Is semi-retirement a bad idea?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
User avatar
kramer
Posts: 1952
Joined: Wed Feb 21, 2007 1:28 am
Location: World Traveler

Re: Is semi-retirement a bad idea?

Post by kramer »

letsgobobby wrote:
kramer wrote: I started college late and so I didn't finish graduate school and start my career proper until age 29. I would have sworn that I would never get burnt out and anyone that knew me would have sworn the same. But I burned out at age 40. Also, I came to the conclusion that high paying jobs are inherently stressful -- a lot is expected of you and your performance is monitored. That is just life and I am thankful for my career and I wouldn't trade that growing experience. But I had achieved my career goals already and I got out at age 41, no regrets 7 years later.
what do you do now?
I retired. And that would not necessarily be the best solution for many people of different personality type, etc. However, my main point for the OP is that it is hard to predict how you will feel about your job or career several years in the future.
User avatar
tfb
Posts: 8397
Joined: Mon Feb 19, 2007 4:46 pm

Re: Is semi-retirement a bad idea?

Post by tfb »

grantham324 wrote:I'm asking why don't more people plan on working part time and semi-retiring earlier, so they don't have to wait until that lump some grows so large that it can support their income at 4%? Why is it either black or white, retire or not-retired? Why doesn't the area in between appeal to more people?
Because the part-time income can't be relied upon. Unless you can scale your work schedule on your own in your profession, such as a dentist working 2 days a week versus 5 days, it's difficult to work half-time at half-pay. If I'm working with others on something and I only show up 2 days a week, the project is moving on when I'm not there. I won't be effective if I don't know what happened in the other 3 days. If you are counting on income from part-time work, you have to be really sure you can get part-time work at the pay scale you are projecting. It's much easier to work one year full time at full pay than counting on working six years part-time at 1/6th pay.
Harry Sit has left the forums.
fposte
Posts: 2327
Joined: Mon Sep 02, 2013 1:32 pm

Re: Is semi-retirement a bad idea?

Post by fposte »

tj wrote:One concern would be how many other kids would there be in these LCOL retirement regions? Would it be easy for your kids to make friends?
I live in a comparatively LCOL area, and it's often listed as one of the best places in the country to raise kids. The OP is talking about reducing his salary to what I make now, and I live comfortably putting half of that away toward retirement every year. And I'm directing research at a research I university, so I haven't found any of the drawbacks of feeling insignificant that are being suggested of lower salaries.

I think one question is whether semi-retirement is more like retirement with extra income and something to do, or being employed but making less than you used to without more satisfaction. The fact that we're talking about consultancy makes me think it could end up as the latter--there's a lot of work involved in running your own business. But that's not a knock against the concept of semi-retirement, just a note about things that could make it less sweet than hoped.
Nathan Drake
Posts: 6201
Joined: Mon Apr 11, 2011 12:28 am

Re: Is semi-retirement a bad idea?

Post by Nathan Drake »

A few responses in here are pretty insulting; I'd argue there's very little correlation between monetary compensation and career happiness after a certain point. In fact, for certain professions it probably becomes inversely proportional.

Similarly, 80K (especially in a low cost of living area) is a very high salary for many people. It's well above average household income. Having to "downgrade" to a mere 80K per year is apparently unimaginable to some people here. I haven't made much over 80K, am younger than the OP, and yet have a higher net worth despite not having anywhere near his level of income.

I'm actually in a similar boat in that I would prefer to take on part-time work from home and wouldn't mind making 40K or so, I just haven't found too many avenues to accomplish this and am still stuck working. Many people are in a rush to make money, but the only real currency we have is time...and spending decades working 40+ hours per week just isn't for me.
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
cherijoh
Posts: 6591
Joined: Tue Feb 20, 2007 3:49 pm
Location: Charlotte NC

Re: Is semi-retirement a bad idea?

Post by cherijoh »

grantham324 wrote:I'm 32 and married with 1 child.
250k in investments.
290k/year combined income.
Living in high COL high tax area.

If I bought a house here it'd cost around 1.25M. The same house in my preferred semi-retirement location would be around 500k. In 2-3 years we'll have enough to buy that 500k house in cash (or with a very small mortgage), plus have our car paid off.

With a house and car paid off, plus kids in public schools, our expenses would be very minimal, and certainly wouldn't require our current level of income. We don't require a fancy lifestyle.

I'm thinking I could become an independent consultant and semi-retire, while my wife works part time. Target combined income would go from 290k/year to around 80k/year, which would be fine since our house and car would be paid off. Starting at birth, we'll contribute $200/mo for each child to a 529 plan (we plan on having 2-3), which should be a nice college egg for the kids over 18 years of tax-advantaged appreciation...that way college savings won't be a huge burden for us and reason to keep working full time. We have family willing to provide day care for free. With Obama Care kicking in, we should be able to reasonably provide for health insurance, plus my wife may be still able to get it via her company with part time work.

What am I missing? Why don't more people with highish retirement assets also do this? I realize we're fortunate to have the ability to accumulate this much in assets at our age, but for those our age or even in their 40s-50s, why do they wait until they reach millions in assets to retire? Why not just move to a lower COL area, pay off house and car, put kids in good public schools, and then semi-retire to provide for smaller expenses?

This seems like a much preferable future to me vs. working our arses off until we're in our 60's with millions to completely retire, if we even make it to live that long. And yet, I feel really weird about this semi-retirement plan because it's so unheard of. Reaching "your number" to completely retire seems the orthodox way to go.

I should note -- I never really want to completely retire. I'm completely fine, so long as my health allows, always doing something part time to bring in money. My wife is the same. Is that the missing link and why I feel weird? Is it that most people just can't wait to completely stop work, and so they are planning to accumulate millions vs. enable semi-retirement with long-term, part-time work?
I hate to tell you, but $250K in retirement assets while certainly "highish" for the average Joe at 32, is really not all that impressive for a couple earning $290K/year in light of the incredibly hot stock market of the last few years. How much of this nest egg came out of your pocket vs. employer matches and account earnings? How much of it is in taxable accounts versus tax advantaged? Don't forget to account for taxes and potential early withdrawal penalties when you liquidate your nest egg to pay cash for that house. If it's mostly tax-advantaged, you will pay a 10% early withdrawal penalty and taxes at your marginal rate.

Also it will be a neat trick to move to a different part of the country and launch a consulting business both at the same time. It takes time to find clients and word-of-mouth to build up a client list. (NOTE: If most of your clients come from your current area, there is the hassle of being a road warrior - not great for a family man). Having a bi-weekly paycheck is something you can't truly appreciate until you don't have one. Friends who work as consultants have told me that it is feast or famine and that they are afraid to turn down a job for fear that they won't get that next assignment. Most consultants maintain a larger than normal emergency fund because of this uncertainty. The exceptions to this are people who have enough saved to cover the basics of retirement and are working for the mental stimulation or to pay for some expensive vacation or other extras - not to cover property taxes, insurance,utilities, food and clothing for their family.

