Author Topic: Early retirement is an eclectic concept  (Read 1793 times)

patci32

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Early retirement is an eclectic concept
« on: December 28, 2018, 03:01:23 AM »
Hello everyone,

Here are a few thoughts about FIRE. Even if I am glad I discovered the concept of early retirement, I understood recently that it's not a unified concept. It applies very differently to people, depending on their hopes and lifestyles. In my example, being frugal is extremely difficult and not exactly desirable. I'll explain why below:

1. I live in France, which implies different things:

- Here, work is a bit different than in North America. The typical contract an executive gets is 220 days a year of work, no more. So in the end, it's easier to be not entirely focused on work when you get that much vacation.
- We are collectively smart: even when you age, your medical expenses are covered by social security. We also have a public retirement system, from which I should benefit at least a bit after 65 y.o.
- We are world champions of soccer. That's not relevant but I wanted to mention it.

2. I graduated from the best possible schools in France. In my country, this will matter your whole life (which is a bit stupid, but it's the way it works). As a consequence, I have the luxury of choosing my career and can expect, even if things are never linear, interesting and well paid jobs, which will make work more bearable.

3. I live in Paris. This town is really not compatible with frugality. That said, I am pretty happy with it. Paris is awesome, but only if you can afford to enjoy it. If you are frugal in Paris, you are just stuck in a small overpriced appartement. My life in Paris involves :

- going to the restaurant: the offer is incredibly large
- enjoying the cultural life: going to theater, concerts, exhibitions, cinema
- I am also passionate by sports : therefore I cannot miss Roland Garros live or the Olympic Games in 2024 :)

4. I love traveling

And i don't want to wait for retirement to travel. I enjoy my French vacations to do it every year, when I am still young and I am very happy with it.

Those points explained, I am still on MMM forum talking about early retirement. Here is what the concept and your community brought me:

1. I am now aware of the importance to invest on a regular basis and thinking on the long range, not trying to beat the market.
2. I studied my expenses. The ones I have described above, I don't want to cut them, they make my life great. But they are a few that I can cut: going to a nice restaurant because it's a great experience is ok. Ordering a snack because you are lazy maybe not that ok. I think I will be able to rationalize my expenses in the future.
3. My life is ok right now. I don't need to spend more. Even if my income increases, I will try to keep my expenses on the same level. I understood that I don't need to consume more than my current level to be happy.
4. Even if I don't retire in my 30s or 40s, a good investment strategy may buy me time. It would still be a great victory for me being able to retire in my 50s while having being able to enjoy life continuously.

Thanks for reading me.




fell-like-rain

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Re: Early retirement is an eclectic concept
« Reply #1 on: December 28, 2018, 07:23:52 AM »
Perhaps so many Americans are driven to the idea of early retirement because our work culture is so terrible. If I had 35 hour weeks and 6-8 weeks of vacation, I'd probably like my job a lot more.

patci32

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Re: Early retirement is an eclectic concept
« Reply #2 on: December 28, 2018, 08:40:05 AM »
Exactly. To be fair, the number of hours an executive will work may be extremely high in France. We talk about "presenteeism". In some companies, even if you don't have work to do, you must be there. I try to avoid this and until now I have managed to work around 40 hours a week but I am just at the beginning of my career and I know it tends to get worse when you get more responsibilities.

Tuskalusa

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Re: Early retirement is an eclectic concept
« Reply #3 on: December 28, 2018, 09:11:27 AM »
I think that one of the challenges with American work culture is that there always seems to be more work scoped than the hours the job is given. My whole career seems to center on a theme of prioritization discussions. Even these days...Ive landed a job at 30 hours a week with ample vacation and a lovely working environment. However, the full job scope would require something like 50 hours. (Im not exaggerating...).  So,well go down the painful prioritization route again.

If jobs were actually scoped for a reasonable workload, my opinion is that more people would enjoy their jobs. But the capitalist mentality means more for less, and growth with the same resources. No wonder FIRE is a thing.

RyanAtTanagra

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Re: Early retirement is an eclectic concept
« Reply #4 on: December 28, 2018, 10:40:07 AM »
Replying because your soccer comment made me legit lol

It sounds like you're more mustachian than you think you are.  It's not necessarily about early retirement, it's about evaluating your spending so you can stop spending on things that aren't important to you, and spend on the things that are.  For a lot of people here one of the important things becomes freedom through early retirement, but that's not the case for everyone.

And keep in mind early retirement is a good goal even if you don't want to retire, because things change.  You get sick of your career, have a health issue that makes it hard to work, kids you want to stay home with, a job you want to take because you like the mission, but it doesn't pay well.  etc.   You don't have to deprive yourself to get there, but it sounds like you're getting it.

patci32

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Re: Early retirement is an eclectic concept
« Reply #5 on: December 31, 2018, 01:39:06 AM »
Thanks everyone for your comments, that was very interesting.

agusus

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Re: Early retirement is an eclectic concept
« Reply #6 on: December 31, 2018, 06:07:19 AM »
- Here, work is a bit different than in North America. The typical contract an executive gets is 220 days a year of work, no more. So in the end, it's easier to be not entirely focused on work when you get that much vacation.

I've always been curious about the French system. To be clear, that is not 145 days of vacation right? Ie, you can't take your weekends whenever you want and have nearly a 5 month continuous travel vacation?  If so, that's not really that much vacation. In the US at a similar high quality job to the executive one I think you're speaking of, we get 104 weekend days off + about 15 public holidays. That leaves 246 fixed (non-flexible) working days. Then we get 5 weeks vacation with X years of experience (my company gave it at 6 years of experience).

