воскресенье, 6 ноября 2016 г.

I could make lots more money if I worked much longer

I could make lots more money if I worked much longer

I could make lots more money if I worked much longer

People so easily forget that opportunity cost is not just an economic measure. Time has a value inherent and specific to you. If that value is greater then the dollars you make then your done. I personally still enjoy some of the aspects but not all of work. Also I have yet to hit the tipping point for my personal value of time. This is why I say I’m financially independent and not yet on an early retirement track. That being said I’m also not naive enough to ignore that my value of an hour is ever changing. Someday the tipping point will be reached and I’ll retire. I will have to be careful to escape the dreaded one more year, as should everyone. So I guess what I’m saying is while early retirement in my 30s is not for me, as long as you have a sufficient plan and sufficient cash reserves to pull it off I see no concerns.

Full Time Finance recently posted…The Benefits of Financial Independence

Good point about opportunity cost, Full Time Finance. It’s true, the cost extends beyond pure money. And regarding retiring in your 30s, yup, a plan and reserves definitely help, but flexibility might be the most important element of retiring in your 30s.

Money and Trump in the final sentence. How fitting.

Like the contrasting styles and beliefs on display last night, you are seeing a polarizing view from your reader. That’s OK. Thankful to live in a country where we can entertain such opinions.

He /she may change their view one day. I probably felt a bit like the reader many years ago. Which is scary when I really think about it….

Mr. PIE recently posted…PIE Portfolio Progress in Q3: Presidents, Presentations, Percentages and Chickens of Doom

I definitely don’t mind opposing viewpoints. First, that shows that my words are finding their way out into the mainstream, which is great to see. But second, I also don’t mind these views because, quite frankly, I know that early retirement isn’t for everyone. That’s okay. There’s nothing that *requires* a person to want early retirement. If you like working and the accumulation of money, that’s great. Go forth and be happy. But, there are those of us who value our time over our money and would rather spend our time doing other things that make us happier.

I hear you, Steve, loud and clear, and I’m definitely on the FIRE bandwagon. But I get the flipside too, OMY is real! My career has been relatively short so far, just 10 years, but I’ve worked hard these 10 years to reach a million. It may be enough, it may not. So I can see the reasoning to sit tight for a few more years to plug away in order to have cushion…and in the worst case I’ll have all the more comfortable of a lifestyle. I’m a fairly conservative person though, so I’ve always tended to error on the side of caution.

The Green Swan recently posted…The Green Condor: Clearing Growth Hurdles

Nothing wrong with a little caution. After all, we’re dealing with seriously life-changing business here. I can understand the wisdom of spending more time at the office if that makes it easier. But, I do argue that there are LOTS of opportunities out there to earn money after calling it quits from full-time work. For those who are properly motivated, seasonal jobs and work here and there might be a good option to help provide money for living expenses while still allowing maximum adventure/fun time. The balance is important.

I think I’ve got plenty of character without having a job! Maybe too much!

Frankly, there’s too many fun things to do in this world than to be stuck in an office all day….making someone else rich.

But hey, if the reader feels that life is about building the biggest number in his bank account, then go right ahead there buddy….work away!

For me, I’ve got what I need to be happy . Why would I want to go back to work and mess that up?

Mr. Tako @ Mr. Tako Escapes recently posted…Knowing When To Sell

My thoughts exactly. Who am I to judge his or her decision to work longer than I choose to? To each their own.

So with you on all these points. If the person likes work then he should continue but I didn’t hear any of the joy about work. it was all about more more money. In that case he has fallen in the one-more-year trap. My father in law on the other hand is in his 80s and still works, not for the money but because he loves it. I wish I had that kind of passion.

As for myself (looking at this from a hind-side perspective) I was trapped myself in the one more year trap until work made me physically sick. So instead of retiring at 1 million I retired at 1.2 million. I was only stuck in it for maybe 2 years. I don’t regret it.

