Why Are So Many Doing "One More Year"?

[CCCA]

In addition to those two benefit, each additional year also buys you one less year of life that you need to cover from assets.  So maybe you now have a 29 year time horizon instead of 30 years.

Whether that is a good or bad thing kind of depends on your perspective.

You are, of course, correct.  But I don't usually think of it in those terms because I'm planning for infinite retirement (i.e. sustainable indefinitely). 

[Retired To Win]

In addition to those two benefit, each additional year also buys you one less year of life that you need to cover from assets.  So maybe you now have a 29 year time horizon instead of 30 years.

Whether that is a good or bad thing kind of depends on your perspective.

Just how exactly is "one less year of life" a good thing?

[sol]

Just how exactly is "one less year of life" a good thing?

Well, it technically increases your chances of success for a given SWR.  It reduces the duration of the retirement, meaning you either improve your odds for one SWR, or you keep the same odds and get to increase your SWR.  In the context of the previous post about OMY increasing your savings contributions and earning an extra year of investment returns, I just thought I'd throw out a third financial reason to OMY your life away.

And technically I suppose it's not really one less year of life because you don't die any sooner.  It's just one less year of life that you're not working. 

What, too literal?

[sirdoug007]

The OMY scenario is one where you definitely do not get to have your cake and eat it too. We each only have a certain number of days on this earth so trading another 365 of them in for cash should be seriously considered in terms of a finite life. 

We should also consider the  levels of safety we are building into our plans. These are not generally considered by the calculators that everyone likes to use to stress themselves out     

http://www.mrmoneymustache.com/2011/10/17/its-all-about-the-safety-margin/


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[Retired To Win]

Just how exactly is "one less year of life" a good thing?

Well, it technically increases your chances of success for a given SWR.  It reduces the duration of the retirement, meaning you either improve your odds for one SWR, or you keep the same odds and get to increase your SWR.  In the context of the previous post about OMY increasing your savings contributions and earning an extra year of investment returns, I just thought I'd throw out a third financial reason to OMY your life away.

And technically I suppose it's not really one less year of life because you don't die any sooner.  It's just one less year of life that you're not working. 

What, too literal?

For my taste, yes, too literal.  Reducing my time in retirement is the last thing I would have thought of as a positive.

My response would have been pretty much what sirdoug007 just wrote.  I think it bears repeating:

The OMY scenario is one where you definitely do not get to have your cake and eat it too. We each only have a certain number of days on this earth so trading another 365 of them in for cash should be seriously considered in terms of a finite life. 

We should also consider the  levels of safety we are building into our plans. These are not generally considered by the calculators that everyone likes to use to stress themselves out     

http://www.mrmoneymustache.com/2011/10/17/its-all-about-the-safety-margin/

It's all about maximizing one's "freedom time" isn't it?  With just enough chances of SWR success to make it relatively safe?  (Since, after all there are never any guarantees -- regarding finances OR longevity.)

[Villanelle]

The OMY scenario is one where you definitely do not get to have your cake and eat it too. We each only have a certain number of days on this earth so trading another 365 of them in for cash should be seriously considered in terms of a finite life. 

We should also consider the  levels of safety we are building into our plans. These are not generally considered by the calculators that everyone likes to use to stress themselves out     

http://www.mrmoneymustache.com/2011/10/17/its-all-about-the-safety-margin/


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I guess I don't really think life starts at retirement.  We aren't FIRE yet, and DH and I both love our lives.  So spending one more year working, as a trade off for less worry and the ability to do a few more of whatever may come up, seems like a decent trade.

For someone whose QOL sucks while they are working, or who looks at time spent employed is just treading water until the awesomeness starts when they quit, I can see when they wouldn't want to risk working even a day longer than necessary.  But for people who are pretty darn happy even while working, then the trade off of having a bit more security or even a bit more fancypants-ness, isn't really illogical.  Because for them, it isn't trading away a day or year of pure drudgery and anguish in order to get those things.  Dh and I will have more freedom in retirement, but it isn't like we have none now. 

[CCCA]

I guess I don't really think life starts at retirement.  We aren't FIRE yet, and DH and I both love our lives.  So spending one more year working, as a trade off for less worry and the ability to do a few more of whatever may come up, seems like a decent trade.

For someone whose QOL sucks while they are working, or who looks at time spent employed is just treading water until the awesomeness starts when they quit, I can see when they wouldn't want to risk working even a day longer than necessary.  But for people who are pretty darn happy even while working, then the trade off of having a bit more security or even a bit more fancypants-ness, isn't really illogical.  Because for them, it isn't trading away a day or year of pure drudgery and anguish in order to get those things.  Dh and I will have more freedom in retirement, but it isn't like we have none now.