Your plan could work at some time in the future, but you need to be a lot more aggressive with your savings and be realistic about both a post-move budget and what is a reasonable income for a newly minted consultant.
Topic Author
grantham324
Posts: 27
Joined: Sun Jan 19, 2014 1:30 pm

Re: Is semi-retirement a bad idea?

Post by grantham324 »

letsgobobby wrote:
You don't even have kids yet - that changes perspective, income/spending needs, etc.

It's not easy in many professions to be part-time - some yes, some not.

And for many of us, our jobs provide us excellent health care - even with the evolution of the ACA, I would not count on having affordable health care 5 years from now until facts on the ground bear that out.

As you say it's not black and white. In my situation, by age 45, we anticipate several things to happen concurrently:
  • 25x expenses saved for retirement
    private college tuition for 2 kids completely saved for (likely not enough for living expenses - we'd have to fund those some other way)
    higher earner will have surpassed the second bend point in SS PIA calculations
    oldest child will be entering middle school, and (we expect) will benefit from more hands-on guidance and presence from both parents (whether she likes it or not)
    clarity on health care insurance landscape
    clarity on older parents' health and other needs
    clarity on an educational program my children are interested in
    outside chance I will have pursued and completed certification in an tangentially related field, opening up new business opportunities
If all that aligns, then sure - my wife will likely cut back her hours from 30 to 20 or less; I'll probably go down from 40-70 to 30; we'll take more vacation time, etc. But as you can see a lot on that list is unknown right now, and I wouldn't feel comfortable pulling the trigger on partial retirement until we have a lot more clarity.
I do have a child now. And if my perspective has changed at all, it's changed to realize that it would be a horrible waste to keep working as much as I am and to miss spending time with him and my wife.

Anyhow, college and health insurance seem to be two of the major reasons people remain chained to their jobs.

Regarding college tuition, I believe that it simply cannot continue to inflate at anywhere near its current rate. It if it did, by the time my kid was 18 college would cost like $500k. That's pretty much impossible to save for. Tuition is going to hit a breaking point where something, I'm not sure what, will put a stop to it, and tuition will probably actually drop (on average) as technology reduces the cost of distributing education. So I'm going to save $200/mo for my child and invest it aggressively, but whatever that amounts to, that's it...I don't believe it's reasonable to try to save up enough to fully cover future college tuition at the current tuition inflation rate. Absolute worst case scenario, technology will provide cheaper alternatives to college in the future, if it doesn't actually reduce all college tuition.

For healthcare, it's the same situation...it cannot continue at the current inflation rate. It's just not possible. Something will have to give. ACA is the first part of that, but if doesn't end runaway costs, then the USA will have to reform in some other way that does get the job done (single payer probably). That doesn't help if you have serious medical issues right now, but that's why the prospect of health insurance doesn't worry me 20 years from now.
avalpert
Posts: 6313
Joined: Sat Mar 22, 2008 4:58 pm

Re: Is semi-retirement a bad idea?

Post by avalpert »

grantham324 wrote:
avalpert wrote:
grantham324 wrote: What am I missing? Why don't more people with highish retirement assets also do this?
You don't really have highish retirement assets - even $500k in a diversified portfolio can only support at most $20k a year in income for a long term retirement (and probably to be safe you would want it closer to $15k for a potential 60 year retirement). If that $500 is all in home equity the income you can take off of it is nil.
That's the type of viewpoint that I'm wondering why so many people are married to -- the idea that retirement = lump sum * 4% withdrawal rate, and that you can't retire until that equals your current level of income. I'm asking why don't more people plan on working part time and semi-retiring earlier, so they don't have to wait until that lump some grows so large that it can support their income at 4%?
Because in most professions part time work doesn't scale well and I don't want to have to work 20 hours a week in retirement any more than 40 (or 60) - for me those are all still working and not being retired.
Why is it either black or white, retire or not-retired? Why doesn't the area in between appeal to more people?
Because my alternative to not working is travelling so this semi-retirement as you speak of it isn't appealing to me at all - it isn't in between it is the worst of both. That said, I will be taking my third sabbatical next year in my 15 years in the workforce (two of which have been (will be) for long term travel and one was to get my pilots license and write). That is a compromise that appeals to me even though it isn't retirement.
Yes, there's risk that your semi-retirement income doesn't add up to what you thought it would, but the same risk exists on the other side of the coin for people living off a 4% WDR -- the market could hand out a large enough series of poor returns that your WDR makes your money run out too soon, or that you outlive your money (IMO people underestimate this risk by looking at the near history of US market returns and assume the future will be the same, and they also under-estimate future health advances extending lifespans given exponential technology growth)...
This is extremely unlikely - the 4% withdrawal rate is very safe not anywhere near the same league of being unable to maintain part time income (which happens to non-trivial percentage of people who try on a regular basis). It is disingenuous to compare those two risks.
at least in the case of indefinite semi-retirement, you never really stopped working and you could more easily return to full time conventional work.
This may be an unfounded assumption (I know people who have struggled to make that return) and the one living on 4% can always spend less if needed.
I'd really hate to be in a situation where I'm older and it turns out that I need to go back to work after not having worked for 10 years. Always continuing a small amount of work + earlier retirement seems to be the best of both worlds and mitigate risk nicely.
Then you should probably save more before you step back - you don't have a large savings base at this point.
tj
Posts: 9317
Joined: Wed Dec 23, 2009 11:10 pm

Re: Is semi-retirement a bad idea?

Post by tj »

fposte wrote:
tj wrote:One concern would be how many other kids would there be in these LCOL retirement regions? Would it be easy for your kids to make friends?
I live in a comparatively LCOL area, and it's often listed as one of the best places in the country to raise kids. The OP is talking about reducing his salary to what I make now, and I live comfortably putting half of that away toward retirement every year. And I'm directing research at a research I university, so I haven't found any of the drawbacks of feeling insignificant that are being suggested of lower salaries.

I think one question is whether semi-retirement is more like retirement with extra income and something to do, or being employed but making less than you used to without more satisfaction. The fact that we're talking about consultancy makes me think it could end up as the latter--there's a lot of work involved in running your own business. But that's not a knock against the concept of semi-retirement, just a note about things that could make it less sweet than hoped.
That's true, his "lower" salary is even higher than what I make in a HCOL area.
User avatar
hoppy08520
Posts: 2193
Joined: Sat Feb 18, 2012 10:36 am

Re: Is semi-retirement a bad idea?