I still do fall for the what-if-I-had worked a little more. Today, with a changed financial landscape (medical costs) I certainly could use one more million. It’s easy to forget the bad days at work when thinking about all the money that came with it.

I like to think that with early retirement there is still a possibility of going back to the workforce. Maybe that helps for those of you stuck in the one-more-year trap. Take the plunge and if you find it happened too early, try again.

Maarten recently posted…Screw-ups on My Way to a Million: Making Assumptions

You brought up a point that I’ve always enjoyed making, too. Just because you retire early doesn’t mean you can never return to work again if you choose / need to. You might not get your *exact* job back, but hell, you probably don’t want that exact job back anyway. After all, isn’t that what you were trying your best to get away from in the first place?

My response to this kind of questioning is “I can always make more money but I can’t make more time”.

Well said, Paul. And very, very true.

I agree! I could work until the day I die if all I cared about was money. But FIRE is about working JUST long enough to make enough money to live comfortably–whatever that means to you. If it’s meaningful for the reader to fund his children’s and grandchildren’s educations, more power to him, if that’s what he wants to do and he’s okay with working for several more decades.

Some people are okay with working every day. I just happen not to be one of those people, so retiring early is more appealing.

I do disagree with the reader about early retirees not working hard, developing skills, or meeting different types of people. If you retire early, you’re not just sitting in front of the TV twiddling your thumbs. You’re traveling, starting a business, working at a nonprofit, fixing up your home, etc. It opens up the world to doing things that are new and things that you want to do–it’s not about getting comfortable and giving up on challenging yourself. If anything, it’s a new set of challenges than the predictable 9-to-5 lifestyle.

Mrs. Picky Pincher recently posted…30-Day Frugal Cleanse Week 2

That’s an excellent point, Mrs. Picky Pincher. It’s true that the commenter has a very skewed sense of what “retirement” actually means. The crack about eating peanut butter and jelly sandwiches is an indication he or she doesn’t understand early retirement. You’re right – with so much extra time on your hands while you’re young and active, there is just SO much out there to get involved with and explore. And meeting like-minded individuals who also prioritize freedom is an excellent way to find opportunities out there that suit your fancy!

I can see both sides of this – especially if you enjoy your work or really enjoy just giving back to your kids, family, community (in terms of money). The problem is when you decide that you have enough to go and enjoy retirement, there might not be much time left to do that. We’ll be heading to a funeral of a neighbor this week. Retired and died at 67. He was a great guy and did a lot of living on his years here on earth – but each funeral is a reminder of the limited time we get.

Vicki@Make Smarter Decisions recently posted…How Would You Pay for $4200 of Car Repairs in One Week?

You’ve hit the nail on the head for me, Vicki. I don’t have any idea how much time I’ll have on this earth, and the last thing that I want to do is spend it in an office somewhere…or even working from home, doing things that I don’t truly enjoy. Yes, we do need money to maintain our lifestyle, but minimizing the way we live has completely streamlined our needs. $100 now is a LOT more money to us than it used to be. And, that’s a GOOD thing!

I think some people over-estimate the cost of food when they talk about retiring early requiring a daily diet of PB&J.

TJ recently posted…September Spending Shenanigans & Summary

Yup, just a little bit! The implication being that those who retire in their thirties are one step away from homelessness, barely scrimping to get by.

“Money is a means to an end” That was the hardest part for me to grasp as somebody who is now jumping on board the FIRE train. I only just graduated college and had plans to make a certain amount of money. However, once I began reading more about personal finance and specifically more about FIRE it opened my eyes to what I really wanted in life. Freedom… The ability to do what you want is truly priceless. If I want to travel the world for a year so be it. After that I feel like I want to work for a year, so be it. That is the freedom I want to have.

Stefan – The Millennial Budget recently posted…How I Graduated College Debt Free

Good on you for realizing what truly makes you happy BEFORE sinking money into meaningless objects, Stefan. Too few people manage to do that…like me, for example.