I was going to say the same thing.  If you are pretty young, like 30-40, a larger safety margin might be necessary just because the timeline is so long (50+ years) and the risk is somewhat greater than someone who has a 30-40 year retirement planned. 

Also if part time work is possible at your same job, you get many of the benefits of delaying touching your stash (to let it grow) while still getting many of the benefits of FIRE, like much more free time, more time spent with the kids, etc. . .  It's like a partial OMY. 

[NoraLenderbee]

The OMY scenario is one where you definitely do not get to have your cake and eat it too. We each only have a certain number of days on this earth so trading another 365 of them in for cash should be seriously considered in terms of a finite life. 

We should also consider the  levels of safety we are building into our plans. These are not generally considered by the calculators that everyone likes to use to stress themselves out     

http://www.mrmoneymustache.com/2011/10/17/its-all-about-the-safety-margin/


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I guess I don't really think life starts at retirement.  We aren't FIRE yet, and DH and I both love our lives.  So spending one more year working, as a trade off for less worry and the ability to do a few more of whatever may come up, seems like a decent trade.

For someone whose QOL sucks while they are working, or who looks at time spent employed is just treading water until the awesomeness starts when they quit, I can see when they wouldn't want to risk working even a day longer than necessary.  But for people who are pretty darn happy even while working, then the trade off of having a bit more security or even a bit more fancypants-ness, isn't really illogical.  Because for them, it isn't trading away a day or year of pure drudgery and anguish in order to get those things.  Dh and I will have more freedom in retirement, but it isn't like we have none now.

Same here. Working is not a living death for me. I can still enjoy my life even if I'm not 100% free right now.

[Retired To Win]

I guess I don't really think life starts at retirement.  We aren't FIRE yet, and DH and I both love our lives.  So spending one more year working, as a trade off for less worry and the ability to do a few more of whatever may come up, seems like a decent trade.

Yes, the "cusp point" for that trade-off is going to be different for each individual.  It's true that I underwent an aha! moment when I realized my work had become more stressful and grinding rather than satisfying.  That's when I looked up from my desk and started considering an earlier retirement.

But, I must tell you, now that I've spent 14 years in that earlier retirement -- and been able to do the things I've done because I had the freedom to do them -- I see that, for me, it would have been even better if that psychological trade-off point had come years earlier.

[Kaspian]

If (when I hit my time goal for pension) OMY pushes my worth from say, $930K to over a million, I'd stick around work to see that happen.  (Even if it would likely happen on its own without me being employed.)  I don't care too much, but it'd be fun to be the first millionaire in our family tree in recent memory.  ...Why not?

[dragoncar]

Poor investment returns could easily add OMY

[sirdoug007]

The key question is at what point do you consider yourself financially independent?

At that point, you have your F-you money and no longer NEED employment to support your lifestyle.  From that FI day on, you are no longer working for your employer, you are working for yourself.

That doesn't mean you will never work again or you have to work only part time, but it means that you have complete control over the terms of your work (time commitment, compensation, etc.) because you can always take your skills and go home.

Thinking in binary terms of work/retirement makes it easy to justify OMY from a perspective of money scarcity and reducing risk/adding funding for some of your wants.  You make a severely limiting assumption that you will never have another dollar of earned income and therefore need to be ultra-sure that you have enough.  In practice this means you keep moving the goal posts.

If you instead think of the progression as work/FI from a perspective of  monetary abundance you start to see that of course you will do some projects, work part time, etc. and keep earning money.  The difference will be that these projects will be 100% on your terms.  This is what MMM did.

I could easily support my spending by working half-time on cherry picked projects that I really enjoy.  I'm fortunate that my career makes a transition to part time work extremely easy.  Or I may decide I don't want to do engineering any more and get a job at a brewery or as a financial planner.  The key for me is to have that cushy 'stache that supports my basic spending and allows me total confidence to do whatever I WANT to do with my energies.

[CCCA]

It's not so much about hating your job (I loved mine!) but more about time. A job, even a beloved job, is a huge time suck that takes up a big part of each and everyday. Add in commute and getting ready for work each day and that takes more time. An 8 hour a day job can end up taking 10 or more hours out of your day, everyday. Throw in the need to do other stuff like household chores, kids, pets, spouses, friends, parents, etc... and you are left with very little precious free time to engage in activities you want. And if those activities are very time consuming in and of themselves, or require you to spend all your non-working time to do them, then it can be all too much. So for some of us ER is less about having to do a dreaded job each day, and more about freeing your time so you can do ALL the things you want in life.