Post by hoppy08520 »

Nathan Drake wrote:Similarly, 80K (especially in a low cost of living area) is a very high salary for many people. It's well above average household income. Having to "downgrade" to a mere 80K per year is apparently unimaginable to some people here. I haven't made much over 80K, am younger than the OP, and yet have a higher net worth despite not having anywhere near his level of income.
I agree...with conditions.

I was one of the posters who also pointed out that $80K in LCOL is not exactly poverty wages -- it's twice the median family income in many LCOL areas.

I think the question is, can the OP and his wife count on getting that $80K indefinitely? Quite a few responders brought up the often temporary nature of consulting. And if you relocate to an area where there isn't a lot of local business in your profession, you're even more vulnerable and dependent on hanging on to contacts and contracts from your prior full-time profession. Can the OP keep that going for 15 - 20 years? Maybe he can if he's a good networker and flys back to the home base every so often to keep his contacts close. (I realize I'm making all kinds of assumptions here and maybe projecting how I see consulting in IT which is my business...)

I suppose it all depends on the OP's profession and how mobile/remote you can be and how long you can pull it off. For many professions, virtual offices are becoming more and more common so that might not be a major concern for the OP.
Topic Author
grantham324
Posts: 27
Joined: Sun Jan 19, 2014 1:30 pm

Re: Is semi-retirement a bad idea?

Post by grantham324 »

avalpert wrote: This is extremely unlikely - the 4% withdrawal rate is very safe not anywhere near the same league of being unable to maintain part time income (which happens to non-trivial percentage of people who try on a regular basis). It is disingenuous to compare those two risks.
What seems unlikely to me is that post-WW2 America's economic growth will continue at the same rate forever and equity gains will therefore continue at the same rate forever. America's fortunate position since the end of WW2 is an aberration in history. And yet thinking 4% WDR is "very safe" is based on that assuming that blip in history will continue to repeat. Maybe it will repeat, but maybe it won't...it seems you're ignoring the risk here.

What also seems unlikely is that with exponential advances in technology we wouldn't see a large leap in average lifetimes. That's not speculative. The trend toward longer lives is already established, and it's also clearly established that technology is advancing exponentially, not linearly.
avalpert wrote:
and the one living on 4% can always spend less if needed.
Could you say the same of the one in semi-retirement?
avalpert
Posts: 6313
Joined: Sat Mar 22, 2008 4:58 pm

Re: Is semi-retirement a bad idea?

Post by avalpert »

grantham324 wrote: Regarding college tuition, I believe that it simply cannot continue to inflate at anywhere near its current rate...

For healthcare, it's the same situation...
I agree - I believe that too. Of course I have believed it for two decades (even wrote a paper in high school about it) and my beliefs haven't translated into reality. So, I guess since it is just your kids future and your later years health online it seems like a reasonable bet.

The types of markets that can remain irrational longer than you can solvent are not limited to equity markets.
Topic Author
grantham324
Posts: 27
Joined: Sun Jan 19, 2014 1:30 pm

Re: Is semi-retirement a bad idea?

Post by grantham324 »

hoppy08520 wrote:I suppose it all depends on the OP's profession and how mobile/remote you can be and how long you can pull it off. For many professions, virtual offices are becoming more and more common so that might not be a major concern for the OP.
This is another major trend I see. In my full time job I already work from home more than half the time, and several of my "co-workers" are 1099 contractors who work 100% from home. I've also interviewed at 2 companies in the past 2 years (large corporations) that were advertising 100% remote positions. I work on the business side of technology, by the way.

I think we are just at the beginning of the remote work trend. I think in the future the only people who will not work from home are the ones that truly need to be physically at work, and in my field there's no real reason to be in an office.
avalpert
Posts: 6313
Joined: Sat Mar 22, 2008 4:58 pm

Re: Is semi-retirement a bad idea?

Post by avalpert »

grantham324 wrote:
Could you say the same of the one in semi-retirement?
Say what? Assuming by semi-retirement you still mean working part time I can't really say the same - the potential volatility in income is too large to assume you can just slightly adjust spending to compensate.
letsgobobby
Posts: 12073
Joined: Fri Sep 18, 2009 1:10 am

Re: Is semi-retirement a bad idea?

Post by letsgobobby »

Nathan Drake wrote:A few responses in here are pretty insulting... Similarly, 80K (especially in a low cost of living area) is a very high salary for many people. It's well above average household income. Having to "downgrade" to a mere 80K per year is apparently unimaginable to some people here. I haven't made much over 80K, am younger than the OP, and yet have a higher net worth despite not having anywhere near his level of income.
Your example proves the point... it's not insulting, it's just questioning.

You earn less and have saved more, meaning you live on a much smaller income than the OP does, who earns 3 times what you make and yet has saved less. Either he just started working, or he saves very little, or some combination of the two. In either case his proposal to leave the rat race and live on 'only' $80k seems naive and unrealistic (not that *he is* those things, this is just my perception of the plans themselves).

Imagine a $300k earning couple, age 35, who have saved $750k by living on only $50k per year with the goal of early retirement. They decide to pull the trigger and go into partial retirement now rather than early total retirement in 5 years. This is a plan that makes sense to me. They've already proven they can live on less money; they've already proven they know how to live on their proposed budget; they have many multiples of expenses saved up so if everything doesn't line up as planned, they still have tons of safety built in.

As I see it, the OP's plan leaves no room for error. It's *not* always easy to get back into the full time workforce from part time. Employers want to know why you left, what you did, what's changed that now you're coming back. They want to know they're not just a paycheck to you, that you will be a good worker (meaning dedicate yourself to their cause). Even in medicine, a pretty forgiving business as theses things go, partially retired folks are looked at askance if they start inquiring about full time work again.
grantham324 wrote:
Regarding college tuition, I believe that it simply cannot continue to inflate at anywhere near its current rate. It if it did, by the time my kid was 18 college would cost like $500k. That's pretty much impossible to save for. Tuition is going to hit a breaking point where something, I'm not sure what, will put a stop to it, and tuition will probably actually drop (on average) as technology reduces the cost of distributing education. So I'm going to save $200/mo for my child and invest it aggressively, but whatever that amounts to, that's it...I don't believe it's reasonable to try to save up enough to fully cover future college tuition at the current tuition inflation rate. Absolute worst case scenario, technology will provide cheaper alternatives to college in the future, if it doesn't actually reduce all college tuition.
It is impossible to save for the average family, but you earn $300k per year, meaning it is imminently possible for you. And your family will pay full sticker price when your kid(s) go to college. There's no point in even discussing whether you want to or plan to pay for their higher education (that conversation is old as hat and has been rehashed ad infinitum), only to say that if it is your intention to do so, hoping things will be different is a poor plan. Note that tuition has been increasing at double the rate of inflation for more than 50 years; it is not just a recent phenomenon.
For healthcare, it's the same situation...it cannot continue at the current inflation rate. It's just not possible. Something will have to give. ACA is the first part of that, but if doesn't end runaway costs, then the USA will have to reform in some other way that does get the job done (single payer probably). That doesn't help if you have serious medical issues right now, but that's why the prospect of health insurance doesn't worry me 20 years from now.
With respect to health care, it's not just the rise in the costs of health care that keep us up at night; it's just plain having access. For instance, if the ACA is overturned, suddenly those with pre-existing conditions can't get health care at any price.