The good news is, that if you FIRE and you don’t like it, you can always go back to work! Not to mention, there are still many, many ways to bring in a few extra dollars along the road of early retirement as well. Most of us on this journey do not want to be tied to a desk from 9 to 5.

You most certainly give up something in just about every situation. I would much rather trade a little extra padding for time than I would keep working and lose that time. Time is something that can never be re-gained but you can always go back to work for more money.

Having some wiggle room in your FIRE numbers is good. But if you end up with too much padding, you traded away more time than you absolutely needed to. Some choose to have more things, the FIRE community chooses to have more time.

Great read, Steve!

Precisely, Josh! Early retirement isn’t an eternal decision. There is LOTS of work out there for skilled laborers and companies are always on the lookout for people with some work ethic. Personally, I like the idea of seasonal work just to keep some income flowing in. It keeps you active, but only for a few weeks / months. Then, you can go back to whatever it is that you like to do…and take a couple years off from work entirely if the mood strikes you.


I couldn’t agree more, Steve. This is a perfect strategy, especially for those on the road full time.

Plenty of work-camping opportunities and temp work can be had.

Exactly, Josh. We probably won’t work camp the first year that we begin traveling, but we’ll see what our options are thereafter.

Couldn’t agree more, Steve!!

We can get our health insurance paid for until Medicare kicks in if my husband remains in his current job until he’s 55. All of our family members think we would be crazy to give this up, but we will likely give it up anyway. He is 42 now and should be able to quit before he’s 50. We only have this one life. It’s just not worth sacrificing the time. “Happiness trumps money.” Well said.

Amanda @ centsiblyrich recently posted…Do you know what you need to accomplish your dreams? Start with why

Thanks Amanda. “We only have this one life. It’s just not worth sacrificing the time.” – Man, awesome quote.

I could see myself stuck in a “one more year” scenario, but if so, it would quite literally be just one more year. While we may hit our number fairly easily in 2018, there’s still the hiccup that with Mrs. SSC’s new job, it would cover pretty much everything except the mortgage. Figuring that one out will be interesting, but mainly just a math and associated comfort level problem. But with my company’s incentive programs 2019 would be a rocking year where 3 incentives hit at once and it would effectively be a whole extra year of FIRE funds. Or a few years of the mortgage covered at least.

When starting this career of mine, the goal was never about having the most money, or more, and more, and more money, rather to live comfortably enough that money isn’t my sole thought and stressor in my life. Having lived like that, I could care about getting more and more money. I’m fine with “enough” but we all know everyone’s version of “enough” is totally different.

Like others have said, you can make more money, but you can’t ever make more time. At some point, I also want to have more free time and pseudo freedom to do what I want with it. I’m assuming parenting will eat up most of that “free” time, lol.

Mr. SSC recently posted…Our Money Went Where? September 2016 Update

It’s interesting that you mention your career goals, and how it never really included making money. Your attitude was much better than mine. For me, it was about making money. Sheer income. Saving, on the other hand, was a side thought.

Thanks for your comment!

Outside of paying for people’s education i don’t really see any comments on what they plan to do with the pile of cash they plan to accumulate. Over 100,000K per year in retirement sounds great – but HOW you are going to deploy it is just as important as having it.

I have though about my own goals and how they align with me stopping during my highest earning years – but we will address that concern when we get to it

Apathy ends recently posted…How We Saved over $20,000 with a Mortgage Refinance

Good point, Apathy. I distinctly got the feeling that the commenter just wants “more money”. And that’s cool, I guess. More money is always better than less money. But, is it just gonna sit in the bank? Hmm…

Great responses. I, too, have face the “one more year” dilemma. On paper, I could retire at 54. However, I am doing ONE MORE YEAR (and only ONE). Why? Health care inflation is too big a risk to ignore. I do NOT want to go back to work once I retire. If working one more year can (almost) eliminate this risk, it’s a year worth “investing”. Beyond that, I’m getting out while we (hopefully) still have a good number of healthy years left in these bones to do the things we REALLY want to do, and I will NOT work an additional year beyond my slight “buffer”. Slight buffer is ok, massive buffer is a waste of valuable years. Time over Money, within reason.