Then there is the age, health and fitness thing. If the things you like require a certain level of fitness and health - climb mountains and then fling yourself off of them in various ways, bike tour around the world, mush Huskies in Antarctica, run multiple 100 miles races, kayak to Patagonia or just play volleyball on the beach all day :-)! - may not be as easy to do if you wait until you are older.

This is a good point and it is too bad that generally speaking, it is quite binary, either you are working or you are retired.  If employers allowed employees to downshift to part-time work then there could be significant benefits for a person close to FIRE, you wouldn't need as much money as your stash gets larger, and you would have more free time to do travel for a month or work 3 days per week, or whatever you like.


My own goal is for part time work as I enjoy many aspects of the job including intellectual challenge and the societal benefits of my work, but I would prefer to do less overall, and less of the stuff I don't enjoy.  Being FIRE (or close to FIRE) will enable me to do that.

[spokey doke]

I was recently struck by all the threads on the forum about ways to make money post-FIRE...not needing to do that is perhaps worth OMY for many...

[sirdoug007]

I was recently struck by all the threads on the forum about ways to make money post-FIRE...not needing to do that is perhaps worth OMY for many...

I have the opposite reaction.  With all the easy ways to make what amounts to a big chunk of your spending, why continue with a full time job when you have your expenses (which you have been tracking for many years) covered?

[partgypsy]

Talked to a friend I know, who really has his stuff together who now I realize must have 1 more year syndrome, and now I wish I asked him, why didn't he retire sooner? He is retiring in April. He bought his house many many years ago for 25K long time now paid off; his main hobbies are fixing up his house and gardening (very handy). Single, no kids. He has for many years (probably most of his working life) maxed out his 401 and also contributed his limit to Roth. He is 63, and in addition to ss, will be getting some version of a pension (don't know how much). For me, it seems like he could have retired years ago, and I swear I had the conversation with him a few different times, where he said he was going to retire "soon" but then didn't.  He is now going to officially retire in April at 63. I even asked him if he had big plans for retirement (thinking that if he wanted to travel alot, do something else maybe he wanted a bigger cushion) but no, just going to live his life as usual...
I asked him if he had ever heard of Mister Money Mustache and hadn't.

[Cookie78]

I was recently struck by all the threads on the forum about ways to make money post-FIRE...not needing to do that is perhaps worth OMY for many...

I have the opposite reaction.  With all the easy ways to make what amounts to a big chunk of your spending, why continue with a full time job when you have your expenses (which you have been tracking for many years) covered?

This was and is my reaction to that factor too. If I can make some easy side money doing something I like to do IF I WANT TO, why stay at work OMY to create extra padding which may not be necessary.

[spokey doke]

I was recently struck by all the threads on the forum about ways to make money post-FIRE...not needing to do that is perhaps worth OMY for many...

I have the opposite reaction.  With all the easy ways to make what amounts to a big chunk of your spending, why continue with a full time job when you have your expenses (which you have been tracking for many years) covered?

This was and is my reaction to that factor too. If I can make some easy side money doing something I like to do IF I WANT TO, why stay at work OMY to create extra padding which may not be necessary.

For me, the difference in earnings potential is pretty significant.  Also, while I will be willing to be flexible and take on work if conditions require it, I really value being free of the felt need to find ways to get more money.

If I found something I REALLY like doing that someone wants to pay me to do, that would likely change.

[Retire-Canada]

Thinking in binary terms of work/retirement makes it easy to justify OMY from a perspective of money scarcity and reducing risk/adding funding for some of your wants.  You make a severely limiting assumption that you will never have another dollar of earned income and therefore need to be ultra-sure that you have enough.  In practice this means you keep moving the goal posts.

Very good points.

Not only will you likely end up earning some money after ER, but looking at the likely scenarios that would buffer a serious market crash you are trading 1+ years of full-time work in your prime for the potential of needing to pick up some part-time to reduce your %WR for a short period of time "if" a major market crash occurs at a point [ie early on in ER] where the impact on your plans is significant.

It's the FIRE equivalent of buying an expensive insurance comprehensive policy on your car vs. just paying for a repair if you actually damage the car.

The problem is that it's a fear based response and after one more year you can always come up with a new and more frightening scenario that justified saving more $$ by working a 2nd year...and so on.