Maybe at your age you're lucky enough to still be in perfect health. I was too, a year ago. Now I'm not. Now, I could not buy life insurance, disability insurance, or pre-ACA health care insurance on the open market at any price. And this can happen to anyone, at any time, so I suggest you have a better plan than, "costs can't go up forever." Or a very good crystal ball!
cherijoh
Posts: 6591
Joined: Tue Feb 20, 2007 3:49 pm
Location: Charlotte NC

Re: Is semi-retirement a bad idea?

Post by cherijoh »

Nathan Drake wrote:A few responses in here are pretty insulting; I'd argue there's very little correlation between monetary compensation and career happiness after a certain point. In fact, for certain professions it probably becomes inversely proportional.

Similarly, 80K (especially in a low cost of living area) is a very high salary for many people. It's well above average household income. Having to "downgrade" to a mere 80K per year is apparently unimaginable to some people here. I haven't made much over 80K, am younger than the OP, and yet have a higher net worth despite not having anywhere near his level of income.

I'm actually in a similar boat in that I would prefer to take on part-time work from home and wouldn't mind making 40K or so, I just haven't found too many avenues to accomplish this and am still stuck working. Many people are in a rush to make money, but the only real currency we have is time...and spending decades working 40+ hours per week just isn't for me.
Personally, I find it unimaginable that the OP would be able to "downgrade" from $290K to $80K. Look at a typical cost of living calculator here. Other than housing costs, I doubt the main expense components (e.g., groceries, utilities, transportation, and healthcare) will fall more than 15 - 20% relative to the high COL area. He's also talking about adding to the size of his family.

As you point out, the OP's savings rate to date isn't especially impressive in light of the family take home pay. So not only would they be raiding their current next egg to buy a house they couldn't afford on the reduced income, it seems like they would be significantly cutting into their current standard of living and limiting the amount they could save in the future for retirement. Before implementing this plan they should consider an "austerity budget" to see how much they need to take in to cover expenses and save adequately for retirement. It is a lot easier to handle a significant pay cut when you are in the habit of living below your means.

FYI - I agree that making more money isn't a good predictor of happiness, but not making enough to cover expenses IS a good predictor of unhappiness. The problem in my opinion is that so many people can't distinguish between "needs" and "wants". You are to be commended for having already figured out that earning more money isn't the be all/end all.
jebmke
Posts: 25271
Joined: Thu Apr 05, 2007 2:44 pm
Location: Delmarva Peninsula

Re: Is semi-retirement a bad idea?

Post by jebmke »

grantham324 wrote:I think we are just at the beginning of the remote work trend. I think in the future the only people who will not work from home are the ones that truly need to be physically at work, and in my field there's no real reason to be in an office.
I think working at home will increase in popularity although some employers are backing away from it. I did a semi-re for 3.5 years and I found I could do some things from home but many things not. I ended up doing a lot of traveling since I lived quite distant from my "client"; in my case, the heavy travel was no different than my full time situation so the travel didn't affect my decision to eventually make a clean cut.
Stay hydrated; don't sweat the small stuff
Ybsybs
Posts: 549
Joined: Thu Aug 28, 2014 4:28 pm

Re: Is semi-retirement a bad idea?

Post by Ybsybs »

We don't know how much educational debt OP and OP's spouse had. It may be that their savings rate is actually very impressive.

I'm on the side of the responders who think OP's plan is feasible. And I agree with the nay sayers that there are a lot of points to test along the way to prove whether it is feasible for OP.

Possible major steps:
1 - Keep current location and current jobs. Reduce spending to $80k. (Save the rest.)
2 - Keep current location and jobs and reduced spending. Start consulting side business.
3 - Keep current location and reduced spending. Shift consulting side business to full-time. Quit one of the two day jobs, if absolutely required.
4 - Move to new location with established consulting business. Spouse seeks job in new location.
User avatar
dodecahedron
Posts: 6563
Joined: Tue Nov 12, 2013 11:28 am

Re: Is semi-retirement a bad idea?

Post by dodecahedron »

cherijoh wrote:
Personally, I find it unimaginable that the OP would be able to "downgrade" from $290K to $80K. Look at a typical cost of living calculator here. Other than housing costs, I doubt the main expense components (e.g., groceries, utilities, transportation, and healthcare) will fall more than 15 - 20% relative to the high COL area. He's also talking about adding to the size of his family.
.
I can see a number of other costs that will drop a lot more than 15-20%:

1) federal income tax and federal payroll tax will obviously drop a lot

2) he said his current area is "high tax" area so state/local taxes could drop a lot

3) he is moving to area where he said there are family nearby to provide "free childcare" and also they may need less childcare with wife working part-time (Childcare costs in a HCOL area can easily be $25K/child.)

4) transportation could be cheaper if consulting involves working from home (and/or billing clients for travel) and/or perhaps the home they plan to acquire will be more walkable or bikeable than where they are now

5) food bill can go down a lot if new lifestyle allows more time for cooking from scratch at home (so less eating out/takeout/convenience foods)

6) increased free time allows more time for comparison shopping and budgeting, do-it-yourself savings (no more hired housecleaning help, lawn help), time to use the public library rather than just buying books online, etc.

7) "keeping up with the Joneses" costs may be lower--e.g., if neighborhood friends are not all participating in expensive activities and lessons (because such things aren't even available in their new location) or wearing the latest fashions, their kids won't feel left out.

8) It sounds like OP intends to work from home, which reduces professional wardrobe costs, drycleaning, lunches out, etc.

A lot of these cost changes happened for us when our family made a somewhat similar change a few decades ago. (The main exception for us is that local taxes were higher here than they were in our previous location.)
Last edited by dodecahedron on Sun Oct 12, 2014 4:09 pm, edited 1 time in total.
trueblueky
Posts: 2365
Joined: Tue May 27, 2014 3:50 pm

Re: Is semi-retirement a bad idea?

