Many of my Chinese friends in the US send a large percentage of their earnings back to support the old folk.    In many African cultures, generosity is much more highly valued than it is in the West.

But not strangers. Especially those in other countries.
Title: Re: "One More Year" strikes the rich the hardest
Post by: Pigeon on January 16, 2015, 08:44:37 AM
I get your point, but in some cultures, sharing with even with strangers as a form of hospitality is very much expected, in a way it is not in the West.  I deal with a lot of African students.  They are hospitable in a way we just are not.

Different cultures, different values.
Title: Re: "One More Year" strikes the rich the hardest
Post by: SCUBAstache on January 16, 2015, 10:34:35 AM
Yes.  I'm still ~5 years away from FI, but my job is pretty good (love/hate perhaps?), I like most of my coworkers and get paid pretty well...so I know it's going to be difficult to leave. 

#uppermiddleclassproblems

But, ultimately, I think I will choose freedom.  I want to be able to do what I want, when I want.  I want to be outside more during the day and have more time to take long walks and cook.  I may pull a OMY depending on my situation at the time, and if the job is leaning more to the love than the hate that year.  I look forward to having this dilemma!
Title: Re: "One More Year" strikes the rich the hardest
Post by: arebelspy on January 16, 2015, 10:53:06 AM
My problem is not OMY, but OLY.  I keep reducing our time to FIRE, going "..we don't need that much."  "...we can probably get by on that." etc.  Bringing FIRE in sooner and sooner.

Of course, that's different than what the OP is proposing, based on an ethical argument of OMY to help others.  I don't have an answer for that, yet.
Title: Re: "One More Year" strikes the rich the hardest
Post by: DoubleDown on January 16, 2015, 12:19:21 PM
The ethical dilemma (if there is one) reminds me of Schindler's List, where Schindler keeps spending down his fortune and bankrupting his company finding ways to help "one more."
Title: Re: "One More Year" strikes the rich the hardest
Post by: brooklynguy on January 16, 2015, 12:58:35 PM
The ethical dilemma (if there is one) reminds me of Schindler's List, where Schindler keeps spending down his fortune and bankrupting his company finding ways to help "one more."

I had this thought exactly but questioned whether it was appropriate to start drawing the parallel.  But when I read the rhetorical questions in the closing remarks of the original post, I immediately pictured Sol as Schindler getting down on his knees asking how many more people this gold ring could have saved.
Title: Re: "One More Year" strikes the rich the hardest
Post by: 2Birds1Stone on January 16, 2015, 01:03:46 PM
For me it largely depends on how much you are able to pad the stache in relative terms. If your omy increases stache 5% I can see leaving he workforce a lot easier than say omy increasing stache by 25%
Title: Re: "One More Year" strikes the rich the hardest
Post by: Bateaux on January 16, 2015, 01:35:47 PM
My OMY is actually 3 to 5 more years.  There is plenty more than enough to make it right now at a 4% withdrawl.   I plan on a 3% withdrawl and there are multiple reasons for this.   In 3 to five years my savings will likely double or more.  What took nearly 2.5 decades to build for us will double in a half a decade more.  I'm 46 and my goal is to Retire at 50 respectively young and old enough to feel I earned it. There is a recession on the way and I want to keep my good paying job so that I have money to buy bargains all the way down and all the way back up.  I hope to retire on the rising market post recession. I want a blue water sailing catamaran to live on.  These boats are expensive during the good times and cheap in the bad.  I'll want to save for that.   I'm also thinking about legacy funds.  I hope not to spend all I've earned.  My son's life was saved by Saint's Jude's Children's Resarch Hospital.   They work miracles there. I want every dime I can save to go there when I die.  Even if just one child is saved it will be worth it to me.
Title: Re: "One More Year" strikes the rich the hardest
Post by: JCfire on January 16, 2015, 02:05:53 PM
If you want to help people, you can almost definitionally do a lot more of it when you're not trapped in an office for the whole day. Throwing money at people isn't the only way to help them.

The interesting problem with this is that, if you donate your entire income to your chosen charity, that charity could use it to hire a full time worker.  Then the question just becomes, if that charity posted the job that would be most helpful to it within the salary range you could fund with your annual salary, and you applied for the job, would you be the best candidate?  If not, then you can probably do more good for your chosen cause by trapping yourself in an office.

In my personal case, I know that companies in my professional field think my time is worth way more than any non-profit thinks that it is worth.
Title: Re: "One More Year" strikes the rich the hardest
Post by: blainem13 on January 18, 2015, 11:54:29 AM
I think the delta between FI and RE is entirely explained by OMY, and how many OMY's is just a measure of how conservative someone is financially.

Personally, I will be FI in about 2 or 3 years, but I'm planning to work for 10-11 more years (age 41ish) given my age and the huge opportunity cost to not working.  This scenario could change if I didn't like my job as much, if I was forced to work longer hours, etc.; but for now that's my plan.  I agree that the higher one's income and pace of FI, the smaller SWR one will seek since the marginal effort isn't that great.

As for the ethical concerns, I think MMM might argue that RE, living local, and living deliberately benefit the world.  Stepping off the produce and consume treadmill greatly reduces our impact on the world.  Also, if you're not planning to have children, you can will your "final assets" to a good cause that will help many many people.  The hard part would be picking where to give your money; I'm sure there's a forum somewhere on the internet for that.
Title: Re: "One More Year" strikes the rich the hardest
Post by: Blindsquirrel on January 18, 2015, 09:04:58 PM
OMY or actually 3-5 years is where I am. Absolutely FI now by any measure but want to have 4 things before we pull the plug on our huge fire hose of cash jobs. End of parental support of 36K a year(will not like it when it happens but dementia is terrible), Paid off house, gross a ton off investment houses, great big stack of liquid loot 100-200K.  We are stacking ridiculous amounts of cash and my DGAF attitude will one day catch up. If it is tomorrow I am good but not ready yet. Def a first world problem.
Title: Re: "One More Year" strikes the rich the hardest
Post by: EarlyStart on January 18, 2015, 09:17:11 PM
I'm only 22 and have a ways to go, but my significant other and I have talked about just going part time once we hit the FI number. This might make the transition easier as it's less dramatic. If part time was just enough to live on without investing further, we at least get to see it grow a little on it's own or endure another business cycle.
Title: Re: "One More Year" strikes the rich the hardest
Post by: goodlife on January 20, 2015, 06:57:09 PM

As for the ethical concerns, I think MMM might argue that RE, living local, and living deliberately benefit the world.  Stepping off the produce and consume treadmill greatly reduces our impact on the world.  Also, if you're not planning to have children, you can will your "final assets" to a good cause that will help many many people.  The hard part would be picking where to give your money; I'm sure there's a forum somewhere on the internet for that.

I agree that living smaller and reducing your impact on the world are great, but I think that is possible even without living the MMM lifestyle. In fact, I do have some moral concerns about some of his approaches to life in general, for example his argument of not following current events because basically you can't change those things, so might as well not know about them at all and just live your very local FIRE life and not concern yourself with the greater troubles of the world. To me, that is morally repugnant. It is in fact the rich (which by my definition is anyone who is FI by whatever standard) who should take on responsibility for creating a better world and for sure that doesn't happen if you just ignore things around you. Of course you can't solve every problem in the world, but I strongly believe that everyone can make an impact, whether that be helping the poor in Bangladesh or being involved in local politics of your small town. If everyone just aims to gobble up enough money to live off forever in this unencumbered lifestyle with no care for the world, then that's how you hand over power to despots and dictators. Ignorance, especially if by choice, is a tragedy in my opinion and very very dangeours. I could FIRE in 3 years at age 33 and just move some place nice and not bother anymore with making a difference, but I find something morally wrong with that. Maybe I will keep working, I do a lot of impact investing in developing countries, it can sometimes be stressful, but I am also deeply involved in the world and have the opportunity to make an impact. Or maybe I will move somewhere else and work on more local issues. But whatever it is, I feel like I have a moral obligation to use my time in a socially beneficial manner. I am no longer occupied with making a living and surviving. I truly believe I now need to dedicate my time to some sort of higher purpose, even if that purpose is not always 100% enjoyable. On that one, I agree with MM: life is not about seeking out pleasures and comfort. But comfort does not just mean buying a BMW and driving across the street to the supermarket. There is also comfort of the mind and that is equally dangerous. Your mind needs to be challenged as much as your muscles. And part of that is seeking out situations that may be uncomfortable, learning about things that make you uncomfortable and taking action that might be intellectually uncomfortable. If nobody is willing to sacrifice their time, comfort and money for such important work then the world is in a truly dire situation. All the riding my bike, not buying crap and having a small footprint on the world is not going to relieve me of that responsibility. Your footprint on the world's resources should be small....but maybe we should all aim at having a bigger footprint on the world when it comes to making a difference.
Title: Re: "One More Year" strikes the rich the hardest
Post by: innerscorecard on January 20, 2015, 09:27:39 PM
Independent and self-sustaining people are the original building block of a free society.
Title: Re: "One More Year" strikes the rich the hardest
Post by: Knapptyme on January 20, 2015, 09:53:44 PM
Thought-provoking idea. I feel as though when time with one's kids is involved in the decision, the effect of OMY working for money lessens the impact of one more year instilling these same values in your children. Not that you couldn't do it while working, but being that example to them without any obligation can likely have an effect greater than whatever interest or safety margin generated.

It's a peculiar trade-off, but if by working one year fewer, or at least stopping when FI is reached, I could ensure that my children go and do likewise while maintaining a charitable attitude and/or habit, I would do it every time. That investment will live longer than I will (hopefully), and it is my entire reason to reach FI sooner.
Title: Re: "One More Year" strikes the rich the hardest
Post by: jmusic on January 21, 2015, 01:52:59 AM
I agree that living smaller and reducing your impact on the world are great, but I think that is possible even without living the MMM lifestyle. In fact, I do have some moral concerns about some of his approaches to life in general, for example his argument of not following current events because basically you can't change those things, so might as well not know about them at all and just live your very local FIRE life and not concern yourself with the greater troubles of the world...

At the risk of continuing off-topic along with you, I've read the MMM post that you're referring to, and I don't think that he means to be 100% oblivious to any and all current events.  The philosophy is in keeping with the "low-information" diet (a la Tim Ferriss). 

In other words, if the event is important enough, you WILL hear about it unless you never leave your house and only read books.  Case in point, I was in a college classroom with no TV on during the 9/11 attacks, and we were all informed with enough time for me to walk 1/4 mile back to the lobby of my dormitory in time to see the second impact LIVE.