MMM and others have made a very good point that after something sensible like a 4% SWR more money isn't the best way to avoid FIRE problems....being flexible is.

We keep working because we are scared and working is all we have been trained to do our whole lives.

-- Vik

[AlwaysBeenASaver]

Thinking in binary terms of work/retirement makes it easy to justify OMY from a perspective of money scarcity and reducing risk/adding funding for some of your wants.  You make a severely limiting assumption that you will never have another dollar of earned income and therefore need to be ultra-sure that you have enough.  In practice this means you keep moving the goal posts.

Very good points.

Not only will you likely end up earning some money after ER, but looking at the likely scenarios that would buffer a serious market crash you are trading 1+ years of full-time work in your prime for the potential of needing to pick up some part-time to reduce your %WR for a short period of time "if" a major market crash occurs at a point [ie early on in ER] where the impact on your plans is significant.

It's the FIRE equivalent of buying an expensive insurance comprehensive policy on your car vs. just paying for a repair if you actually damage the car.

The problem is that it's a fear based response and after one more year you can always come up with a new and more frightening scenario that justified saving more $$ by working a 2nd year...and so on.

MMM and others have made a very good point that after something sensible like a 4% SWR more money isn't the best way to avoid FIRE problems....being flexible is.

We keep working because we are scared and working is all we have been trained to do our whole lives.

-- Vik

Very well said, I'm going to keep this post to reread periodically!

[Cookie78]

I was recently struck by all the threads on the forum about ways to make money post-FIRE...not needing to do that is perhaps worth OMY for many...

I have the opposite reaction.  With all the easy ways to make what amounts to a big chunk of your spending, why continue with a full time job when you have your expenses (which you have been tracking for many years) covered?

This was and is my reaction to that factor too. If I can make some easy side money doing something I like to do IF I WANT TO, why stay at work OMY to create extra padding which may not be necessary.

For me, the difference in earnings potential is pretty significant.  Also, while I will be willing to be flexible and take on work if conditions require it, I really value being free of the felt need to find ways to get more money.

If I found something I REALLY like doing that someone wants to pay me to do, that would likely change.

Yeah, I can appreciate both sides. It's an individual choice based on how much you make, how much you hate/love your job, how flexible you want to be after you retire.

I don't picture myself taking on work 'if required'. I picture taking on fun side jobs 'if I feel like it', whether it's required or not. If I'm making a little extra income during the high times, it'll help out during the low times too. If I don't feel like working, I can always be flexible with spending instead, if required. I'm a few years from FI though, so who knows what will change until then. Maybe I'll love my job and want to stay an extra year, or maybe I'll still be itching for the earliest escape possible. :)

[The Happy Philosopher]

Interesting question, I will add a few thoughts.  Some of these are specific to higher income more specialized professions such as medicine.

1. Efficiency: Someone mentioned it before. There is nothing I could realistically do to earn anywhere close to what I earn now other than medicine.  If I guess wrong about my monetary needs I  have to work way harder in the future to catch up. Also in many professions there is a barrier to re-entry once you have been out for a time. You lose your edge and in some instances not employable. Medicine, law, maybe some engineering.  One more year is the path of least resistance. Also many law and medical practices have buy ins, and starting over would be a gigantic pay cut.
2. Waste: Simply put most of us cut spending to a point where we are comfortable.  Further cuts would be more painful. Our core expenses are a higher percentage of spending than average. For most people its easier to cut 20% off of 120k spending than 40k spending.  This efficiency paradoxically allows for less flexibility with retirement spending if you just shut off the money flow after you hit the 4% rule.
3. Health care: Health care is cheap and affordable to those that don't really need it. Its amazing how financially destructive moderate to severe medical problems can be even with insurance. Being sick or taking care of sick people takes tremendous energy and will most likely bleed over and have a negative financial impact on your life. It is a scary thing to have to go buy insurance on the open market for 20-30 years before medicare kicks in.  Maybe some people with horrible medical disasters can share on this forum. I know in an ideal world we all just fly to India or South America and have our renal transplant and coronary bypass for $100 but this is not practical for most.  ACA was intended to fix some of this but I  remain skeptical for now, it would be great for early retirees if this ends up guaranteeing affordable insurance.
4. Underestimation for change: I don't know what spending level will bring me the most happiness 20 years from now, heck I'm not even sure 2 years from now.  One more year gives more options.

Many of this stuff doesn't matter if you have a job that is easy to jump in and out of or if you don't have health insurance anyways.  Everyone will have their own issues and reasons of course.