Fritz @ TheRetirementManifesto recently posted…How to Build A Retirement Paycheck From Your Investments

I’m right there with you, Fritz. Though working one more year kinda sucks, the reduction of risk could very well be worth that time. But I agree, having a buffer is great, but working additional years just for the sake of working – especially if you don’t enjoy the work that you’re doing, might not be worth the effort.

Happiness trumps money unless money brings happiness to the person. Then happiness IS money. (Not that I’m advocating either side).

There has to be a number where at some point, people should say “I don’t care about money.” I’m definitely trying to get to that point where money is just another tool to use in life, not a necessity to keep my life afloat. I have a long ways ahead of me but reading personal finance blogs I think can help me get there!

Finance Solver recently posted…How to Have More Money This Month

True that, Finance Solver. If making money brings you true happiness, then that’s cool. No problem. Whatever floats your boat.

And it’s real tough sometimes to identify when you simply don’t care about extra money.

Not everyone can have the same priority. If someone wants more money, then go for it. I’m not judgmental.

I also agree that opportunity cost isn’t just about money. If I kept working, I wouldn’t have had the opportunity to spend time raising my kid. My health would have kept deteriorating and I’d still be very unhappy. Everyone has to find their own path.

Joe recently posted…Dividend Income Update – Q3 2016

Agreed – nothing wrong with working if that’s what makes you happy.

I nearly spit out my coffee at the “free money” line! Um, no sir, that money sure isn’t FREE. We like to shorthand things like employer matches as “free money” but that is compensation given in exchange for trading our limited time and life force in exchange for work that makes the company money. Nothing free about that! And, sure, lots of us could get richer if we worked longer, but I’ll take the time over the money any day and know you guys would too!

Our Next Life recently posted…How Combined Finances Helped Us Get to FIRE Faster

Hehe, yup – I found that part funny too. I understand what the guy probably *meant*, but like you said, it’s not “free” money. The time you trade in exchange for that money is absolutely, positively huge!

How is the 401k contribution “free money” if it comes at the cost of 40+ hours per week of your time and energy?

I think there is a general sentiment that if you can make more money, you should. Whether that’s working longer, side hustling, working overtime, or moving for a promotion, earning more is considered almost a virtue. I don’t see it that way. Sure, optimize your income while you’re working, but living to earn money you don’t need makes no sense to me.

Exactly, Kalie – it’s not free. We’re trading our precious time for all of that money, no doubt.

“Happiness trumps money”

Yep! Amen to this post.

Brad, Financial Coaching recently posted…Should you pay off your mortgage early?

Thanks Brad.

I really appreciate you tackling this post. I have a write up that I’m working for on my blog about whether I should work for another 10 years in order to get guaranteed health benefits, a full pension and probably a million dollars working the extra time. On paper it sounds great but like all the reasons you stated there is so much else that I rather be doing. I struggle with the point of retiring because I can versus the retiring because I should. While I’m still a couple of years away from FIRE it’s something that definitely weighs on my mind.

Mustard Seed Money recently posted…The Dream: House with a Pool

Appreciate the comment! Yeah, there are a lot of people out there who have a carrot dangled in the distant future to keep them working a job. Sometimes, the carrot can seem attractive – it might even be the best course of action! But then again, you never know. People give up a LOT of freedom when they work an additional X number of years. But is the money worth it?

Tough question, no doubt. For us, it’s just straight money. No pensions or retirement where I work. I’d probably bring in another couple million if my wife and I worked another 10 years, but there’s no way that’s happening. Not a chance in hell!

I like to say you can always get more stuff, but you can’t get more time. Time is the ultimate luxury.

MrFireStation recently posted…Stop Saving, Start Spending In Retirement?