The real benefit is that we free up brain space and avoid the 99% of the junk on the news media which only serves to propagate fear (and keep your attention through the ads that sell useless crap).  "What you didn't know about your toothbrush may be killing you!  More at 10..."
Title: Re: "One More Year" strikes the rich the hardest
Post by: blainem13 on January 22, 2015, 06:19:54 PM

As for the ethical concerns, I think MMM might argue that RE, living local, and living deliberately benefit the world.  Stepping off the produce and consume treadmill greatly reduces our impact on the world.  Also, if you're not planning to have children, you can will your "final assets" to a good cause that will help many many people.  The hard part would be picking where to give your money; I'm sure there's a forum somewhere on the internet for that.

I agree that living smaller and reducing your impact on the world are great, but I think that is possible even without living the MMM lifestyle. In fact, I do have some moral concerns about some of his approaches to life in general, for example his argument of not following current events because basically you can't change those things, so might as well not know about them at all and just live your very local FIRE life and not concern yourself with the greater troubles of the world. To me, that is morally repugnant. It is in fact the rich (which by my definition is anyone who is FI by whatever standard) who should take on responsibility for creating a better world and for sure that doesn't happen if you just ignore things around you. Of course you can't solve every problem in the world, but I strongly believe that everyone can make an impact, whether that be helping the poor in Bangladesh or being involved in local politics of your small town. If everyone just aims to gobble up enough money to live off forever in this unencumbered lifestyle with no care for the world, then that's how you hand over power to despots and dictators. Ignorance, especially if by choice, is a tragedy in my opinion and very very dangeours. I could FIRE in 3 years at age 33 and just move some place nice and not bother anymore with making a difference, but I find something morally wrong with that. Maybe I will keep working, I do a lot of impact investing in developing countries, it can sometimes be stressful, but I am also deeply involved in the world and have the opportunity to make an impact. Or maybe I will move somewhere else and work on more local issues. But whatever it is, I feel like I have a moral obligation to use my time in a socially beneficial manner. I am no longer occupied with making a living and surviving. I truly believe I now need to dedicate my time to some sort of higher purpose, even if that purpose is not always 100% enjoyable. On that one, I agree with MM: life is not about seeking out pleasures and comfort. But comfort does not just mean buying a BMW and driving across the street to the supermarket. There is also comfort of the mind and that is equally dangerous. Your mind needs to be challenged as much as your muscles. And part of that is seeking out situations that may be uncomfortable, learning about things that make you uncomfortable and taking action that might be intellectually uncomfortable. If nobody is willing to sacrifice their time, comfort and money for such important work then the world is in a truly dire situation. All the riding my bike, not buying crap and having a small footprint on the world is not going to relieve me of that responsibility. Your footprint on the world's resources should be small....but maybe we should all aim at having a bigger footprint on the world when it comes to making a difference.

Perhaps.  I'm still undecided as to whether microfinance is helpful or predatory, or perhaps whether western intervention in the developing world is helpful or predatory.  Sorry for the cynicism, but I'm very wary of the white savior complex, and I think it is possible that locally governed development might be more in the interest of the people. 

I think most people do more harm by consuming oil that funds despots and dictators and climate change versus stepping out of that cycle.  Last year, MMM used about 40 gallons of gasoline by my estimate, which is pretty minimal funding of either of those "bads."  Opting out of oil consumption, iphones made in foxconn factories with suicidal depressed employees, electronics and a stream of new cars with hundreds of pounds of rare earth elements mined by virtual slaves, new clothes made in bangledashi garment factories, etc. seems like it can do quite a bit of good.  I realize you and I wouldn't engage in much of that working or not, but many people need a reason not to do/buy those stupid things.  I'm pretty sure that's the real motivation for MMM's blog.

I would also argue that being FIRE allows you to have a much greater impact locally - be it working/being active in your local coop governance, local government, student mentoring, school board, etc.  Alternatively, it would allow more time to do international volunteer/nonprofit work; but, again, I'm a sceptical of the real benefit there.
Title: Re: "One More Year" strikes the rich the hardest
Post by: Daisy on January 22, 2015, 08:13:59 PM

As for the ethical concerns, I think MMM might argue that RE, living local, and living deliberately benefit the world.  Stepping off the produce and consume treadmill greatly reduces our impact on the world.  Also, if you're not planning to have children, you can will your "final assets" to a good cause that will help many many people.  The hard part would be picking where to give your money; I'm sure there's a forum somewhere on the internet for that.

I agree that living smaller and reducing your impact on the world are great, but I think that is possible even without living the MMM lifestyle. In fact, I do have some moral concerns about some of his approaches to life in general, for example his argument of not following current events because basically you can't change those things, so might as well not know about them at all and just live your very local FIRE life and not concern yourself with the greater troubles of the world. To me, that is morally repugnant. It is in fact the rich (which by my definition is anyone who is FI by whatever standard) who should take on responsibility for creating a better world and for sure that doesn't happen if you just ignore things around you. Of course you can't solve every problem in the world, but I strongly believe that everyone can make an impact, whether that be helping the poor in Bangladesh or being involved in local politics of your small town. If everyone just aims to gobble up enough money to live off forever in this unencumbered lifestyle with no care for the world, then that's how you hand over power to despots and dictators. Ignorance, especially if by choice, is a tragedy in my opinion and very very dangeours. I could FIRE in 3 years at age 33 and just move some place nice and not bother anymore with making a difference, but I find something morally wrong with that. Maybe I will keep working, I do a lot of impact investing in developing countries, it can sometimes be stressful, but I am also deeply involved in the world and have the opportunity to make an impact. Or maybe I will move somewhere else and work on more local issues. But whatever it is, I feel like I have a moral obligation to use my time in a socially beneficial manner. I am no longer occupied with making a living and surviving. I truly believe I now need to dedicate my time to some sort of higher purpose, even if that purpose is not always 100% enjoyable. On that one, I agree with MM: life is not about seeking out pleasures and comfort. But comfort does not just mean buying a BMW and driving across the street to the supermarket. There is also comfort of the mind and that is equally dangerous. Your mind needs to be challenged as much as your muscles. And part of that is seeking out situations that may be uncomfortable, learning about things that make you uncomfortable and taking action that might be intellectually uncomfortable. If nobody is willing to sacrifice their time, comfort and money for such important work then the world is in a truly dire situation. All the riding my bike, not buying crap and having a small footprint on the world is not going to relieve me of that responsibility. Your footprint on the world's resources should be small....but maybe we should all aim at having a bigger footprint on the world when it comes to making a difference.

I totally agree. Not even sure which is my favorite part. I just agree.

I'm hoping by having the ability to FIRE, I can have some time to reflect on what it is I would like to do for the rest of my life. I do plan on having some chill down time for a while after FIRE'ing to decompress, reflect, do some personal stuff, but I feel having a purpose for something outside of me is very important in my post-FIRE life.
Title: Re: "One More Year" strikes the rich the hardest
Post by: James on January 22, 2015, 08:33:06 PM
That really speaks to me sol, I can definitely see your struggle. I could easily be in your shoes in the future, and have no idea what choice I would make. For me there is the additional aspect that I do medical missions work and can't continue that if I retire. I could for a while, but eventually doing something a couple times a year just isn't enough to maintain quality work. But would I continue to work part time just so I can volunteer?


My thoughts right now is to work part time to keep my abilities and fund the trips. And I can cut back to part time once I have enough money to fund my lifestyle outside those trips. The pay would cover medical mission work, and the rest of the money can go to others, helping my kids with college, supporting some third world efforts I'm involved in, donating to local causes, etc. But how far to cut back will be a hard decision, and how long to keep the part time gig will be hard to know. Or do I just pick up per diem work to cover those things? Or do I go part time earlier at a higher level so I can do more medical mission now?


At least I have a decent while to figure it out for myself. Best of luck to those making the decisions, there isn't any right answer, just finding what works for you.
Title: Re: "One More Year" strikes the rich the hardest
Post by: sol on March 10, 2015, 11:42:50 PM
I'm reviving this thread because someone posted a related question over here (http://forum.mrmoneymustache.com/welcome-to-the-forum/charity-and-omy-syndrome/) and it reminded me I wanted to respond to this but never got around to it.

Like 2lazy2retire posted in that thread, working OMY can do a lot of good for other people if you give it all away, and I've about decided to run with the idea.  Help me over the edge.

Here's my plan.  In order to ease into this process I want to give away more than half of my salary the year after I hit my FIRE number.  In my mind, this is mentally equivalent to declaring myself FI and then continuing to work for OMY and splitting my take home pay between charitable giving and building my safety buffer.

In some sense this is an act of cowardice.  If the market crashes horribly or someone in my family gets sick and incurs huge medical bills, I will still have my firehose of cash (the job) on hand to support me.  I could cut back on the charity if my needs changed for the worse, and keeping the job is a form of insurance against that early-retirement nightmare financial meltdown scenario that might otherwise put you in the 5% of cases where a 4% SWR doesn't work.

If the market holds up for another year, and I've added significantly to my savings, then I've done a bunch of good in the world and lowered my SWR a bit, and all I had to do was endure one more Christmas party.  If the market crashes and my early retirement would have been a failure, I can always keep on working and will report back on how glad I am that I didn't bail the moment I hit my number, and you can all point to me as a cautionary tale for other would-be FIRE types.

And I think I might enjoy going to work a little more if I knew that Monday's eight hours of work bought Thanksgiving dinners for 25 needy families, and Tuesday's staff meeting saved 5 acres of rainforest, and that my government-mandated three-day first-aid/CPR/safety course provided a full semester of job training for a disabled person.  Those goals are more motivating to me than reducing my SWR from 4.04% to 4.02%.

The question then becomes one of logistics.  How do you give away that much money? 
Title: Re: "One More Year" strikes the rich the hardest
Post by: brooklynguy on March 11, 2015, 06:45:51 AM
Very commendable.  Don't see why logistics should be a problem.  People commonly give away sums far greater than half a year's salary of Sol the Mensch and manage to overcome any logistical hurdles.  If the goal is maximization of benefit to the world with your dollars, just donate them all to a data-driven philanthropic organization like the Gates Foundation.  Or follow J. Collins' advice and  start your own (http://jlcollinsnh.com/2012/02/08/how-to-give-like-a-billionaire/).
Title: Re: "One More Year" strikes the rich the hardest
Post by: Retire-Canada on March 11, 2015, 06:56:47 AM

At a high earning job, that fire hose of cash can do a lot of good in the world once your own expenses are met.  That's the OMY problem I'm struggling with.

As long as you know you are staying OMY for some specific goal and it means enough to you to give up another precious year from your life I see no problem with it.

My solution is to switch to part-time work.