[Retired To Win]

... Underestimation for change: I don't know what spending level will bring me the most happiness 20 years from now, heck I'm not even sure 2 years from now.  One more year gives more options...

But "one more year gives more options" is something that would be true year after year.  Meanwhile, while one's financial options may be increasing, one's remaining time in life is unquestionably decreasing.  When does this OMY "logic" cease to apply?  When you are too sick or old to keep working anyway?  I'm just asking...

[2Birds1Stone]

I can see both sides argument.

I am in the school of thought that once I have enough to cover my barebones expenses plus maybe $1k/month of fun money I am FIRE'd

My good friend and coworker is convinced that I will change my mind once the $$ roles in. It is not uncommon for our position to involve into mid 6 figure salaries. He thinks I will not be able to step away from that to slow travel the world on a relatively small budget.

My ideal situation would be doing contracted/consulting work a few months out of the year to stay sharp mentally, use that extra income generously to treat family/friends to some nice things, help charity with both time and $$, and in the event of sudden financial hardship due to health, economy etc, I am still valuable to the market.

[ender]

The perspective someone earlier said about "OMY likely funds nearly an entire kids college education" is probably what will cause OMY for me.

By the time any mini-enderland's are close to college a 5-8% increase in my net worth will likely be quite a bit of their potential college education.

OMY for this seems reasonable (especially if they are in high school anyways and are more tied to a location). Well... maybe 4/5 OMY or 3/5 year ;)

[The Happy Philosopher]

... Underestimation for change: I don't know what spending level will bring me the most happiness 20 years from now, heck I'm not even sure 2 years from now.  One more year gives more options...

But "one more year gives more options" is something that would be true year after year.  Meanwhile, while one's financial options may be increasing, one's remaining time in life is unquestionably decreasing.  When does this OMY "logic" cease to apply?  When you are too sick or old to keep working anyway?  I'm just asking...

That's such a tough question to answer, but a great one. At some point financial failure becomes so statistically improbably that continued work should only be because it gives you more happiness. Maybe it is useful to do "stress tests" and examine your finances under duress. What would life look like with me and DW both sick maxing out health insurance deductibles each year? What would a divorce look like where I take half my assets and live off of them? What would a 20-30% increase in luxury spending look like? What would deciding to pay for college look like? For me personally I would be comfortable is my finance could take one of these major hits and keep on ticking.  I hope none of these things happen but life is complicated. Also job satisfaction would be a huge factor. I would be willing to take more financial risk to escape a job I hated. If I was in a good situation I would probably keep working and build up savings.

[tomsang]

Retired to Win, you have mentioned that this questions is more towards those in their late 60's, but then you continue to query and push those who are sub 40 years old.  Retiring in your late 50's or early 60's, I believe when you decided to retire, is completely different from someone doing a One More Year when they are sub 40. 

Many of those who are sub 40, can't fully grasp how their expenses for kids, health, and other areas are going to significantly change in the future.  If your kids are out of the house and your expenses are stable then it is easier to project your needed amount.  You also retired with much more certainty regarding Social Security and other pensions.  This is completely different from someone who only has 10 or so years of full employment.  Their Social Security is permanently effected by retiring without having 35 high years of compensation.  This can be done, but everyone had better have a strong understanding of their desired spending in the future and have safety built into their Stache. A professional that is getting a premium for their knowledge may be stuck with minimum wage 20 years after retiring.  Doing one or two years "extra" can almost guarantee success with the worst case that you leave more money to charities or family.  They would most likely still be retiring 30+ years earlier than "normal" retirement.  If your job is completely miserable, then it might be time to find a different job vs. retiring at the minimum of the spectrum.

You also mention lifespan vs. safety.  If you are retiring at 35, your lifespan is somewhere in the 82 year range.  Giving up one year for increased security and safety is giving up 2% of your remaining life.  If you are 67, you have 19 years of life remaining, so you are giving up 5% of your life to increase your security, when most of your life and major expenses are behind you and your Social Security income is probably locked down at close to the max. In my mind they are different scenarios for One More Year syndrome.  Those who are 40 years or less are gaining knowledge and wisdom by staying put.  That extra year can be used to reflect on your values, get a better understanding of your current expenses, figure out your future expenses, and increase your safety margins.  Like most thing Mustachian, the goal is to spend your time and money on areas that improve your life.  That one extra year may give you the security and confidence to know that your life is set and you have a clear vision for the future.