Amen to that, and well said MrFireStation.

My motto to people before reaching FIRE was always “I work so I won’t have too”. Most people never understood what I meant and those same people now mock me because I don’t “have a job”. I say, to each their own… If you TRULY love to work, then good for you, go for it!!

I agree – if you actually love to work, there’s absolutely nothing wrong with that. Keep working. But to many of us, working doesn’t bring us joy. Freedom from work, however, does.

Ha ha, the “building character” comment makes me think of a theory that I once heard about these words. It went something like: “Any experience that was really shitty and that you’d never want to have again is often polished up as being a character building experience”.

So if all you’re doing is building character then chances are someone gave you that shitty job to do and you fell for it without realising that it’s a terrible job that they didn’t want to do themselves!

InsiderAccountant recently posted…I’m still here – I’ve just been busy building!

Good point! I had never thought of it that way, but it’s true. If someone says to you “It builds character”, that pretty much means that yeah, it sucks, but you’ll be a “better person” for it. I’d rather not spend my life doing something that sucks!

I did the math for shits and giggles to see how much money I’d have if I continued down my current career path and saved 50%+ of my income as I do now but retired at 50. Even retiring early at 50 I’d have multi-millions of dollars since I’m only 28 now and my earning potential would increase every year. What would I need all that money for? I’d rather have time and freedom then extra money sitting on the sidelines that I would most likely not spend. I think that’s what separates the FIRE community from the “normal” population is that we value time and freedom MORE than we value a buck. Great perspective Steve.

Fervent Finance recently posted…Upping the Emergency Fund

Thanks for the comment, Fervent. The “why” is an interesting question in this equation.

“I want to make lots and lots of money!”

“Oh yeah? Why’s that”

“Umm…so I can spend it?”

Really like how you point out that it’s about pursuing what makes you happy and doing what is right for you. The commenter is motivated primarily by money. There’s nothing inherently wrong with that, of course We’re all motivated by money in some way (that’s why we work, right?). But money isn’t the only thing that you can value.

It’s similar to how some folks talk about voting for people who will lower taxes. If taxes were the only thing that I cared about, then sure, that’d make sense. But we all have different things we value that influence our decisions. We’re not just money optimizing robots.

Financial Panther recently posted…Pay Off Debt By Rejecting The “It Isn’t Possible” Mentality

Absolutely right, Financial Panther. Different things are important to us humans. If money is your primary motivator, then more power to ya…work until you die if you’d like. Nothing wrong with that, and I’m certainly not judging that personal decision.

Another facet that I think about is what all this additional money is going to be used for? Probably buying “stuff” or travel on air liners or other items that consume resources and further negatively impacts the condition of our planet. There are so many wonderful reasons for us all to learn what enough means.

Yup! Answering the “why” question can provide an incredible amount of insight into the long-term goal…something to look forward to, and especially some point that we know whether or not we’ve succeeded in reaching that goal.

At some point the marginal utility of money starts to diminish. One more year syndrome is continually deciding that it is worth it to keep going, but since our desires are endless we keep moving the goal posts. Retiring early wont make sense to someone who loves their job because it doesn’t really feel like a trade. It’s all about maximizing our happiness and well being and knowing when to stop trading time for money.

TheHappyPhilosopher recently posted…How Understanding the Marginal Utility of Money Will Make you Happier

We can always make more money even after we retire, but it’s awfully tough to bring time back.

A reader left a particularly curious comment to a post a couple weeks ago proving just how much more money we could accumulate if we remain in the workforce and continue subjecting ourselves to the tortures of corporate America.

This particular blog post was about 4 things “lifers” say, but from the perspective of our younger generation. The comment, written by LW, offers something a bit different. It was insightful and hard-hitting. The second I began reading, I knew I had to post a response. This was too good to pass up because it highlights a key point in early retirement.

His (or her) comments are in italics, and my responses are written underneath each section.