- I get a lot of free time to do stuff I love.

- I earn enough to live off and keep saving a little bit.

- I allow my investments to keep growing to whatever arbitrary %WR makes me happy

- And I keep my foot in the door at work should I hit sequence of returns crisis early in my ER

Frankly I am not sure I will stop working 100% once I am down in the 3-6 months/yr range.

With Fuck You Money, a solid skill set plus experience you can negotiate a sweet part-time gig where you do the fun tasks and someone who needs 40hrs/wk x 52 wks/year of pay to deal with their consumer debt can do the crappy jobs.

Either way congrats on being successful at work and at your FIRE planning. The problem you pose is a nice one to have. :)

-- Vik
Title: Re: "One More Year" strikes the rich the hardest
Post by: DoubleDown on March 11, 2015, 03:01:12 PM
@sol, your plan is fine and can certainly help others. I'm planning a similar but somewhat different strategy that might also appeal to you. I'm sitting on the "extra" money I earned with OMY as a hedge against bad sequencing up front. So far so good, and that extra money is compounding even more. Once I get through a few years, and it becomes clear that I'll likely end up in the group whose ending stash is far greater than the starting amount, I'll start giving it away.

It's the same idea as you with having a safety net and being able to help others. The downside, unlike your plan, is that there's no plum, regular 9-5 job to fall back on if investments go far south. The upside is that I quit already, and there will be likely even more to give away through compounding as long as no zombies. I guess one could also argue that I'm not helping as many right now (beyond my regular charitable giving), but like Jesus said, we will always have the poor among us, so there's no danger of not having someone to help in a couple of years.
Title: Re: "One More Year" strikes the rich the hardest
Post by: Candace on March 11, 2015, 03:08:14 PM
Sol,

Congratulations, and you definitely have my admiration for thinking this way about helping other people.

My opinion is that we strive for FI so that we can decide what to do with our time and with our energy.

If you decide that you would like to make some significant gifts to charities that help people in the ways you describe, as a way of starting off your post - FI life, then great. Further, if you see that an efficient way for you to contribute to very worthwhile causes is to work OMY and contribute a large percentage of your salary to those causes, then you ARE doing what it is you want to do with your time and energy. This is the point of being FI. You may be making sacrifices by staying at work, but nothing dear is bought without a cost. Even though you're still at work, you're using your talents and energy for YOUR purposes. You will have a different perspective on the job. You won't be there because you need the income. You'll be there because you have plans for the income that will make you feel good. And, you can quit whenever you want during the year if something happens at work that makes it not worth staying. That's the power of FI.

I would suggest you decide how much of a gift you want to make (perhaps the amount is equal to half your yearly salary), and then stick to that plan by funneling the money directly. Then, you can RE -- as in REally leave work -- and know you've accomplished one of your goals already.

One tip-- you might want to consider how you make your gifts. The charities see a large one-time gift and think you're going to give that much every year. They'll never stop hounding you. I know this from experience. An anonymous gift might get you out of years of hounding.
Title: Re: "One More Year" strikes the rich the hardest
Post by: dandarc on March 11, 2015, 03:19:28 PM
Sol - feeling you on this one.  Granted, we are something like 8-10 years away from hitting our number, but I could see us continuing to work at our lucrative jobs in order to give a lot of it away.

I was thinking our model might look like:

1.  Put whatever we can into tax-deferred vehicles.
2.  Pull our living budget.
3.  Split whatever is left between charitable giving and a "do cool one-off things with / for our family" fund.
4.  Give most of our estate to charity way down the road.

Eventually, maybe 2 gets pulled from assets instead of income (in our minds any way - money is fungible and such).
Title: Re: "One More Year" strikes the rich the hardest
Post by: brooklynguy on March 11, 2015, 03:51:09 PM
The upside is that I quit already, and there will be likely even more to give away through compounding as long as no zombies.

Related to this point, it's worth keeping in mind that, because the type of early retirement planning most of us are doing is based on avoiding worst case (or near-worst-case) scenarios, most of us will end up with large estates that we can leave to charity.

The median historical early retiree using a 4% WR and cfiresim's default settings for the other variables (75/25 stock/bond allocation and 0.18% investment fees) ended up with a portfolio equal to more than 32x their annual withdrawals after 30 years and more than 53x their annual withdrawals after 50 years (in each case, in inflation-adjusted terms).  So more than 50% of the time, early retirees would have amassed a fortune allowing them to make a charitable donation at the end of their retirement period greater than their total cumulative spending during their entire retirement (in real dollars).  If you adjust the variables (such as increasing the stock allocation or decreasing the investment expenses) and factor in the various levels of safety margin that are unaccounted for by cfiresim but will be utilized in practice, the real portfolio ending values are correspondingly higher.

It's informative to plug in your own numbers to get a sense of what kind of estate you could expect to end up with.  It may be that half a year's salary is a relative drop in the bucket.
Title: Re: "One More Year" strikes the rich the hardest
Post by: PatStab on March 11, 2015, 06:57:12 PM
We are going to go from about $250k per year to $65k per year.  That's going to be OH MY GOD!

I keep working the numbers, yes we are saving a lot but we enjoy life too.

It will happen but I know the first year or two will be different.
Title: Re: "One More Year" strikes the rich the hardest
Post by: arebelspy on March 12, 2015, 11:21:47 AM
I'm reviving this thread because someone posted a related question over here (http://forum.mrmoneymustache.com/welcome-to-the-forum/charity-and-omy-syndrome/) and it reminded me I wanted to respond to this but never got around to it.

Like 2lazy2retire posted in that thread, working OMY can do a lot of good for other people if you give it all away, and I've about decided to run with the idea.  Help me over the edge.

Here's my plan.  In order to ease into this process I want to give away more than half of my salary the year after I hit my FIRE number.  In my mind, this is mentally equivalent to declaring myself FI and then continuing to work for OMY and splitting my take home pay between charitable giving and building my safety buffer.

In some sense this is an act of cowardice.  If the market crashes horribly or someone in my family gets sick and incurs huge medical bills, I will still have my firehose of cash (the job) on hand to support me.  I could cut back on the charity if my needs changed for the worse, and keeping the job is a form of insurance against that early-retirement nightmare financial meltdown scenario that might otherwise put you in the 5% of cases where a 4% SWR doesn't work.

If the market holds up for another year, and I've added significantly to my savings, then I've done a bunch of good in the world and lowered my SWR a bit, and all I had to do was endure one more Christmas party.  If the market crashes and my early retirement would have been a failure, I can always keep on working and will report back on how glad I am that I didn't bail the moment I hit my number, and you can all point to me as a cautionary tale for other would-be FIRE types.

And I think I might enjoy going to work a little more if I knew that Monday's eight hours of work bought Thanksgiving dinners for 25 needy families, and Tuesday's staff meeting saved 5 acres of rainforest, and that my government-mandated three-day first-aid/CPR/safety course provided a full semester of job training for a disabled person.  Those goals are more motivating to me than reducing my SWR from 4.04% to 4.02%.

The question then becomes one of logistics.  How do you give away that much money?

You are an inspiration.
Title: Re: "One More Year" strikes the rich the hardest
Post by: coachese on March 12, 2015, 11:30:08 AM
If one more year increases the nest egg 20% then I see the way as clear. One more year. That rhymes.
Title: Re: "One More Year" strikes the rich the hardest
Post by: brooklynguy on March 18, 2015, 11:19:34 AM
Here's my plan.  In order to ease into this process I want to give away more than half of my salary the year after I hit my FIRE number.  In my mind, this is mentally equivalent to declaring myself FI and then continuing to work for OMY and splitting my take home pay between charitable giving and building my safety buffer.

I've been thinking about this a lot since your update post.

My (amorphous, undeveloped) plan had always been to get to the retirement finish line ASAP (which necessarily means deferring any charitable giving until after achieving FIRE, except that I have been making some relatively nominal contributions during my working career), and then focus on charitable giving in retirement.  Because I am, like most of us, in all likelihood grossly oversaving, I expect to have substantial excess over "enough" to give away once it becomes clear that my retirement is on a successful trajectory.

A side benefit of this strategy, I had always assumed, is that it would maximize my net lifetime charitable contributions (because every dollar that I defer giving away now will turn into many multiple real dollars that I can give away later).  But this ignores the tax considerations, which I never really focused on.

Your "OMY with half the proceeds going to charity" plan will allow you to take a substantial tax deduction in your final year of high-income employment.  Plus, instead of contributing the cash you earn, you can contribute an amount of appreciated taxable portfolio assets of equal value (allowing you to take a deduction for the full market value and avoid capital gains tax), and replace them with new shares purchased with your income at full market value, thereby permanently stepping up your tax basis.  Double plus, if you establish your own charitable fund (as described in the Jim Collins article I linked to above), you can even allow the contributions to continue to grow on a tax-free basis through investments of your choosing, to be allocated as and when you decide (plus get a host of other benefits outlined in Jim's article).  So there goes my idea of maximizing the total contributions by deferring them.

My projected FIRE date is (I believe) similar to yours -- probably within three years or so.  I have lots more thinking to do about this.  Thanks for planting the seed.
Title: Re: "One More Year" strikes the rich the hardest
Post by: msilenus on April 20, 2015, 12:39:44 PM
Brooklynguy just referred me over to this thread.  My thoughts have been skewing similar to Sol's and his.  Some quick comments:

* Big +1 to the suggestion of using a DDF for this.
* Deferring big charitable contributions until the last year might be a little wasteful, because it might push you into a lower marginal rate.  It's usually going to be optimal to spread out contributions over more high-earning years.  A compromise might be phasing up into this approach slowly.

I don't think supporting a cause in an ongoing way while working indefinitely is going to wind up being the most impactful way to donate.  You agree with their aims, but what do you know about them, really?  Have you worked there?  Have you seen the impact they're having?

My current thinking is that I'll build up a DDF balance while I'm working and have more time than money, but not worry about allocating to causes.  After I retire, when I have more time than money, I'll spend that time figuring out where the money will go.  That will involve spending serious time figuring out both where the money is needed most, and who can do the best work with it

Another factor to consider is that nonprofits have huge downswings in revenue during recessions.  So another philanthropic role you can play that might be superior to an ongoing contributor, is to try to be a revenue stabilizer.
Title: Re: "One More Year" strikes the rich the hardest
Post by: brooklynguy on April 20, 2015, 01:23:31 PM
Deferring big charitable contributions until the last year might be a little wasteful, because it might push you into a lower marginal rate.  It's usually going to be optimal to spread out contributions over more high-earning years.