Thanks for the question,

Tom

[dragoncar]

If you are retiring at 35, your lifespan is somewhere in the 82 year range.  Giving up one year for increased security and safety is giving up 2% of your remaining life.  If you are 67, you have 19 years of life remaining, so you are giving up 5% of your life to increase your security

These numbers confuse me.  Can you elaborate?

[tomsang]

If you are retiring at 35, your lifespan is somewhere in the 82 year range.  Giving up one year for increased security and safety is giving up 2% of your remaining life.  If you are 67, you have 19 years of life remaining, so you are giving up 5% of your life to increase your security

These numbers confuse me.  Can you elaborate?

A 35 year old male has an actuarial lifespan of 82.2 or 47.2 years of life remaining.  At 67 you are projected to live to 84.8 or 18 years. Not sure what I did to change it.  So 1/47 is 2.2% of your actuarial life vs. 1/18 or 5.6% of your actuarial life.  Actuarial life is from the SS website at http://www.ssa.gov/planners/lifeexpectancy.html

[relaxednature]

I was thinking about this OMY topic and looking at my planned retirement spreadsheet, I have when I retire and my plan to move money at low -to- no taxes from 401k/IRA to Roth before I am required to take RMD.

to me with how it looks the amount of taxes I would owe by adding another year of work starts cutting into me being able to transfer enough money to avoid taxes to the point where a couple more years makes say $40k difference a year in taxes because of RMD.  I'm sure this has a lot to do with how far out you are and which account it compounding in, but am I looking at that wrong?  or are there also ways I might not know about to keep your taxes low if you have an RMD of like $140k a year.

[dragoncar]

If you are retiring at 35, your lifespan is somewhere in the 82 year range.  Giving up one year for increased security and safety is giving up 2% of your remaining life.  If you are 67, you have 19 years of life remaining, so you are giving up 5% of your life to increase your security

These numbers confuse me.  Can you elaborate?

A 35 year old male has an actuarial lifespan of 82.2 or 47.2 years of life remaining.  At 67 you are projected to live to 84.8 or 18 years. Not sure what I did to change it.  So 1/47 is 2.2% of your actuarial life vs. 1/18 or 5.6% of your actuarial life.  Actuarial life is from the SS website at http://www.ssa.gov/planners/lifeexpectancy.html

Shit, so I can't really plan to live to 82.2.  Because next year it'll be 82.3, and so on.  Every year my life expectancy goes up so I'll never die.

[sirdoug007]

or are there also ways I might not know about to keep your taxes low if you have an RMD of like $140k a year.

RMDs of $140k/year are not a problem. They are the result of a ridiculous success!


Sent from my iPhone using Tapatalk

[relaxednature]

I guess what I was saying about the RMD, is just that if you keep doing OMY then at some point the extra taxes your paying from the larger RMD on your IRA that didn't get converted starts to make it pointless.

[Retired To Win]

Retired to Win, you have mentioned that this questions is more towards those in their late 60's, but then you continue to query and push those who are sub 40 years old.  Retiring in your late 50's or early 60's, I believe when you decided to retire, is completely different from someone doing a One More Year when they are sub 40. 

Many of those who are sub 40, can't fully grasp how their expenses for kids, health, and other areas are going to significantly change in the future...

Thanks for the question,

Tom

You brought up a lot of good points in your comment.  I would like to point out, though, that in my original post I specifically referred to people who KNEW they had enough money accumulated to retire.  That's altogether different from people who, as you point out, would be looking at great uncertainty regarding how much they might need.

(BTW, I retired at 53.  And I have no way of knowing, unless they say, how old folks replying to this thread are.)

[Latwell]

"Why are so many doing 'one more year?"

Probably for the same reason I have a second job still. I know I want to quit, but I like the extra income. I've become too accustomed to having the extra money coming in, so I'm afraid to jump away from it. I've finally reached the point in my life where the second job is going to have to go but that doesn't stop me from finding an excuse to continue to work there for another year.


I think the main reason people put in another year is because they are afraid of the drastic change that occurs when they retire. You suddenly go from working 40 hours per week to zero. I have a feeling I will need to gradually walk into retirement when my time comes. I won't be able to jump into it. However, my SO would definitely be able to jump into without issues.

[deborah]

Lack of belief - I didn't believe the figures I got when I did calculations. They must be wrong, nobody can retire that young from an ordinary job.

Lack of health - During my working life I was usually sick all winter, and I felt I had a hard time retaining my job. I was sure I couldn't get another job after I retired because of my health problems, so retirement was a "once only" thing - and I couldn't afford to get the figures wrong.