Post by trueblueky »

avalpert wrote:
grantham324 wrote: Regarding college tuition, I believe that it simply cannot continue to inflate at anywhere near its current rate...

For healthcare, it's the same situation...
I agree - I believe that too. Of course I have believed it for two decades (even wrote a paper in high school about it) and my beliefs haven't translated into reality. So, I guess since it is just your kids future and your later years health online it seems like a reasonable bet.

The types of markets that can remain irrational longer than you can solvent are not limited to equity markets.
The real price of private college isn't going up that fast. You can't go by the sticker price. A good student (top 10% of the high school, 30 ACT) is going to get a huge discount from the sticker price. The state schools are a problem, with many states reducing their funding, making those universities more dependent on tuition.

See http://nces.ed.gov/globallocator/ for examples. Pick a few schools you know and check the data. For example, the sticker price for Fordham is $63,448, including dorm and meal plan. 92% of incoming students received grants from the school averaging $20,201. The average net price, including Pell grants and other side from outside sources, was $35,105. That's still a lot, but $140k over four years is much more affordable than something north of $250k.

If money is a consideration, look at private schools a couple states away where your kid's scores would be in the top 25%
avalpert
Posts: 6313
Joined: Sat Mar 22, 2008 4:58 pm

Re: Is semi-retirement a bad idea?

Post by avalpert »

trueblueky wrote:
avalpert wrote:
grantham324 wrote: Regarding college tuition, I believe that it simply cannot continue to inflate at anywhere near its current rate...

For healthcare, it's the same situation...
I agree - I believe that too. Of course I have believed it for two decades (even wrote a paper in high school about it) and my beliefs haven't translated into reality. So, I guess since it is just your kids future and your later years health online it seems like a reasonable bet.

The types of markets that can remain irrational longer than you can solvent are not limited to equity markets.
The real price of private college isn't going up that fast. You can't go by the sticker price. A good student (top 10% of the high school, 30 ACT) is going to get a huge discount from the sticker price. The state schools are a problem, with many states reducing their funding, making those universities more dependent on tuition.
Not where I went to school or the types of schools my kids are likely to look at - all aid their is need-based only. Sure, there are more affordable options and some great state programs depending on what they are looking to do but counting on money at the school you would like to go to just because you are smart is not a reliable option.
If money is a consideration, look at private schools a couple states away where your kid's scores would be in the top 25%
Whether or not money will be a consideration is wholly in my control - the degree to which I need to limit my children's options on college will be determined by my own degree of selfishness.
User avatar
dodecahedron
Posts: 6563
Joined: Tue Nov 12, 2013 11:28 am

Re: Is semi-retirement a bad idea?

Post by dodecahedron »

trueblueky wrote:
avalpert wrote:
grantham324 wrote: Regarding college tuition, I believe that it simply cannot continue to inflate at anywhere near its current rate...

For healthcare, it's the same situation...
I agree - I believe that too. Of course I have believed it for two decades (even wrote a paper in high school about it) and my beliefs haven't translated into reality. So, I guess since it is just your kids future and your later years health online it seems like a reasonable bet.

The types of markets that can remain irrational longer than you can solvent are not limited to equity markets.
The real price of private college isn't going up that fast. You can't go by the sticker price. A good student (top 10% of the high school, 30 ACT) is going to get a huge discount from the sticker price. The state schools are a problem, with many states reducing their funding, making those universities more dependent on tuition.

See http://nces.ed.gov/globallocator/ for examples. Pick a few schools you know and check the data. For example, the sticker price for Fordham is $63,448, including dorm and meal plan. 92% of incoming students received grants from the school averaging $20,201. The average net price, including Pell grants and other side from outside sources, was $35,105. That's still a lot, but $140k over four years is much more affordable than something north of $250k.

If money is a consideration, look at private schools a couple states away where your kid's scores would be in the top 25%
Indeed, if kids can get into one of the highly endowed Ivy League/Stanford/MIT/Williams/Swarthmore/Amherst type schools, a family with $80K in household income is currently only expected to contribute ~10% of their income for college tuition (while the $290K family would be paying the entire cost.)
Topic Author
grantham324
Posts: 27
Joined: Sun Jan 19, 2014 1:30 pm

Re: Is semi-retirement a bad idea?

Post by grantham324 »

Personally, I find it unimaginable that the OP would be able to "downgrade" from $290K to $80K. Look at a typical cost of living calculator here. Other than housing costs, I doubt the main expense components (e.g., groceries, utilities, transportation, and healthcare) will fall more than 15 - 20% relative to the high COL area. He's also talking about adding to the size of his family.
We currently live off around 50% of our income. The reason we haven't saved more is we haven't made this much for very long, and because we live in a ridiculously high COL area.

If I type in my current annual expenses into a COL calculator, it spits out around 80k in my preferred location. But of course COL goes down dramatically if you have zero housing costs, so 80k gets reduced to 40k or so. The difference is savings and wiggle room to account for risk.
avalpert
Posts: 6313
Joined: Sat Mar 22, 2008 4:58 pm

Re: Is semi-retirement a bad idea?

Post by avalpert »

grantham324 wrote:
Personally, I find it unimaginable that the OP would be able to "downgrade" from $290K to $80K. Look at a typical cost of living calculator here. Other than housing costs, I doubt the main expense components (e.g., groceries, utilities, transportation, and healthcare) will fall more than 15 - 20% relative to the high COL area. He's also talking about adding to the size of his family.
We currently live off around 50% of our income. The reason we haven't saved more is we haven't made this much for very long, and because we live in a ridiculously high COL area.

If I type in my current annual expenses into a COL calculator, it spits out around 80k in my preferred location. But of course COL goes down dramatically if you have zero housing costs, so 80k gets reduced to 40k or so. The difference is savings and wiggle room to account for risk.
But you won't have zero housing costs. Aside from the obvious stuff (property tax, insurance, maintenance and repairs etc.) you have imputed rent - since your entire savings is tied up in the house to not account for the investment income you are forgoing by living there is misleading. You essentially will have zero assets to lean on for safety margin outside of your home equity (at least based on the numbers you have provided).
jebmke
Posts: 25271
Joined: Thu Apr 05, 2007 2:44 pm
Location: Delmarva Peninsula

Re: Is semi-retirement a bad idea?

Post by jebmke »

avalpert wrote:But you won't have zero housing costs. Aside from the obvious stuff (property tax, insurance, maintenance and repairs etc.) you have imputed rent - since your entire savings is tied up in the house to not account for the investment income you are forgoing by living there is misleading.
On a strictly cash flow basis, does the imputed rent matter? On the other hand, housing cost does need to include planning for capital costs like roof replacement, replacement of HVAC and other capital type items to keep the house in the same condition when purchased. Actually, when I used to move a lot, I assume I would lay out 10% or so of the house price for remodeling, decorating ......... Houses eat money and it doesn't stop when you retire.
Stay hydrated; don't sweat the small stuff
avalpert
Posts: 6313
Joined: Sat Mar 22, 2008 4:58 pm

Re: Is semi-retirement a bad idea?