This is an excellent point, but a tradeoff of this approach is that it may cut against the psychological appeal of Sol's plan to "first reach FI, then work OMY for charity's benefit."  Sol described it as "an act of cowardice" to continue working OMY after attainment of FI for the nominal purpose of benefitting charity when that approach just so happens to also provide the personal benefit of leaving your umbilical cord / firehose of cash unsevered as an insurance policy against the shit hitting the fan.  You're right that deferring major charitable giving until the last year is probably suboptimal from the charity's perspective, but I like the mental compromise of "taking care of #1" by reaching FI as soon as possible and only then shifting gears to more altruistic concerns.

By the way, for anyone following along, "DDF" stands for "Donor Directed Fund," which, as msilenus described in the thread that led him to this one (http://forum.mrmoneymustache.com/welcome-to-the-forum/how-do-charitable-donations-fit-into-your-finances/msg633485/#msg633485), is the type of vehicle described in the Jim Collin's article linked to earlier in this thread.
Title: Re: "One More Year" strikes the rich the hardest
Post by: brooklynguy on April 20, 2015, 05:08:59 PM
Also, my understanding is that Vanguard's DDF option has a $25K minimum initial investment threshold, which creates a barrier to spreading contributions out over time.  Msilenus, have you found other good alternatives?  (I haven't done much (any, really) research into this myself yet, beyond reading Jim Collins' article.)
Title: Re: "One More Year" strikes the rich the hardest
Post by: asauer on April 21, 2015, 07:53:11 AM
That's a great point.  One reason my husband and I are projecting 7 years until ER instead of 5 is b/c we want to be key players in our favorite charity's capital campaign.  Plus, we want to have a certain amount per child for college.  It's completely worth two years of extra work to make these happen.  Though, to avoid potential OMY issues after that, we're sticking to very specific goals for the extra $. 
Title: Re: "One More Year" strikes the rich the hardest
Post by: grantmeaname on April 21, 2015, 10:57:07 AM
Like most threads started by Sol this is definitely an interesting conversation. Since I'm 8 or so years out from retirement even under an optimistic scenario it's hard to say how I'll feel when the target date comes around, since people change a lot and it's hard to imagine what 8-years-older me will value. Despite this I've been pondering over the concept as well. Since I'm thinking about downshifting into a job that will make a firehose of cash ($250k/year or more) it's a much different situation than many people find themselves in, but my thought has always been to direct a lot of the money to philanthropy. I'll definitely be watching in the time between now and then to see what your experience is.
Title: Re: "One More Year" strikes the rich the hardest
Post by: msilenus on April 21, 2015, 01:30:16 PM
Also, my understanding is that Vanguard's DDF option has a $25K minimum initial investment threshold, which creates a barrier to spreading contributions out over time.  Msilenus, have you found other good alternatives?  (I haven't done much (any, really) research into this myself yet, beyond reading Jim Collins' article.)

Fidelity Charitable has much lower minimums, and very good integration with Fidelity.
Title: Re: "One More Year" strikes the rich the hardest
Post by: Aussiegirl on April 21, 2015, 04:18:40 PM
I worked 4 more years after I hit FIRE. I am a very risk averse person and wanted lots of "buffer" in my ER plan. I wanted to limit the "do I have enough?" thoughts as much as possible.

Now ER'ed and looking back, I'm not sure the physical and mental toll of those 4 years was worth saving another 400k or so. In hindsight, probably should have quit my job the MOMENT I hit the number.

This is interesting Jon_Snow.   I estimate that we'll be FI in 2 years, but find myself thinking we should work another 2 years post that "just to be sure".   What advice would you give me?

Title: Re: "One More Year" strikes the rich the hardest
Post by: brooklynguy on May 07, 2015, 10:32:01 AM
FYI, Pfau recently wrote an article (http://www.forbes.com/sites/wadepfau/2015/05/01/getting-the-most-from-charitable-giving-with-donor-advised-funds/) about charitable giving through Donor Advised Funds (which I believe is interchangeable with Donor Directed Funds).  It doesn't really say anything new, but the discussion of concentrating contributions into high-marginal-rate years made me rethink this point from the earlier discussion in this thread:

Deferring big charitable contributions until the last year might be a little wasteful, because it might push you into a lower marginal rate.  It's usually going to be optimal to spread out contributions over more high-earning years.

This is an excellent point, but a tradeoff of this approach is that it may cut against the psychological appeal of Sol's plan to "first reach FI, then work OMY for charity's benefit."  Sol described it as "an act of cowardice" to continue working OMY after attainment of FI for the nominal purpose of benefitting charity when that approach just so happens to also provide the personal benefit of leaving your umbilical cord / firehose of cash unsevered as an insurance policy against the shit hitting the fan.  You're right that deferring major charitable giving until the last year is probably suboptimal from the charity's perspective, but I like the mental compromise of "taking care of #1" by reaching FI as soon as possible and only then shifting gears to more altruistic concerns.

If deferring all contributions to the final "one more year (or partial year)" will push you into a lower marginal rate, there's an obvious middle ground between that approach and msilenus' optimal approach of spreading out contributions over as many years as it takes to never push you into a lower marginal rate:  don't defer contributions entirely until the final year (or partial year), but defer contributions to the final period of years of your choosing (for example, the penultimate year + the final year (or partial year)).  In other words, it doesn't have to be an all or nothing approach between the two extremes.  Of course, for every additional year you include in the contribution spread-out period, you defer your attainment of FIRE by a corresponding amount of time, and incur some additional risk of the excrement making physical contact with the oscillating air current distribution device (such as job loss) before you get to the finish line.
Title: Re: "One More Year" strikes the rich the hardest
Post by: brooklynguy on June 17, 2015, 01:24:40 PM
FYI, Kitces just published a truly excellent (in typical Kitces fashion) write-up of donor advised funds, which covers the finer tax and other nuances (some of which were discussed earlier in this thread, but many of which were not):

https://www.kitces.com/blog/rules-strategies-and-tactics-when-using-donor-advised-funds-for-charitable-giving/
Title: Re: "One More Year" strikes the rich the hardest
Post by: Guesl982374 on June 18, 2015, 07:39:00 AM
Here's my plan.  In order to ease into this process I want to give away more than half of my salary the year after I hit my FIRE number.  In my mind, this is mentally equivalent to declaring myself FI and then continuing to work for OMY and splitting my take home pay between charitable giving and building my safety buffer.
...
The question then becomes one of logistics.  How do you give away that much money?

Sol - Sounds like a great plan and no, it is not cowardice.

When you originally posted this thread back in Januaray it got me seriously thinking. While I will most likely take 3-6 months to decompress, there is a significant chance I will want to continue earning money in different, riskier ways (one of my core reasons to acheive FI is to be able to take risks without putting my family at risk). There's a good chance my wife will most likely want to continue working in her field. For us, the question won't necessarily be OMY vs. RE, but rather what to do with the surplus of cash. My wife and I discussed this a few times and we are most likely going to set up a scholarship fund to help low-income kids to go college (we are passionate about education reform) with a large portion of the extra cash generated. The idea would be to set up a fund and utilitize the 4% rule for "indefinite" scholarship payouts. As we continue to earn money we can keep throwing money on the pile for bigger and bigger scholarships. It's still a pretty rough idea and FI is still (more than) a few years away but it's definitely on the table.

Thanks for kicking off the thought process.
Title: Re: "One More Year" strikes the rich the hardest
Post by: Bearded Man on June 18, 2015, 07:14:05 PM
What about working one more year and then changing careers to something else?

This. I might try this and am creating a plan for this as an option. Although FI now, if I work another 2 years my QOL goes up. Plan was/is to get while the getting is good for the next 9 years. I have 7 to go, but at the 5 year mark I may decide to either FIRE or change careers. If I can let my nest egg grow a few more years by doing so while still putting some money away and I can stomach the BS I might just work the full 7 years I have left.
Title: Re: "One More Year" strikes the rich the hardest
Post by: Bearded Man on June 18, 2015, 07:19:42 PM
I worked 4 more years after I hit FIRE. I am a very risk averse person and wanted lots of "buffer" in my ER plan. I wanted to limit the "do I have enough?" thoughts as much as possible.

Now ER'ed and looking back, I'm not sure the physical and mental toll of those 4 years was worth saving another 400k or so. In hindsight, probably should have quit my job the MOMENT I hit the number.

Interesting...I wonder if I will feel the same.
Title: Re: "One More Year" strikes the rich the hardest
Post by: patrickza on June 25, 2015, 04:48:49 AM
I also don't really have a year, but a number. It's simple for me $1m and I walk out the door never to return. That's a 2% SWR for me if I exclude any side gigs. Realistically, I'm good to go now with the side gigs, but I want that number! I expect to hit it in about 3-5 years, and I'll be around 40, unless of course a side gig goes big, or work just drives me insane.
Title: Re: "One More Year" strikes the rich the hardest
Post by: grantmeaname on June 25, 2015, 04:59:49 AM
If I were you I'd read this thread (http://forum.mrmoneymustache.com/investor-alley/stop-worrying-about-the-4-rule/) and then retire tomorrow!
Title: Re: "One More Year" strikes the rich the hardest
Post by: ender on June 25, 2015, 06:11:20 AM
One of the reasons we are generous now (not FI) is that I don't expect I can magically change my attitude someday when I have wealth.

OMY only makes sense if you have a purpose that you believe in behind it. Charity can be a purpose. Scholarships can be a purpose.

I fully expect I will work some until I am in my mid-50s and potentially even 60s (assuming I live that long, I guess). I also fully expect work will become optional well before then.

But if I get to a point where I am close to FI or past it, my lifestyle will allow me to have immense freedom with my resources - whether working and giving crazy amounts financially or giving my time, choosing a more satisfying or less stressful career, or taking a 3 month sabbatical/vacation JUST CUZ or spending much more time with my hopeful children.

This is what pursuit of FI and MMM lifestyle is for me. It's not a "hurry up and quit working and do nothing" thing for me. It's a pursuit of a state where I can "live life how I want to live it and live it to the full." FI and anti-materialism fit perfectly with that goal. But when I'm at that point, who knows where I'll be. Maybe I'll be making $150k a year at a job I love and will be able to give away $5,000 a month to charities I support. Maybe I could fully fund a new one myself. Maybe I request to work 32 hours a week. Who knows. But what I do know is I want the freedom to make those choices.

Pursuing FI lets me dream of this. These dreams are not going to change if I actually hit there but will become reality. Maybe I'll continue working and nothing will really change. I don't know.