[The Happy Philosopher]

Retired to Win, you have mentioned that this questions is more towards those in their late 60's, but then you continue to query and push those who are sub 40 years old.  Retiring in your late 50's or early 60's, I believe when you decided to retire, is completely different from someone doing a One More Year when they are sub 40. 

Many of those who are sub 40, can't fully grasp how their expenses for kids, health, and other areas are going to significantly change in the future...

Thanks for the question,

Tom

You brought up a lot of good points in your comment.  I would like to point out, though, that in my original post I specifically referred to people who KNEW they had enough money accumulated to retire.  That's altogether different from people who, as you point out, would be looking at great uncertainty regarding how much they might need.

(BTW, I retired at 53.  And I have no way of knowing, unless they say, how old folks replying to this thread are.)

It's very difficult for the early retiree to "know" their money will last forever. For people in their 30s or 40s there are just too many variables to realistically plan for 50-60 years. Sequence of returns risk is bad for a 30 year retirement, but absolutely devastating to a 60 year retirement. For people making good money in a job they don't hate it is very psychologically difficult to shut the income stream off. This is especially difficult for people who would have a tough time getting back into their job market. I would be very regretful if I retired and had to go back to work in 20 years at a job I liked less than the one I do now for 20 or 30% of the income. A 30 year retirement is comparatively simple. At this point omy is probably mostly phycolocical.

[Retired To Win]

"Why are so many doing 'one more year?"

Probably for the same reason I have a second job still. I know I want to quit, but I like the extra income. I've become too accustomed to having the extra money coming in...

I think the main reason people put in another year is because they are afraid of the drastic change that occurs when they retire. You suddenly go from working 40 hours per week to zero...

On the extra income, I think the question to ask oneself is whether what the extra job income buys is worth more fundamentally than the extra time that one would have without the job.  And that, in a substantial way, ties in to the question of what one would do with an extra 40 hours a week of free time without the job.  That's why I firmly believe that for earlier retirement to "stick" one has to be retiring TO something(s) and not just retiring FROM a job.

For me, the answers were (1) I want the time more and (2) hey! Here's my list of stuff I wanna do!!  And I can't wait!

[Cassie]

I agree you need to retire to something. I think semi-retirement for many will be the best of both worlds.

[Gerard]

There's kind of a third option in here, too, keeping in mind that one more year at work improves your finances in two ways: by what you earn and by the extra year your savings can increase in value before you start drawing from them.

You can get the savings increase (but not, obviously, the extra work income) if you stop working but choose to spend a year or more doing something that costs far less than your anticipated SWR, or costs nothing (net). Maybe rent out your home and backpack around for a year? Go live in a tent and write a novel? Become a WWOOFer?

[Cookie78]

There's kind of a third option in here, too, keeping in mind that one more year at work improves your finances in two ways: by what you earn and by the extra year your savings can increase in value before you start drawing from them.

You can get the savings increase (but not, obviously, the extra work income) if you stop working but choose to spend a year or more doing something that costs far less than your anticipated SWR, or costs nothing (net). Maybe rent out your home and backpack around for a year? Go live in a tent and write a novel? Become a WWOOFer?

This is something I'm seriously contemplating lately that may knock 2 years off my RE date.

[Retired To Win]

There's kind of a third option in here, too, keeping in mind that one more year at work improves your finances in two ways: by what you earn and by the extra year your savings can increase in value before you start drawing from them.

You can get the savings increase (but not, obviously, the extra work income) if you stop working but choose to spend a year or more doing something that costs far less than your anticipated SWR, or costs nothing (net). Maybe rent out your home and backpack around for a year? Go live in a tent and write a novel? Become a WWOOFer?

This is one hell of an idea.  Wish I had looked into doing something like that earlier.  Huh...  Might even be theoretically possible now, even though I've already solved my passive income to living expenses equation.  (And we own a house, and we have a bunch of animals, and...)

[HappyMargo]

I agree you need to retire to something. I think semi-retirement for many will be the best of both worlds.

This is exactly what I'm considering at this point.
 
I will be able to FIRE in 3 years.  DH has 10-14 years of work remaining (for various reasons, but he does run his own business & has a lot of freedom already, working only 3 days/ week.)

My job is very physical, can be exhausting & during our "busy season" requires 11-15 hour days.  My plan is to stay full-time for 3 final years, then down-shift to per diem, working only the days/ shifts I choose (2 or 3 per week.)  That way I'll enjoy MUCH more free time and my savings/investments won't be touched & can still grow while I'm waiting for DH to finish up.  We will be totally set to FIRE together then!