Post by avalpert »

jebmke wrote:
avalpert wrote:But you won't have zero housing costs. Aside from the obvious stuff (property tax, insurance, maintenance and repairs etc.) you have imputed rent - since your entire savings is tied up in the house to not account for the investment income you are forgoing by living there is misleading.
On a strictly cash flow basis, does the imputed rent matter?
No, but on an income basis you have to make sure you aren't double counting the expected return from your assets and the reduced cash outlay.
On the other hand, housing cost does need to include planning for capital costs like roof replacement, replacement of HVAC and other capital type items to keep the house in the same condition when purchased. Actually, when I used to move a lot, I assume I would lay out 10% or so of the house price for remodeling, decorating ......... Houses eat money and it doesn't stop when you retire.
Ain't that the truth
User avatar
obgyn65
Posts: 770
Joined: Sun May 06, 2012 9:11 am

Re: Is semi-retirement a bad idea?

Post by obgyn65 »

For what it is worth, I am also considering semi retirement. Just see a few patients part time, but nothing like what i have been doing for the last 20 years. Reading this thread makes me realize I am far from being the only one. Good luck.
"The two most important days in someone's life are the day that they are born and the day they discover why." -John Maxwell
cherijoh
Posts: 6591
Joined: Tue Feb 20, 2007 3:49 pm
Location: Charlotte NC

Re: Is semi-retirement a bad idea?

Post by cherijoh »

dodecahedron wrote:
cherijoh wrote:
Personally, I find it unimaginable that the OP would be able to "downgrade" from $290K to $80K. Look at a typical cost of living calculator here. Other than housing costs, I doubt the main expense components (e.g., groceries, utilities, transportation, and healthcare) will fall more than 15 - 20% relative to the high COL area. He's also talking about adding to the size of his family.
.
I can see a number of other costs that will drop a lot more than 15-20%:

1) federal income tax and federal payroll tax will obviously drop a lot

2) he said his current area is "high tax" area so state/local taxes could drop a lot

3) he is moving to area where he said there are family nearby to provide "free childcare" and also they may need less childcare with wife working part-time (Childcare costs in a HCOL area can easily be $25K/child.)

4) transportation could be cheaper if consulting involves working from home (and/or billing clients for travel) and/or perhaps the home they plan to acquire will be more walkable or bikeable than where they are now

5) food bill can go down a lot if new lifestyle allows more time for cooking from scratch at home (so less eating out/takeout/convenience foods)

6) increased free time allows more time for comparison shopping and budgeting, do-it-yourself savings (no more hired housecleaning help, lawn help), time to use the public library rather than just buying books online, etc.

7) "keeping up with the Joneses" costs may be lower--e.g., if neighborhood friends are not all participating in expensive activities and lessons (because such things aren't even available in their new location) or wearing the latest fashions, their kids won't feel left out.

8) It sounds like OP intends to work from home, which reduces professional wardrobe costs, drycleaning, lunches out, etc.

A lot of these cost changes happened for us when our family made a somewhat similar change a few decades ago. (The main exception for us is that local taxes were higher here than they were in our previous location.)
He is talking about a 72% drop in salary while potentially adding 1 or 2 children to the family. I don't see that happening without some sacrifice despite your list of potential cost reductions. How much did you see your spending go down when you made your move? If the OP can do due diligence and demonstrate to himself that $80K is doable then more power to him. But there are a lot of holes in the rest of the plan that suggest that he hasn't thought it through thoroughly.
User avatar
dodecahedron
Posts: 6563
Joined: Tue Nov 12, 2013 11:28 am

Re: Is semi-retirement a bad idea?

Post by dodecahedron »

cherijoh wrote:
dodecahedron wrote:
cherijoh wrote:
Personally, I find it unimaginable that the OP would be able to "downgrade" from $290K to $80K. Look at a typical cost of living calculator here. Other than housing costs, I doubt the main expense components (e.g., groceries, utilities, transportation, and healthcare) will fall more than 15 - 20% relative to the high COL area. He's also talking about adding to the size of his family.
.
I can see a number of other costs that will drop a lot more than 15-20%:

1) federal income tax and federal payroll tax will obviously drop a lot

2) he said his current area is "high tax" area so state/local taxes could drop a lot

3) he is moving to area where he said there are family nearby to provide "free childcare" and also they may need less childcare with wife working part-time (Childcare costs in a HCOL area can easily be $25K/child.)

4) transportation could be cheaper if consulting involves working from home (and/or billing clients for travel) and/or perhaps the home they plan to acquire will be more walkable or bikeable than where they are now

5) food bill can go down a lot if new lifestyle allows more time for cooking from scratch at home (so less eating out/takeout/convenience foods)

6) increased free time allows more time for comparison shopping and budgeting, do-it-yourself savings (no more hired housecleaning help, lawn help), time to use the public library rather than just buying books online, etc.

7) "keeping up with the Joneses" costs may be lower--e.g., if neighborhood friends are not all participating in expensive activities and lessons (because such things aren't even available in their new location) or wearing the latest fashions, their kids won't feel left out.

8) It sounds like OP intends to work from home, which reduces professional wardrobe costs, drycleaning, lunches out, etc.

A lot of these cost changes happened for us when our family made a somewhat similar change a few decades ago. (The main exception for us is that local taxes were higher here than they were in our previous location.)
He is talking about a 72% drop in salary while potentially adding 1 or 2 children to the family. I don't see that happening without some sacrifice despite your list of potential cost reductions. How much did you see your spending go down when you made your move? If the OP can do due diligence and demonstrate to himself that $80K is doable then more power to him. But there are a lot of holes in the rest of the plan that suggest that he hasn't thought it through thoroughly.
I no longer remember exactly how much our spending went down when we made our move, but what I can tell you is that when we moved here we did not have much in taxable beyond the net proceeds of the sale of our home in our previous location (which we immediately plowed into a 45% down payment on the home where we have lived ever since). So essentially, after we closed on our home here, we had zero in our taxable account when we moved here 25 years ago.

We were able to max out our retirement contributions every year that we lived here AND the balance in our taxable accounts grew from 0 to an amount which is twice the value of our retirement accounts now. (And unlike the OP, we did have a mortgage on our home, but we paid it off within 12 years.) And we never had any debt other than mortgage during that entire period. Also, we had a second child shortly after we moved here.
ThankYouJack
Posts: 5704
Joined: Wed Oct 08, 2014 7:27 pm

Re: Is semi-retirement a bad idea?