If you look at MMM he still works, too. Just on his terms completely and with no "I need a paycheck" incentive whatsoever.
Title: Re: "One More Year" strikes the rich the hardest
Post by: MLKnits on June 25, 2015, 06:27:24 AM
Quote
You're assuming the millionaire salary person is saving the same quantity of money as the other person, rather than only saving a similar percent.  I've noticed *most* people with high salaries tend to increase their spending substantially as the salary rises, and thus don't save so much.

Also in the OP's hypothetical case, the rich person has only been saving for less than a year.  I would be worried about those frugal habits not being ingrained, because the rich person has a much longer time of being used to living large than the $20K/year person.

This would be one of the biggest risks, IMO. And as a higher earner, my OMY plan (still a good ways away) is to switch to a lower-paying, hopefully lower-stress (or at least different stress types!) job for a year and live only off that income, so that I may not be saving more but my existing investments will continue to grow. That way it's a test run of "can I live off X for real, without cheating" (too easy to cheat with a high income!) while not actually drawing down the stash. Plus, some of the potential profession shifts could actually be things that would make me happy, who knows.
Title: Re: "One More Year" strikes the rich the hardest
Post by: Captain and Mrs Slow on February 20, 2017, 06:05:44 AM
Along the same lines a lot of Baby Boomers are easing into retirement. Some twke low paying jobs so they can interact with the public, others the companies are suddenly very worried about losing too many staff all at once, so you ease into retirement maybe by working 2-3 days a week for a year or two.
Title: Re: "One More Year" strikes the rich the hardest
Post by: 41918 on February 20, 2017, 05:52:56 PM
For me I don't think I'll ever stop earning. I get bored easily and need a new challenge. Once I hit the number i'll downshift into something less stressful and let my nut grow for a few years. Downshift will likely be something full time with benefits and less stress. A few years later start something on the side. Ive always thought an adjunct position at a small college would be ideal.
Title: Re: "One More Year" strikes the rich the hardest
Post by: Pigeon on February 23, 2017, 09:52:33 PM
Most adjunct positions aren't full time and don't have benefits.
Title: Re: "One More Year" strikes the rich the hardest
Post by: sol on February 23, 2017, 10:01:31 PM
Most adjunct positions aren't full time and don't have benefits.

Perfect!  If I wanted a regular job, why would I retire?
Title: Re: "One More Year" strikes the rich the hardest
Post by: MM_MG on February 23, 2017, 10:37:09 PM
Holy thread revival Batman!

But I'm glad it was.   We've been thinking about this a lot lately.   I am fortunate to work in a profession where I could easily work into my 70s+ (so could my SO to a certain extent), but we are on track to likely be able to be FIRE at age 50.   We could "take our money and run" and shouldn't feel an ounce of regret.   However, I've recently started thinking about the positive benefits we could have on society in general by working for free or cheaply after age 50.   I am starting to believe that time working and "giving away" our services would likely be the most enjoyable time we've spent working.  Whether that is in the form of offering our services for free or giving away the money we make I don't think it matters.  To Sol's point, I believe I can tolerate a lot of corporate BS knowing that it is helping those much less fortunate.  Of course, it helps that we currently take at least a month off a year and could probably negotiate more time off after age 50.   Regardless, I agree with Sol that OMYS strikes the rich more...as it probably should.   My $.02.   
Title: Re: "One More Year" strikes the rich the hardest
Post by: NorthernBlitz on February 24, 2017, 09:15:13 AM
For high incomes, retirement has a higher opportunity cost.  Although it doesn't sound like it in your case, are higher paying jobs more likely to fulfill an individual's self actualization needs?

Opportunity cost was the first thing I thought of too.

I also think that wealthy people generally come from good family situations. My parents and grandparents have provided me with tremendous opportunities. They have never asked for anything in return, but my grandfather has said that he always felt that it was important for him to help us because his parents and grandparents helped him.

Paying it forward is part of my family's culture and I have benefited from it. I want to be able to do it for my kids so that they can be at or close to zero after their college education. If working for a few more years enables me to do that, I'll probably make that sacrifice.
Title: Re: "One More Year" strikes the rich the hardest
Post by: arebelspy on February 24, 2017, 03:03:50 PM
For high incomes, retirement has a higher opportunity cost.  Although it doesn't sound like it in your case, are higher paying jobs more likely to fulfill an individual's self actualization needs?

Opportunity cost was the first thing I thought of too.

The opportunity cost is another YEAR of your life.

You only get so many of those.  Money stops being worth much of anything, at that point.

Someone used an analogy in another thread that when you have enough it's like getting paid in packs of gum when you only eat a pack or two a year.

What you are saying is that "Yes, I only eat two packs of gum a year, but I can earn 30 packs of gum, when the average household only earns 5 packs of gum! I just need to work one more year for that!  How can I give that up?   Look at the opportunity cost!"

Yes, the opportunity cost is more money. Maybe a lot more money.

...so?

Trading more of my life for money? That's a hard pass, for me.
Title: Re: "One More Year" strikes the rich the hardest
Post by: sol on February 24, 2017, 03:40:03 PM
What you are saying is that "Yes, I only eat two packs of gum a year, but I can earn 30 packs of gum, when the average household only earns 5 packs of gum! I just need to work one more year for that!  How can I give that up?   Look at the opportunity cost!"

The whole point of this thread is that giving it up is hard, especially when each pack of gum can save a life.  The money isn't any good to me, but it can certainly do a lot of good for someone else.  I can make that happen, if I earn that money and then give it away.

If I had to just erase a year of my life to save those lives, it would be a harder decision.  If your job is truly soul-sucking, I feel your pain.  But most of us have chosen jobs we kind of like, and feel are important, and that make a difference in the world.  So I'm not choosing to waste a year of my life in exchange for 30 packs of gum, I'm choosing to make the world a better place at my chosen profession in exchange for being able to allocate vast sums of money towards improving the lives of thousands of impoverished individuals who weren't given the same opportunities that I was.

In that light, the "opportunity cost" is so high that it seems almost criminal to retire too early.
Title: Re: "One More Year" strikes the rich the hardest
Post by: Retire-Canada on February 24, 2017, 05:44:26 PM
Do you do a desk job? If so how do you feel about the deleterious health effects of all the sitting and computer work when you no longer need money?
Title: Re: "One More Year" strikes the rich the hardest
Post by: SwordGuy on February 24, 2017, 06:40:38 PM
Most adjunct positions aren't full time and don't have benefits.

And the pay is generally piss-poor.   
Title: Re: "One More Year" strikes the rich the hardest
Post by: Tabaxus on February 24, 2017, 06:49:09 PM
What you are saying is that "Yes, I only eat two packs of gum a year, but I can earn 30 packs of gum, when the average household only earns 5 packs of gum! I just need to work one more year for that!  How can I give that up?   Look at the opportunity cost!"

The whole point of this thread is that giving it up is hard, especially when each pack of gum can save a life.  The money isn't any good to me, but it can certainly do a lot of good for someone else.  I can make that happen, if I earn that money and then give it away.

If I had to just erase a year of my life to save those lives, it would be a harder decision.  If your job is truly soul-sucking, I feel your pain.  But most of us have chosen jobs we kind of like, and feel are important, and that make a difference in the world.  So I'm not choosing to waste a year of my life in exchange for 30 packs of gum, I'm choosing to make the world a better place at my chosen profession in exchange for being able to allocate vast sums of money towards improving the lives of thousands of impoverished individuals who weren't given the same opportunities that I was.

In that light, the "opportunity cost" is so high that it seems almost criminal to retire too early.

I struggle with this. 

Someone else may have mentioned this, but it almost poses a similar problem as the old thought experiment where a train is speeding toward a group of [X] people, and you can save those people if you flip a switch to instead kill [some number less than X] people.

A particularly hard version of this that comes up is whether you would flip the switch to save a ton of people, if you were the person who would be killed from flipping the switch.

Except here, I can literally save thousands of people, and the switch won't kill me, though it may take years off my life (stress, health, etc.) or otherwise significantly lower my enjoyment of life.

When I frame it in this light, doing anything other than working until I can no longer really do the job seems like a morally bankrupt thing to do.  And it's hard to grapple with.
Title: Re: "One More Year" strikes the rich the hardest
Post by: SwordGuy on February 24, 2017, 06:58:29 PM
It's a tough decision.

Officially, we're in OMY territory.    We were going to retire this April and now we're going for April 2018 instead.

Our FI is way more conservative than most on this forum for several reasons.

Once my wife retires she's unlikely to ever find work again at a vaguely decent paying job in her field - regardless of where we're willing to move to.   It's a combination of her age and her academic specialty.

It would be fairly easy for me to find another full time job as long as I didn't mind it taking a few months to a year for a position to open up.  It's also likely I could find some remote part-time work at a good rate.   But once I quit my current career I don't think I'll want to go back.  I'm ready for a change.

Plus, we have a mentally handicapped daughter, so we have to save for 4 retirements instead of the usual 2.  (2 for my wife and I, plus 1 for my daughter, and then another for our daughter after we pass.)  Since she can't adjust to bad financial returns like the rest of us would, we can't count on that as a viable option for her to save her stash.

But I digress a bit.   We're not doing OMY because of all that.  We hit that number this March.   We would be good to go.

But we're working OMY to fund an architecturally cool house from destruction.   It will take a lot of sweat and cash to do it and we decided we didn't want to risk the standard sequence of returns risk while we had very high renovation costs to undertake.   So we decided to use OMY of income to fund it.  But that's it.   We both found MMM much later in our lives than many of you all.  (Damn you, you lucky sods! :) )

When we sell the fixed up house that will fund a few more rentals.   I suspect one of them will end up being donated for the temporary use of folks who need it, such as folks who got burned or flooded out, or who need to visit loved ones in the local military hospital.

We like to help people, but we particularly like to help people who will help themselves and then others.   So I'm planning on looking for good folks to partner with on fixing up houses to flip.   If we do it right, we'll be able to do at least one house a year.   That will give us fun stuff to work on while still leaving us with lots of time to do whatever we want.  We'll be making people's neighborhoods better and helping nice folks with get up and go get ahead.


Title: Re: "One More Year" strikes the rich the hardest
Post by: arebelspy on February 24, 2017, 08:36:36 PM
What you are saying is that "Yes, I only eat two packs of gum a year, but I can earn 30 packs of gum, when the average household only earns 5 packs of gum! I just need to work one more year for that!  How can I give that up?   Look at the opportunity cost!"

The whole point of this thread is that giving it up is hard, especially when each pack of gum can save a life.  The money isn't any good to me, but it can certainly do a lot of good for someone else.  I can make that happen, if I earn that money and then give it away.