So I'm hoping to use part-time (semi-retired) work to save me from needlessly doing OMY... 10 times in a row!

[Cassie]

That sounds like a great plan! When I was fully retired I got bored even with doing volunteer work, etc.  I am much happier with semi-retirement.

[aschmidt2930]

I think working OMY than the math says you have to is smart, if you're retiring young (in most cases). If it's a situation where you're on your fifth OMY, then yeah, some reflection on the true cause is probably necessary.

[Retired To Win]

That sounds like a great plan! When I was fully retired I got bored even with doing volunteer work, etc.  I am much happier with semi-retirement.

That's a big difference between you and me.  I've been earlier retired for 14 years and I have never been bored for any significant length of time.  I think my "trick" is that I always have had a project to be interested in and to keep me motivated.  Right now, it's my blog.  When I first earlier retired, it was a major and extended DIY refurbishing of our house so it could be sold successfully and profitably.  But there's always been "something."

If I look at it a certain way, I too have been semi-retired because I've always been "working" at something about half the time, with the other half spent on leisure and entertainment activities.

(Well, what do you know...)

[steveo]

This is a good thread. Its made me think about seriously decreasing my time to retirement but doing it in a semi-retired fashion. So get to a much lower stash but then work part time for say 5 years. I also have long service leave and at that point I'd be able to be paid for a years part-time work. So it would be 4 years of part-time work that is required rather than 5 years. I am pretty sure that part time work would also enable me to save money so the stash would also increase excluding investment returns.

Our expenses are also higher at the moment because we have 3 kids. The longer we wait to retire the better as the kids will cost us less money.

[rtrnow]

Retired to Win, you have mentioned that this questions is more towards those in their late 60's, but then you continue to query and push those who are sub 40 years old.  Retiring in your late 50's or early 60's, I believe when you decided to retire, is completely different from someone doing a One More Year when they are sub 40. 

Many of those who are sub 40, can't fully grasp how their expenses for kids, health, and other areas are going to significantly change in the future...

Thanks for the question,

Tom

You brought up a lot of good points in your comment.  I would like to point out, though, that in my original post I specifically referred to people who KNEW they had enough money accumulated to retire.  That's altogether different from people who, as you point out, would be looking at great uncertainty regarding how much they might need.

(BTW, I retired at 53.  And I have no way of knowing, unless they say, how old folks replying to this thread are.)

It's very difficult for the early retiree to "know" their money will last forever. For people in their 30s or 40s there are just too many variables to realistically plan for 50-60 years. Sequence of returns risk is bad for a 30 year retirement, but absolutely devastating to a 60 year retirement. For people making good money in a job they don't hate it is very psychologically difficult to shut the income stream off. This is especially difficult for people who would have a tough time getting back into their job market. I would be very regretful if I retired and had to go back to work in 20 years at a job I liked less than the one I do now for 20 or 30% of the income. A 30 year retirement is comparatively simple. At this point omy is probably mostly phycolocical.

The piece you are leaving out about the 30s or 40s person is the ability/likelihood they will earn more is higher than older workers. I was debating leaving my job at 35 when I crossed the 4% threshold, but then the choice was taken away when we lost funding and a layoff looked eminent. To avoid that I was able to become a contract employee. I worked 0 for 3 months. Now I work about 1 day per week at my old job, and more excitedly a low paying but very fun job in anther field fell in my lap. I guess my point is that had I stayed full time at my old job I would have missed out on a fun opportunity that I"m really enjoying. I'm really enjoying on working 2 days per week on average as well. So far, this side income plus what I clear from a single rental has kept me from withdrawing any money from the stash.

[Gerard]

I think there's a difference between choosing one more year even though you have your plan in place, and choosing one more year because situations change. In my case, my sabbatical got pushed back a year, and I got an administrative responsibility that reduces my teaching load (and I can "bank" those reductions until I need them). So my new plan is that I'm going to "work" two years longer than my ER plan, but I'll only have to teach for one semester out of that time. Now I have to work on reorganizing the rest of my life to optimize those two years.

[Livewell]

Our expenses are also higher at the moment because we have 3 kids. The longer we wait to retire the better as the kids will cost us less money.

This is part of my thinking to.  We have two, and continuing to build the stash in a part time fashion seems pragmatic.  Drop kids off in the morning, get to work for 5-6 hours, home for a quick workout or errands before picking them up.  My goal is FI in 4-7 years, and doing this means 7.  Upside is I get to be there for my kids (and wife) every day.

On the other side, I just want to get to FI already!  :)