Why I can’t retire too early

He begins:

1. By continuing to work and contribute to plans like a 529 & 401K, my investments will cover everything I want and college for my children. Providing for them a more simple start than I had in reaching where I am.

I think you are making an awesome choice for your kids. While some disagree with the presumed wisdom of funding your child’s education, I happen to support it for the right situations. More power to you for starting your kids off debt free! Student loans suck, hardcore.

2. The opportunity cost of retiring early as opposed to after 30 years of work is massive! If I retire at 55, in 20 more years I’ll have $1M just in my 401K, not to mention other investments, a company funded pension & have my house fully paid off. BUT if I wait 2 more years its another $250K, another 5 years and Im at $1.4M- which would provide $108K/year until I turn 81. Let’s say I go all the way to 65 now I am sitting on almost $2M, half from the last 10 years. I’ll have $108K/year to live on in retirement. Provide anything I want to my children and grandchildren. I may even put my grandchildren through college.

Respectfully, this sounds like the dreaded “just one more year” syndrome that many of us are plagued with before retiring early. “If I work just one more year, I could have X amount more money”. Just like the “What Ifs” in life, these scenarios are virtually limitless. Why stop at one year? If I work another five years, I’ll have even more money. How about 10 years? What if I never stop? Imagine the money!

The vast majority of early retirees understand that the longer we remain in the workforce, the more money we make. We get it. The math is tough to argue with.

However, I fear that you are missing a very important point in this discussion.

Early retirees prioritize their freedom and liberty over the greenback. Clearly, we all must do what is best for us. To those of us who have worked long, hard and smart to amass the wealth that we need to be happy, working additional years in corporate America, for the sake of even more money, is simply not worth the effort.

Life is short. We humans remember and enjoy the excitement in our lives, not the hours we spent sitting in an office. Early retirees understand what “enough” truly means. We work to satisfy our version of “enough”, then we stop.

Then, we can take control over our lives with enough money and resources to live a comfortable life that makes us happy, keeps us healthy and paints a near-permanent smile on our faces.

3. You are giving up free money, most companies pay a match on a 401K contribution. Say 6%, for the sake of easy math $6,000/ year they give me as a match for my 6% contribution. Doubling my money every month!!! Course I contribute more than that min 6%, but the company will give me more than $200K for free over the course of a career. That compounded with interest is about $500K after 30 years.

Again, early retirees value time and freedom over money. While you might sit in an office to make money, we might hike the Rocky Mountains, or fish the Mississippi River, or hell, maybe just read a good book…whatever makes us happy. We care more about stockpiling happiness than money.

4. I mentioned my other investments, there is also a company pension to consider, the company also pays dividends.

More money, then? Okay, got it.

So I am content not to eat my PB&J and “be free” from hard work. I’d prefer to put in the hours, develop skillsets above and beyond someone gaining no exposure to strong opinions, well developed peers, challenging business environments and experiences that build character.

If money is your primary focus in life, then perhaps you should never retire. There is always more money to be made if you keep at it, chugging through the years and earning those paychecks. Money, money and more money. Beautiful money.

And frankly…

More power to you, good sir! If working long hours (hard work?), developing skill sets, strong opinions, well-developed peers (huh?), business environments and “building character” float your boat, then I say go forth! After all, our only obligation in life is to do what is right for us. Find what makes us happy and pursue it with gusto.

Does working another 20 years make you happy? If so, great. I stand behind your willing desire to work longer than I choose to. I really do.

However, working another 20 years does not make me happy. In fact, it sounds downright horrible, and no amount of money is worth spending another decade or two doing something that I do not enjoy. I do not value money. I value my time. My happiness. My satisfaction out of life.

For me, life is too short to slave away for money. Money is great, but it is only a means to an end.

Happiness trumps money

Original article and pictures take http://www.thinksaveretire.com/2016/10/10/make-lots-money-worked-much-longer/?utm_content=buffer9d4ca&utm_medium=social&utm_source=pinterest.com&utm_campaign=buffer site

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