If I had to just erase a year of my life to save those lives, it would be a harder decision.  If your job is truly soul-sucking, I feel your pain.  But most of us have chosen jobs we kind of like, and feel are important, and that make a difference in the world.  So I'm not choosing to waste a year of my life in exchange for 30 packs of gum, I'm choosing to make the world a better place at my chosen profession in exchange for being able to allocate vast sums of money towards improving the lives of thousands of impoverished individuals who weren't given the same opportunities that I was.

In that light, the "opportunity cost" is so high that it seems almost criminal to retire too early.

Sorry, gotta call bullshit.

You and I both know 99% (probably higher) of the people working "OMY" are doing it out of greed (wanting to spend more) or fear (what if I run out of money, what if the 4% rule isn't safe enough, what if healthcare, etc. etc.).

Not out of "if I work OMY, I can help a lot of people."

We had a whole long discussion on how donating your stache to charity when you die instead of kids is the moral way to go (of course, people arguing on both sides). Then did a poll.  It was, what, 5% of people that said their stache would go to charity instead of kids?

No way most people doing OMY are saying "look how many lives I can save."

OMY strikes the rich the hardest because they could earn so much more.  But they sure as heck (the vast, vast majority) aren't saving lives with it. They're padding their stache.

And at that point, it's gum. Not life saving gum, just slight peace of mind, greed gum.
Title: Re: "One More Year" strikes the rich the hardest
Post by: Retire-Canada on February 24, 2017, 08:44:48 PM
It's extremely hard to change decades of intensive programming around work and stop doing it. I think this issue is severely underestimated by most people considering FIRE.
Title: Re: "One More Year" strikes the rich the hardest
Post by: arebelspy on February 24, 2017, 08:48:52 PM
It's extremely hard to change decades of intensive programming around work and stop doing it. I think this issue is severely underestimated by most people considering FIRE.

The earlier you retire, the less this is a problem.  ;)
Title: Re: "One More Year" strikes the rich the hardest
Post by: Retire-Canada on February 24, 2017, 09:08:41 PM
The earlier you retire, the less this is a problem.  ;)

Yes. I'm planning on OLY or possibly 3 Less Years*. I want to get out with my life and staying in the game until I hit 4% WR isn't worth it.

I have no kids and few young relatives [none that need any resources] so most likely I'll end up in one of the glorious FIRE start years where I'll end up with a huge pot of money I don't need and I'll be more than happy to use it for charitable purposes. I will also use my free time in FIRE to have a positive impact on my friends, family and community.

But, work extra years for money I don't need heck no.

* - I'd need to work 1 - 3 more years FT to hit my FIRE target depending on market returns and my luck with contracts.
Title: Re: "One More Year" strikes the rich the hardest
Post by: aspiringnomad on February 24, 2017, 10:06:29 PM
The earlier you retire, the less this is a problem.  ;)

Yes. I'm planning on OLY or possibly 3 Less Years*. I want to get out with my life and staying in the game until I hit 4% WR isn't worth it.

I have no kids and few young relatives [none that need any resources] so most likely I'll end up in one of the glorious FIRE start years where I'll end up with a huge pot of money I don't need and I'll be more than happy to use it for charitable purposes. I will also use my free time in FIRE to have a positive impact on my friends, family and community.

But, work extra years for money I don't need heck no.

* - I'd need to work 1 - 3 more years FT to hit my FIRE target depending on market returns and my luck with contracts.

I'm in the exact same situation; even the timeframe (FI minus 1-3 years). I think it's more my speed because I'll enjoy the challenge of knowing I may have to figure shit out if market returns are weak or if my spending doesn't drop once I quit. Seems a wee bit more adventurous to me, or at least less formulaic. But more importantly, it'll buy me years of freedom when it's more important to me to have that freedom. I realize I'd be unwilling to make this leap if I had kids or fewer life/work options.
Title: Re: "One More Year" strikes the rich the hardest
Post by: MMM365 on February 24, 2017, 10:09:26 PM
Great posting and great thoughts.  Thank you for sharing. 

We have been thoroughly considering this and discussing this for some time now.  When looking at financial goals, I do think it's important to consider the positive impact that one can have with the additional income that he/she can make.  I read later in this thread, that your comment that it's almost criminal not to earn the money and use some of it to do charitable work/philanthropy.  I've come to that realization and understanding myself as well. 

Two years ago, we set up a small family foundation to which we donate an additional percentage of salary to every year.  THis offsets taxes but more importantly, begins the process of building a separate cache of wealth, only to be used for charitable giving/philanthropy.  These types of vehicles go by several names (donor advised funds, community family foundations) and in most larger cities, you'll be able to find an easy way to do this. 

What we have found, is that this represents a different way of building wealth that is primarily aimed at future giving.  ALthough we give considerably to charity now, we also relish the ability to grow this fund to be used for future giving.  I suppose that once this fund grows to a certain level (and at this point, I'm not sure what that number is), we will feel that the OMY phenomenon will no longer apply. 

I brought this idea up to this forum last year. 
http://forum.mrmoneymustache.com/welcome-to-the-forum/what-is-the-hurry-to-re/msg929586/#msg929586
THought you might enjoy reading it as it does discuss almost exactly your question here. 

Good luck. 
Title: Re: "One More Year" strikes the rich the hardest
Post by: MMM365 on February 24, 2017, 10:11:54 PM
What you are saying is that "Yes, I only eat two packs of gum a year, but I can earn 30 packs of gum, when the average household only earns 5 packs of gum! I just need to work one more year for that!  How can I give that up?   Look at the opportunity cost!"

The whole point of this thread is that giving it up is hard, especially when each pack of gum can save a life.  The money isn't any good to me, but it can certainly do a lot of good for someone else.  I can make that happen, if I earn that money and then give it away.

If I had to just erase a year of my life to save those lives, it would be a harder decision.  If your job is truly soul-sucking, I feel your pain.  But most of us have chosen jobs we kind of like, and feel are important, and that make a difference in the world.  So I'm not choosing to waste a year of my life in exchange for 30 packs of gum, I'm choosing to make the world a better place at my chosen profession in exchange for being able to allocate vast sums of money towards improving the lives of thousands of impoverished individuals who weren't given the same opportunities that I was.

In that light, the "opportunity cost" is so high that it seems almost criminal to retire too early.

Sorry, gotta call bullshit.

You and I both know 99% (probably higher) of the people working "OMY" are doing it out of greed (wanting to spend more) or fear (what if I run out of money, what if the 4% rule isn't safe enough, what if healthcare, etc. etc.).

Not out of "if I work OMY, I can help a lot of people."

We had a whole long discussion on how donating your stache to charity when you die instead of kids is the moral way to go (of course, people arguing on both sides). Then did a poll.  It was, what, 5% of people that said their stache would go to charity instead of kids?

No way most people doing OMY are saying "look how many lives I can save."

OMY strikes the rich the hardest because they could earn so much more.  But they sure as heck (the vast, vast majority) aren't saving lives with it. They're padding their stache.

And at that point, it's gum. Not life saving gum, just slight peace of mind, greed gum.

Isn't this why we talk about these things?  To see other people's thoughts and to encourage others to consider philanthropy in their financial picture?
Title: Re: "One More Year" strikes the rich the hardest
Post by: arebelspy on February 24, 2017, 10:40:54 PM
What you are saying is that "Yes, I only eat two packs of gum a year, but I can earn 30 packs of gum, when the average household only earns 5 packs of gum! I just need to work one more year for that!  How can I give that up?   Look at the opportunity cost!"

The whole point of this thread is that giving it up is hard, especially when each pack of gum can save a life.  The money isn't any good to me, but it can certainly do a lot of good for someone else.  I can make that happen, if I earn that money and then give it away.

If I had to just erase a year of my life to save those lives, it would be a harder decision.  If your job is truly soul-sucking, I feel your pain.  But most of us have chosen jobs we kind of like, and feel are important, and that make a difference in the world.  So I'm not choosing to waste a year of my life in exchange for 30 packs of gum, I'm choosing to make the world a better place at my chosen profession in exchange for being able to allocate vast sums of money towards improving the lives of thousands of impoverished individuals who weren't given the same opportunities that I was.

In that light, the "opportunity cost" is so high that it seems almost criminal to retire too early.

Sorry, gotta call bullshit.

You and I both know 99% (probably higher) of the people working "OMY" are doing it out of greed (wanting to spend more) or fear (what if I run out of money, what if the 4% rule isn't safe enough, what if healthcare, etc. etc.).

Not out of "if I work OMY, I can help a lot of people."

We had a whole long discussion on how donating your stache to charity when you die instead of kids is the moral way to go (of course, people arguing on both sides). Then did a poll.  It was, what, 5% of people that said their stache would go to charity instead of kids?

No way most people doing OMY are saying "look how many lives I can save."

OMY strikes the rich the hardest because they could earn so much more.  But they sure as heck (the vast, vast majority) aren't saving lives with it. They're padding their stache.

And at that point, it's gum. Not life saving gum, just slight peace of mind, greed gum.

Isn't this why we talk about these things?  To see other people's thoughts and to encourage others to consider philanthropy in their financial picture?
Sure. What I'm saying though is that most ignore it, and it's not the real reason so many people OMY.

(As far as almost criminal not to, that's true of every moment of your life. The conclusion isn't work OMY, it's never ER at all, if you really believe it.)
Title: Re: "One More Year" strikes the rich the hardest
Post by: SwordGuy on February 24, 2017, 11:27:59 PM
In that light, the "opportunity cost" is so high that it seems almost criminal to retire too early.

Sorry, gotta call bullshit.

Right back at you. :)

You and I both know 99% (probably higher) of the people working "OMY" are doing it out of greed (wanting to spend more) or fear (what if I run out of money, what if the 4% rule isn't safe enough, what if healthcare, etc. etc.).

Sol isn't 99% of all people.  Sol is one person.   One person who is considering doing exactly what they said they are considering doing.  All the other people are irrelevant to the decision Sol is in the process of making.

There is no bullshit about that.

Sol may decide to help people by working OMY, or may decide to help them in other ways, or possibly to help no one but themselves and their family.   They are working thru that decision.   It's worth taking the time to do so.
I can't fault them for any of those decisions and I certainly wouldn't fault them for seriously considering all three of them.

I'm working OMY to save a house, otherwise I would be retiring in April.  Ditto for my wife.
My FI plans assume I lose every dime I put into that house.   It will be a pleasant surprise if I end up making some money - in which case some of it will find its way to people in need. 

Our original plan was for every 5th or 6th house to be done for charitable purposes.   This house is #5.  Not quite the way we expected to do it when we made that agreement with ourselves a couple of years ago, but it works for us.