Post by ThankYouJack »

I think it's somewhat ironic how the bigger the nest egg can lead to being more conservative financially. At least that seems like a trend on here and also my personal experience -- I'd quit jobs and move wherever in my 20's with no job and only a couple grand to my name.

Sure the OP could wait until a 4% or even 3% SWR but he could also miss out on many great years spending time with his family and doing what he/she is truly enjoys. If it doesn't work out then he can get another full-time job if needed.
Hub wrote:
ThankYouJack wrote: I would love to live like a nomad for a year or two since I can do my work on the road. The quandary I have though is that by the time I could semi-retire and do this, my daughter will be in grade school so we'll probably need to stay put.
My kids will be in grade school by the time I pull this off also, but I envision an entire summer or 2 (or more) living somewhere other than home with them for a couple months. Maybe abroad, maybe just another place in the US. Somewhere where we can live like locals, get some part time work done, and still not really spend all that much more than we would have at home.
I may do something similar, but my favorite time of year where I live is in the summer. I love the warm weather and getting outdoors. My ideal situation would be spending winters in Southern California and Arizona and summers in Colorado, Northern California and the Pacific Northwest. Maybe I'd spend the in between time in North Carolina and abroad :)
tj
Posts: 9317
Joined: Wed Dec 23, 2009 11:10 pm

Re: Is semi-retirement a bad idea?

Post by tj »

I think it's somewhat ironic how the bigger the nest egg can lead to being more conservative financially. At least that seems like a trend on here and also my personal experience -- I'd quit jobs and move wherever in my 20's with no job and only a couple grand to my name.

If it doesn't work out then he can get another full-time job if needed
This is what scares me. I'm 29 and I've already gone through over a 6 month bout of unemployment the last time I took extended time off work to travel. How are people so confident in finding new jobs on a whim? I'd love to try living somewhere different, but throwing away the stable income seems very scary. Like you, a ton of my friends uprooted and move with only 2 months of expenses (presumably a couple grand), but I feel like it should be a lot more than that without having a job in place wherever you end up.
avalpert
Posts: 6313
Joined: Sat Mar 22, 2008 4:58 pm

Re: Is semi-retirement a bad idea?

Post by avalpert »

ThankYouJack wrote:I think it's somewhat ironic how the bigger the nest egg can lead to being more conservative financially.
I think you might have cause and effect reversed.
Sure the OP could wait until a 4% or even 3% SWR but he could also miss out on many great years spending time with his family and doing what he/she is truly enjoys. If it doesn't work out then he can get another full-time job if needed.
Yep, always easy as pie to find that high paying job whenever you want - particularly after you have been out of the workforce.
avalpert
Posts: 6313
Joined: Sat Mar 22, 2008 4:58 pm

Re: Is semi-retirement a bad idea?

Post by avalpert »

tj wrote:
I think it's somewhat ironic how the bigger the nest egg can lead to being more conservative financially. At least that seems like a trend on here and also my personal experience -- I'd quit jobs and move wherever in my 20's with no job and only a couple grand to my name.

If it doesn't work out then he can get another full-time job if needed
This is what scares me. I'm 29 and I've already gone through over a 6 month bout of unemployment the last time I took extended time off work to travel. How are people so confident in finding new jobs on a whim?
For two of my three sabbaticals (my first and my upcoming one) my firm gave me formal leave of absences with a job waiting (in theory at least, still an employee at will so they could have of course reneged if they had to). For my second, it was time for me to be leaving anyway so I negotiated a voluntary separation package that gave me cash flow for a decent amount of time - more than enough to secure another job and be selective about it.
Traveler
Posts: 848
Joined: Fri Aug 30, 2013 9:07 pm

Re: Is semi-retirement a bad idea?

Post by Traveler »

OP, if you're considering moving to a LCOL area, why would you need to spend $500K on a house? I live in a moderately low COL area (Atlanta) and I can easily buy a nice home in a nice, safe area for $300K (I bought a 2 bdr townhome in a decent area for only $60K just three years ago). From my perspective, if you have to spend $500K on a house, it's not a LCOL area. Did you mention where you want to move? Maybe people on this board can provide some insight into true home costs in that area.
cherijoh
Posts: 6591
Joined: Tue Feb 20, 2007 3:49 pm
Location: Charlotte NC

Re: Is semi-retirement a bad idea?

Post by cherijoh »

grantham324 wrote:
Personally, I find it unimaginable that the OP would be able to "downgrade" from $290K to $80K. Look at a typical cost of living calculator here. Other than housing costs, I doubt the main expense components (e.g., groceries, utilities, transportation, and healthcare) will fall more than 15 - 20% relative to the high COL area. He's also talking about adding to the size of his family.
We currently live off around 50% of our income. The reason we haven't saved more is we haven't made this much for very long, and because we live in a ridiculously high COL area.

If I type in my current annual expenses into a COL calculator, it spits out around 80k in my preferred location. But of course COL goes down dramatically if you have zero housing costs, so 80k gets reduced to 40k or so. The difference is savings and wiggle room to account for risk.
Did you include any retirement savings in this estimate of expenses that you punched into the COL calculator? Your plan to purchase the house outright means you will have little or no liquid assets - just a bunch of home equity. Saying "I'll just continue to work part-time" isn't an adequate plan to cover your retirement expenses.

Also, you appear to be taking your expenses as a renter in a high COLA and assuming that they will directly translate to owning a home in the low COLA area. As others have pointed out "no mortgage" doesn't translate to "zero housing costs". If you are serious about your plan, you need to take a close look at your current budget on a line item basis and then research expenses in your preferred location for your new way of life.
Topic Author
grantham324
Posts: 27
Joined: Sun Jan 19, 2014 1:30 pm

Re: Is semi-retirement a bad idea?

Post by grantham324 »

tj wrote:
How are people so confident in finding new jobs on a whim? I'd love to try living somewhere different, but throwing away the stable income seems very scary. Like you, a ton of my friends uprooted and move with only 2 months of expenses (presumably a couple grand), but I feel like it should be a lot more than that without having a job in place wherever you end up.
Depends on your work or how often you're contacted by recruiters.
User avatar
VictoriaF
Posts: 20122
Joined: Tue Feb 27, 2007 6:27 am
Location: Black Swan Lake

Re: Is semi-retirement a bad idea?