That 25 days reduces it to 221 working days, basically the same as you. Also working on weekends or over 40 hours isn't necessarily a requirement - I never did, and still kept up with peers' performance. (oftentimes people think they need to work more but are just working more hours at lower efficiency; this isn't always the case of course, especially for people paid hourly rather than salaried).

You may be happy with that now, but someday might want something different - more flexible control over your time *or* location (ex, travel the world for 6 months, every 2 years, or live somewhere other than France).

I concur you don't need to change anything drastically now if you're happy with your life. FIRE is about finding your optimal balance between time and money, and that's different for everyone.


patci32

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Re: Early retirement is an eclectic concept
« Reply #7 on: December 31, 2018, 06:36:09 AM »
- Here, work is a bit different than in North America. The typical contract an executive gets is 220 days a year of work, no more. So in the end, it's easier to be not entirely focused on work when you get that much vacation.

I've always been curious about the French system. To be clear, that is not 145 days of vacation right? Ie, you can't take your weekends whenever you want and have nearly a 5 month continuous travel vacation?  If so, that's not really that much vacation. In the US at a similar high quality job to the executive one I think you're speaking of, we get 104 weekend days off + about 15 public holidays. That leaves 246 fixed (non-flexible) working days. Then we get 5 weeks vacation with X years of experience (my company gave it at 6 years of experience).

That 25 days reduces it to 221 working days, basically the same as you. Also working on weekends or over 40 hours isn't necessarily a requirement - I never did, and still kept up with peers' performance. (oftentimes people think they need to work more but are just working more hours at lower efficiency; this isn't always the case of course, especially for people paid hourly rather than salaried).

You may be happy with that now, but someday might want something different - more flexible control over your time *or* location (ex, travel the world for 6 months, every 2 years, or live somewhere other than France).

I concur you don't need to change anything drastically now if you're happy with your life. FIRE is about finding your optimal balance between time and money, and that's different for everyone.

Hi,

The French system is a bit complex. There are 5 weeks of vacation that are mandatory in any case. That said, many different systems are coexisting. In some companies, you will get between 8 to 12 weeks of paid leave. Most of the time you won't be able to use it all so you will add the remaining days to a specific account that will allow you to retire earlier.

In my case: I am supposed to work 35 hours but my contract says that I can work up to 38,5. To compensate, they give me around 10 more days called RTT. I say "around 10" because it will depend on the national holiday. If national holiday days occur mostly on weekends, I will get more RTT to compensate. 220 days are just an absolute limit (even if exceptions exist, this is France...).

I hope I am clear enough, given the complexity of the system and English not being my mother tongue.

Let's take 2019 as an example:

365 days
- 104 Saturdays and Sundays
- 10 national holidays not occuring on Saturdays or Sundays
- 25 days of mandatory paid leave
- around 10 extra days because of my contract

If I use all my leaves, I will work 216 days.

I understand that in the US you can get good deals too, but it seems to be more individually negotiated.
« Last Edit: December 31, 2018, 06:38:01 AM by patci32 »

agusus

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Re: Early retirement is an eclectic concept
« Reply #8 on: December 31, 2018, 09:00:50 AM »
I see. I like that the paid leave is mandatory, because many Americans don't use all their vacation days, and feel guilty about taking them. I think you work about 5 days less than I used to, but 2-3 weeks less than the typical American. My point is it's a relatively small difference. The difference between working and not having to work (FI/RE) though is very large. :)

There are also big differences in the social support system in France. That's a consideration (but means you have to stay there, probably). The situation can change in France over a 30-50 year timeline though, just like it can (likely will) in the US.

I think if you keep up points #1-4 you have at the end of your original post, you'll be on a very good track! One note: if you do invest, I would put it in a diverse mix of international funds (not only French companies, because your future is already heavily invested in your country, due to counting on the medical and retirement programs).

patci32

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Re: Early retirement is an eclectic concept
« Reply #9 on: December 31, 2018, 09:06:59 AM »
I see. I like that the paid leave is mandatory, because many Americans don't use all their vacation days, and feel guilty about taking them. I think you work about 5 days less than I used to, but 2-3 weeks less than the typical American. My point is it's a relatively small difference. The difference between working and not having to work (FI/RE) though is very large. :)

There are also big differences in the social support system in France. That's a consideration (but means you have to stay there, probably). The situation can change in France over a 30-50 year timeline though, just like it can (likely will) in the US.

I think if you keep up points #1-4 you have at the end of your original post, you'll be on a very good track! One note: if you do invest, I would put it in a diverse mix of international funds (not only French companies, because your future is already heavily invested in your country, due to counting on the medical and retirement programs).

I may have stated this not correctly. What is mandatory is that your employer provides you with at least 5 weeks a year. You are not obliged to use them all. That said you are really supposed to take them or get these days paid if you don't. For example, when I moved from my previous company, I had 10 days left that they paid me.

For my investment, what scares me most is not the investment in my country, it's the investment in my apartment in Paris. Prices are crazy. I think I will be able to save around 1 500 € a month this year. I am going to invest it through a startup called we save that uses ETF to provide its clients with extremely diversified portfolios. Fees are 1,6% a year.


agusus

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Re: Early retirement is an eclectic concept
« Reply #10 on: December 31, 2018, 09:25:47 AM »
... I am going to invest it through a startup called we save that uses ETF to provide its clients with extremely diversified portfolios. Fees are 1,6% a year.

That's a very high fee. I would recommend looking into other options. In the US we have funds with low fees around 0.06% (0,06% in your notation), through Vanguard (and others). I'm not sure what you have available to you but you should be able to find better rates.
To understand why fees hurt so much, there are articles like these:
https://investor.vanguard.com/investing/how-to-invest/impact-of-costs
https://etfdb.com/etf-education/5-charts-to-put-mutual-fund-expenses-in-perspective/