Title: Re: "One More Year" strikes the rich the hardest
Post by: arebelspy on February 25, 2017, 12:23:57 AM


In that light, the "opportunity cost" is so high that it seems almost criminal to retire too early.

Sorry, gotta call bullshit.

Right back at you. :)

You and I both know 99% (probably higher) of the people working "OMY" are doing it out of greed (wanting to spend more) or fear (what if I run out of money, what if the 4% rule isn't safe enough, what if healthcare, etc. etc.).

Sol isn't 99% of all people.  Sol is one person.   One person who is considering doing exactly what they said they are considering doing.  All the other people are irrelevant to the decision Sol is in the process of making.

There is no bullshit about that.

Sol may decide to help people by working OMY, or may decide to help them in other ways, or possibly to help no one but themselves and their family.   They are working thru that decision.

Well then the thread should be called "OMY strikes Sol the hardest."

;)

I stand by my assessment.
Title: Re: "One More Year" strikes the rich the hardest
Post by: Metric Mouse on February 25, 2017, 01:04:21 AM
The earlier you retire, the less this is a problem.  ;)

Yes. I'm planning on OLY or possibly 3 Less Years*. I want to get out with my life and staying in the game until I hit 4% WR isn't worth it.

I have no kids and few young relatives [none that need any resources] so most likely I'll end up in one of the glorious FIRE start years where I'll end up with a huge pot of money I don't need and I'll be more than happy to use it for charitable purposes. I will also use my free time in FIRE to have a positive impact on my friends, family and community.

But, work extra years for money I don't need heck no.

* - I'd need to work 1 - 3 more years FT to hit my FIRE target depending on market returns and my luck with contracts.

I'm in the exact same situation; even the timeframe (FI minus 1-3 years). I think it's more my speed because I'll enjoy the challenge of knowing I may have to figure shit out if market returns are weak or if my spending doesn't drop once I quit. Seems a wee bit more adventurous to me, or at least less formulaic. But more importantly, it'll buy me years of freedom when it's more important to me to have that freedom. I realize I'd be unwilling to make this leap if I had kids or fewer life/work options.
This is awesome. While I did so accidently, I deffinately took the O(many)Less Year path. It was a fantastic adventure, and I would highly recommend it.
Title: Re: "One More Year" strikes the rich the hardest
Post by: Out of the Blue on February 25, 2017, 04:23:02 AM
I see several related strands of thought running through this thread:


Overall I do agree with the idea that those of us who are privileged are in a better position to, and should, give more back to the world.  Especially as most high income earners are also likely to have high social capital and useful skills that can do a lot of good.  Where the line is to be drawn between giving priority to one's own needs vs others' needs is not an easy question though, nor is the question of how one goes about doing the most good. 

Thank you for starting this thread - I do like seeing ideas like this discussed on these forums.

Edited to respond to this:
Quote
You and I both know 99% (probably higher) of the people working "OMY" are doing it out of greed (wanting to spend more) or fear (what if I run out of money, what if the 4% rule isn't safe enough, what if healthcare, etc. etc.).

I don't know that that's true at all. I think there are many people continuing to work even when they don't need the money (i.e. I'm not just talking about people on these early retirement forums, but also the many, many people in the world who are FI/wealthy already) not out of greed or fear, but because they find their jobs fulfilling and/or think that it benefits society - either directly, or because it enables them to earn to give.  I would hope that it's more than 1% of the population who are already FI, but I really don't know - I think I have had the good fortune of having known a decent number of altruistic and civic-minded people who are motivated more by a desire to give back to society than by money.  Certainly they have demonstrated that in their career choices.
Title: Re: "One More Year" strikes the rich the hardest
Post by: Zoot on February 25, 2017, 04:41:13 AM
My lifestyle wouldn't change, but if I can save the lives of 1000 children by sitting in my cubicle for another 12 months, how many annoying meetings and TPS reports could I suffer through to accomplish that goal?  How many homeless drug addicts or abandoned puppies or acid-burned girls can I help for each awkward performance appraisal I endure?

At a high earning job, that fire hose of cash can do a lot of good in the world once your own expenses are met.  That's the OMY problem I'm struggling with.

A friend of mine went through something like this.  She had a good job in an engineering field, but as it turned out she wasn't happy (ENFJ, for those who know the Myers-Briggs Type Indicator).  She left to form a successful business, which she sold a few years later.  She then had a decision to make about what to do from there.  (I don't know if she was FIRE by that point, but it's possible; I don't know all the details.  She was married at the time to a spouse also making good money, so with that and the business proceeds it's likely she didn't need to work.).

She decided to go back to work in engineering so that she could devote the money to funding some 529's for her (then very young) nieces who would not have had any college funding from their families otherwise (she and her spouse had no kids of their own).  She got laid off after a couple of years, but was unfazed by it--"because I worked those two years," she told me, "my nieces will be able to go to college; the money has years to grow and by the time they need it it will be there for them."
Title: Re: "One More Year" strikes the rich the hardest
Post by: arebelspy on February 25, 2017, 01:54:45 PM
  • whether you can do more good continuing to work and donating the extra funds, or FIRE-ing and doing some more hands-on charitable work personally -  William Macaskill has done some very interesting work in this area, and has suggested that you can do more good working on Wall Street and donating your earnings than by doing hands-on work for charities (https://qz.com/57254/to-save-the-world-dont-get-a-job-at-a-charity-go-work-on-wall-street/). (See more on earning to give (https://80000hours.org/articles/earning-to-give/).) The answer to how you can do the most good depends on (1) how much good (or bad) you do in your current job; (2) how much extra you can donate from the funds at your current job; (3) how much good you can do for a charity after FIREing.  This is something I am still trying to work out for myself, and there are still a lot of unknowns.  I don't do much (if any) good in my current private sector job, but I am planning to change to a job in public policy that will hopefully benefit society in a year or two and I could potentially do a lot of good in that job (I may possibly be overly idealistic for thinking this, though).  I will probably earn a decent amount at that job to give to charity, but it won't be tons - I could give more ($) to charity by staying in my current job but I suspect more good would be done by moving into policy.  And I do think I'll be doing some work that is beneficial to society after I FIRE also, though I'm not sure what form that will take yet.   

Earning to give is awesome.  That's exactly what we're talking about in this thread.

We've been considering going back to work once our kid(s?) is a bit older.  Very few people do this, which is why you hear about the few who do.

Quote
Edited to respond to this:
Quote
You and I both know 99% (probably higher) of the people working "OMY" are doing it out of greed (wanting to spend more) or fear (what if I run out of money, what if the 4% rule isn't safe enough, what if healthcare, etc. etc.).

I don't know that that's true at all. I think there are many people continuing to work even when they don't need the money (i.e. I'm not just talking about people on these early retirement forums, but also the many, many people in the world who are FI/wealthy already) not out of greed or fear, but because they find their jobs fulfilling and/or think that it benefits society - either directly, or because it enables them to earn to give.  I would hope that it's more than 1% of the population who are already FI, but I really don't know - I think I have had the good fortune of having known a decent number of altruistic and civic-minded people who are motivated more by a desire to give back to society than by money.  Certainly they have demonstrated that in their career choices.

You'd be surprised.

How many do you actually know that are earning to give, i.e. working past FI to donate all of their salary to charity?

I'd bet not more than one or two, if that.

And even if you know a handful of people earning to give, that's probably still only about 1% of the people you know, or less.

Quote
She decided to go back to work in engineering so that she could devote the money to funding some 529's for her (then very young) nieces who would not have had any college funding from their families otherwise (she and her spouse had no kids of their own).  She got laid off after a couple of years, but was unfazed by it--"because I worked those two years," she told me, "my nieces will be able to go to college; the money has years to grow and by the time they need it it will be there for them."

Here's a great example.

This is total bullshit.

I mean, I'm sure it's true.  But let's look at the problems with this:
1) She's earning an engineering salary, yet only funds 529s to the limit that they can "grow in time" for the money to be there?  That means she saved or spent the vast majority of it.

More importantly:
2) She's not actually giving any to charity!  She gave some money to relatives who she says couldn't afford college otherwise.  If this is truly the case, there would have been plenty of grants and scholarships available for them. 

Giving some money to relatives (and only a small fraction of what she earned, based on the information given) instead of actually helping dying children, and then getting credit such that someone uses her as an example of earning to give, and altruistic behavior?  What horse *.

I'm sure your friend is a nice person, I don't mean to degrade her personally. But going back to work to put a little aside for your relatives?  ...okay?  That doesn't earn you a lot of altruistic credit in my book.  I'd say it's roughly equivalent to adopting a dog that would have been put down.  No doubt a nice thing to do that costs you some money, but not that praiseworthy versus average charitable behavior.  It's not the going above and beyond earning to give.

It's incredibly, incredibly rare to actually see OMY for altruistic purposes.  You all can cite that one person you know, or have heard of, but that's probably under 1% of the people you know.  And I'd wager much, much, much less.

The truth is, OMY strikes the rich the hardest, because they're used to piling up money, and don't want to give it up.  Not because of some magical "How much could I have helped with this watch"-Schindleresque mindset.[/list]
Title: Re: "One More Year" strikes the rich the hardest
Post by: Out of the Blue on February 25, 2017, 02:08:25 PM
Quote
You'd be surprised.

How many do you actually know that are earning to give, i.e. working past FI to donate all of their salary to charity?

I'd bet not more than one or two, if that.

And even if you know a handful of people earning to give, that's probably still only about 1% of the people you know, or less.

I don't know any that donate all their salary to charity (though some may be and just don't brag about it, I wouldn't know). But I don't think it's an all-or-nothing game - I think continuing to work to continue to be able to give 50% of your salary still counts as "earning to give" and very admirable, even if you could be giving 100% (because you're already FI).   You're still giving away money that you wouldn't have been able to had you not continued working, even if you continue to derive some financial benefit from it also.   

Also, I know of quite a few people who don't give 100% of their salary to charity, but have chosen (or downshifted into) lower-paying careers that let them give back more in terms of their time/skills, etc. While that's not exactly the "OMY" dilemma that is being discussed in this thread, it does make me believe that more than 1% of people who continue to work when they don't have to are not doing it solely or even primarily out of greed or fear.  But I could be being naive.
Title: Re: "One More Year" strikes the rich the hardest
Post by: Zoot on February 25, 2017, 02:37:02 PM
Quote
She decided to go back to work in engineering so that she could devote the money to funding some 529's for her (then very young) nieces who would not have had any college funding from their families otherwise (she and her spouse had no kids of their own).  She got laid off after a couple of years, but was unfazed by it--"because I worked those two years," she told me, "my nieces will be able to go to college; the money has years to grow and by the time they need it it will be there for them."

Here's a great example.

This is total bullshit.

I mean, I'm sure it's true.  But let's look at the problems with this:
1) She's earning an engineering salary, yet only funds 529s to the limit that they can "grow in time" for the money to be there?  That means she saved or spent the vast majority of it.

More importantly:
2) She's not actually giving any to charity!  She gave some money to relatives who she says couldn't afford college otherwise.  If this is truly the case, there would have been plenty of grants and scholarships available for them. 

Giving some money to relatives (and only a small fraction of what she earned, based on the information given) instead of actually helping dying children, and then getting credit such that someone uses her as an example of earning to give, and altruistic behavior?  What horse *.

I'm sure your friend is a nice person, I don't mean to degrade her personally. But going back to work to put a little aside for your relatives?  ...okay?  That doesn't earn you a lot of altruistic credit in my book.  I'd say it's roughly equivalent to adopting a dog that would have been put down.  No doubt a nice thing to do that costs you some money, but not that praiseworthy versus average charitable behavior.  It's not the going above and beyond earning to give.

My apologies--I gave the example here because it was the closest thing I had experienced in my circle of acquaintance of working with any goal other than pure personal gain.  I don't know all the details; I'll ask for more info the next time we talk. 

My understanding was that most of if not all of her salary went to this purpose, and that the number of children involved meant that the division among their accounts would not have resulted in a contribution sufficient to completely cover their college costs without time for growth. 

Giving money to relatives is not strictly charity, of course, but I do think that comparing funding education for a child to adopting a dog is a bit harsh.
Title: Re: "One More Year" strikes the rich the hardest
Post by: MMM365 on February 25, 2017, 02:54:16 PM
I don't know that the decision to work OMY to give another year of percentage giving to charity has to necessarily be 100% to be a compelling reason to affect one's decision.  Whether giving 50%, 25%, 10%, I do think that the commitment to ongoing percentage giving does make the OMY equation a bit more complicated to add up.  However, I also feel that, when those of us who have done well financially, there is a responsibility to consider philanthropy and charitable giving in how our FIRE lives will proceed. 

Does it have to be to work OMY to give 100% of income away to be applicable?  Does only giving 10% of OMY not mean anything?  I think, no, on both counts.  However, if giving charitably is not near 100%, I agree with arebelspy that the reason for working beyond FI is often primarily wanting to obtain more stuff/stash. 

Personally, we committed long time ago to give a percentage of our income, and over time, have been increasing it by a few percentage a year.  We are far from Sol's goal of 50% or the number of 100% (although this thread is actually making me consider that long term goal).  However, when consider FIRE, I think that NOT only should lifestyle, living simply, frugality be considered, but ALSO, we should consider how we can impact other financially with charitable giving and work. 
Title: Re: "One More Year" strikes the rich the hardest
Post by: ducky19 on February 25, 2017, 02:56:57 PM
...but I think I've convinced myself I'm good to go now.  I believe OMY is now 5MM.

I assume that means 5 more months? Because i first read that as 5 million ("M" being the Roman numeral for 1000) and almost choked on my Dorito.

Ha, I read it as 5 More Millennia.

See, I saw 5 Money Mustaches...
Title: Re: "One More Year" strikes the rich the hardest
Post by: Retire-Canada on February 25, 2017, 06:52:32 PM
I'm in the exact same situation; even the timeframe (FI minus 1-3 years). I think it's more my speed because I'll enjoy the challenge of knowing I may have to figure shit out if market returns are weak or if my spending doesn't drop once I quit. Seems a wee bit more adventurous to me, or at least less formulaic. But more importantly, it'll buy me years of freedom when it's more important to me to have that freedom. I realize I'd be unwilling to make this leap if I had kids or fewer life/work options.
This is awesome. While I did so accidently, I deffinately took the O(many)Less Year path. It was a fantastic adventure, and I would highly recommend it.

Aspiring Nomad I can't say I'm excited about pulling the FIRE plug at say 5%WR for the extra challenge, but I totally understand your motivation for having more time off sooner. I guess if there is any aspect that I look forward to challenging myself about it's defeating the decades of programming to work and define myself by it. That will something I feel good about working through and seeing what's on the other side.

MM I am looking forward to all the amazing things I will have time to do that matter a lot to me. That's going to be so great. :)
Title: Re: "One More Year" strikes the rich the hardest
Post by: PizzaSteve on February 25, 2017, 11:14:53 PM
We are in my last OMY, so please wish me good luck pulling the trigger when the target date hits.  (edited out personal details)
Title: Re: "One More Year" strikes the rich the hardest
Post by: Mr. Green on February 26, 2017, 09:16:10 AM
The variables here are so many, and have so many ripple effects, that it's an incredibly difficult topic to argue. Looking at sheer efficiency, governments could spend money more efficiently and have way more impact than one person ever could with his money, unless you're in the Billionaire club. So choosing to sacrifice your freedom (which assum es that if all things were equal you would chose a different life path than to continue earning big money) also requires admitting that you choose to shoulder a burden that everyone else is equally capable of carrying.

Philosophically, one could also argue that remaining in a high earning position might ultimately rob you of an alternate life where your free time in "retirement" led to an idea or passion that would have had a much larger impact on the world than your money ever could have.

I'm not saying to keep working is wrong. If no one ever shouldered a burden larger than themselves the world would be a pretty ugly place. We all should strive to do good things that impact other people. However, the rabbit hole on this one is a lot deeper than just saying, "I could work a couple more years and the money I'd earn would save lives."

The argument gets even more complicated for anyone involved in saving lives at their job (doctors, EMTs, firemen, etc.).

Sent from my MotoE2(4G-LTE) using Tapatalk

Title: Re: "One More Year" strikes the rich the hardest
Post by: EnjoyIt on February 26, 2017, 09:55:50 AM
I fully agree that one more year increases with income.  This comes multifold.  Usually to earn those high incomes requires much time and dedication.  Most people do not come out of high school making a $250k+/yr.  Most people out of college don't make that kind of money either.  It usually requires a graduate degree and then years of dedication at your skill to earn an increasingly growing income.  For example. It took me 12 years out of college to get my MD degree and finish residency.  It then took another few years before I started earning at my peak earnings potential.  One more year seams very appropriate since my working career has been so short.  Also, since I gave up so much of my youth towards education I want some luxury in my life as well. I want to be able to travel more staying in more convenient locations with better accommodations, live in a nicer community with a bit more land, pay for my kids education. . . etc.  I am willing to work a few more years to earn those extra luxuries.  Not to mention after spending 12 years learning my skill, it would be kinda sad to give it up after only 8 years of working. Also, I understand the cost of healthcare and what is associated with not having enough funds during your later years in life. Although medicare will provide the basics, the basics are piss ass pathetic without someone advocating for you. I want to make sure we have enough to cover those extra costs.

Today if I wanted to move into a smaller home and travel more frugally, we can retire right now.  Instead we plan for 2-3 more years and then work part time not necessarily for the money but for the fun of doing something I enjoy.

As for the comment above regarding a recession.  I agree at some point in the future a recession is coming.  Unfortunately we do not know when and how long it will last.  I hope it happens while we are still working full time so that we can add to our nest egg.  We have also been slowly adjusting our asset allocation as we near semiretirement. That way if the markets do drop we can always consider moving to a more aggressive asset allocation if we are willing to take on more risk. 
Title: Re: "One More Year" strikes the rich the hardest
Post by: TomTX on February 26, 2017, 12:27:05 PM
It's extremely hard to change decades of intensive programming around work and stop doing it. I think this issue is severely underestimated by most people considering FIRE.

The earlier you retire, the less this is a problem.  ;)

I've been on plan to retire at 53 (10 more years) - based on when I can first take my pension (at ~55% of pay. No COLA) Not early by the standards here, but quite early for where I work - almost everyone who takes the pension immediately just goes to work at another job for 10+ years. Hell, we have one "return to work retiree" who has been drawing the pension for 24 years and still comes into work. Admittedly a special case - his wife has a "honeydo" list more like War and Peace. He works harder at home than at work...

Anyway:

There are several difficulties with my retiring earlier than I can draw the pension:

1) Accrued vacation and sick leave vanish instead of counting toward years worked.

2) Pension amount is based on salary and years of service. Leaving earlier means the pension is smaller forever.

3) Pension start date is based on age + years of service. If I quit at 52 instead of 53, I can't start drawing the pension til 54.

4) Health insurance worries me.
Title: Re: "One More Year" strikes the rich the hardest
Post by: retired? on February 26, 2017, 12:49:27 PM
Plus in my case (and I suspect others), you can get significant family/spouse or social pressure in the form of, "Are you kidding me? You're giving up that plush job with the outrageous salary -- and for what?!" Other forms are, "I would kill for that job and salary, and you're just throwing it away?!"


Arrrggghhh!  This idea kills me...as a federal, I can't move up until someone ahead of me retires or gets promoted...so these folks who keep working just because they want to and not necessarily need to, means that there is one more person like me who's potential growth is stunted. 

My last employer had a GS12 who was 79 years old and napping for half the day in his cubicle...but he was given all the defference in the world and noone did anything about it.  So he sits and takes up space, and keeps other folks from being able to move in there and be productive.

Your OMY syndrome doesn't just affect you, it affects all those who want to follow in your footsteps but just need you to get the hell out of the way.

Well, the problem in this case isn't someone hanging around that doesn't need to work, but the federal govt that lets it happen.

No one has an expectation that others will "clear the way" so they can move up.  That's ridiculous.  Move to the private sector if these sort of policies bother you.
Title: Re: "One More Year" strikes the rich the hardest
Post by: Metric Mouse on February 26, 2017, 12:52:05 PM
I'm in the exact same situation; even the timeframe (FI minus 1-3 years). I think it's more my speed because I'll enjoy the challenge of knowing I may have to figure shit out if market returns are weak or if my spending doesn't drop once I quit. Seems a wee bit more adventurous to me, or at least less formulaic. But more importantly, it'll buy me years of freedom when it's more important to me to have that freedom. I realize I'd be unwilling to make this leap if I had kids or fewer life/work options.
This is awesome. While I did so accidently, I deffinately took the O(many)Less Year path. It was a fantastic adventure, and I would highly recommend it.

Aspiring Nomad I can't say I'm excited about pulling the FIRE plug at say 5%WR for the extra challenge, but I totally understand your motivation for having more time off sooner. I guess if there is any aspect that I look forward to challenging myself about it's defeating the decades of programming to work and define myself by it. That will something I feel good about working through and seeing what's on the other side.

MM I am looking forward to all the amazing things I will have time to do that matter a lot to me. That's going to be so great. :)
I hope it's even better than you imagine.