Post by VictoriaF »

grantham324 wrote:
tj wrote:How are people so confident in finding new jobs on a whim? I'd love to try living somewhere different, but throwing away the stable income seems very scary. Like you, a ton of my friends uprooted and move with only 2 months of expenses (presumably a couple grand), but I feel like it should be a lot more than that without having a job in place wherever you end up.
Depends on your work or how often you're contacted by recruiters.
The ability to find a new job depends on one's career capital, which consists of one's knowledge, insights, and skills at the time when one needs a job. Recruiter calls are a symptom of the strength of the career capital, not a cause. As external and internal circumstances change, the value of the career capital changes. Recruiter calls may increase or decrease, depending on the direction of the career capital change.

Victoria
Inventor of the Bogleheads Secret Handshake | Winner of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
User avatar
HomerJ
Posts: 21246
Joined: Fri Jun 06, 2008 12:50 pm

Re: Is semi-retirement a bad idea?

Post by HomerJ »

avalpert wrote:For two of my three sabbaticals (my first and my upcoming one) my firm gave me formal leave of absences with a job waiting (in theory at least, still an employee at will so they could have of course reneged if they had to). For my second, it was time for me to be leaving anyway so I negotiated a voluntary separation package that gave me cash flow for a decent amount of time - more than enough to secure another job and be selective about it.
What job do you have where you can take year long sabbaticals??

I especially like where you quit, and got them to pay you a separation package... I should try that next time I feel like it's time for me to be moving on.
Last edited by HomerJ on Mon Oct 13, 2014 10:18 pm, edited 1 time in total.
User avatar
HomerJ
Posts: 21246
Joined: Fri Jun 06, 2008 12:50 pm

Re: Is semi-retirement a bad idea?

Post by HomerJ »

Nathan Drake wrote:I'd argue there's very little correlation between monetary compensation and career happiness after a certain point. In fact, for certain professions it probably becomes inversely proportional.
I have to agree with this. I think I have the perfect job... I'm about as high as I can go, and remain purely technical... Every one of my friends who have gone into management may make more than me, but none of them are happier.. Most of them seem quite stressed and very unhappy and work longer hours... One or two of them may someday make CIO or CEO and pull in the really big bucks, and maybe it will have been all worth it... But most will top out in middle management, after having spent a couple of decades grappling with office politics, and working long hours away from their families.
avalpert
Posts: 6313
Joined: Sat Mar 22, 2008 4:58 pm

Re: Is semi-retirement a bad idea?

Post by avalpert »

HomerJ wrote:
avalpert wrote:For two of my three sabbaticals (my first and my upcoming one) my firm gave me formal leave of absences with a job waiting (in theory at least, still an employee at will so they could have of course reneged if they had to). For my second, it was time for me to be leaving anyway so I negotiated a voluntary separation package that gave me cash flow for a decent amount of time - more than enough to secure another job and be selective about it.
What job do you have where you can take year long sabbaticals??

I especially like where you quit, and got them to pay you a separation package... I should try that next time I feel like it's time for me to be moving on.
Management consulting - but it has had less to do with the nature of the job than being in the right situations at the right time and not being afraid to ask for what I wanted.
Ganacel
Posts: 194
Joined: Tue Sep 02, 2014 3:23 pm

Re: Is semi-retirement a bad idea?

Post by Ganacel »

clacy wrote:Maybe you could meet in the middle. Instead of only working 2-3 more years, why not work 5-6? That way you can exceed your financial goals. 5 years flies by so fast, you will barely tell the difference.

I like the idea of semi-retiring. It's my goal by the time I'm 50.
This is what I plan to do: work at my current job until summer 2019, then quit and do something likely lower-paying, less stressful, and hopefully more enjoyable. Maybe even teaching at a CC. :D
montanagirl
Posts: 1799
Joined: Thu Nov 19, 2009 3:55 pm
Location: Montana

Re: Is semi-retirement a bad idea?

Post by montanagirl »

I was forced into "semi retirement" last year and at first it seemed ideal. But I found that the less I work, the less I want to work. I was less emotionally invested, drifted away mentally so that when they gave me my notice, my reaction was No problem!

I first noticed this when I played music full time. When we worked 6 or even 7 nights a week, I lived and breathed music..went out to see other groups on our night off. But as it slowed down to 5, 4 nights and then just weekends, it began to seem more like a chore to make walking-around money, and not part of my life.
claudia
Posts: 85
Joined: Tue Oct 14, 2014 1:21 pm

Re: Is semi-retirement a bad idea?

Post by claudia »

I was in a somewhat similar situation. I am a CPA and used to work for a Big Four accounting firm. There were many times I worked 90 hours a week. I got into a car accident on the way home from work at 3 in the morning. The stress affected my marriage and both my physical and mental health. 6 months ago, I took a government job that pays me way less than half of what I used to make, but my lifestyle completely changed...changed to a positive way. I am 34 years old, married, with 1 very young child. I don't have as much as you have saved. But I worked my ass off the last 10 years and saved as much as possible. So I think we are financially stable and are on track, but certainly we are not rich. I do sleep better at night and am able to spend more quality time with my child.
C
Naismith
Posts: 530
Joined: Sun Sep 14, 2014 2:58 pm

Re: Is semi-retirement a bad idea?

Post by Naismith »

There have been some excellent considerations raised about how to crunch the numbers and whether they might work, but I would like to address the issue of moving to a lower COL area and how that might affect job satisfaction and quality of life.

The correlation of income to job satisfaction strikes me as spurious at best. Of course it must vary across fields. But as to the example of who gets published--at some of the academic journals for which I have reviewed papers, the reviewing is blind and we don't know the authors' names nor institutional affiliation.

My own experience is that my husband was offered a job in Connecticut, but we could never have afforded to have more children and the commutes would have been brutal. We chose the low COL option. So instead of doing polling on the upcoming presidential race or some national thing, I am doing polling on the local governor's race. It is still fun, just less stressful. My husband is considered one of the top dozen people in the world in his sub-specialty of research and some of our foreign trips have been paid for as part of his requested consulting.

And in the meantime, day to day, I am commuting by bicycle because both my husband's and my labs are only 5 miles from home. We paid off our mortgage in 17 years--we live in a modest neighborhood with a lot of nurses and schoolteachers; the price of our 4-bedroom house was $70,000 and homes in the neighborhood are selling for just over $100,000 since the crash. But the local public schools are excellent; the local high school offers a full range of AP courses and has placed well in national rhetoric and math competitions. The public library is great, offering Overdrive digital content as well as books and DVDs. There is a farmer's market much of the year. We garden, pick berries for freezing, can tomatoes.

Yes, we live in a college town and I appreciate that gives us a better quality of life than a random city of similar size. Our elementary school kids have more hands in the classroom because of student teachers, and our big performance venue get class acts, stopping off on a Thursday night on the way to the big city. In some aspects of medical care, the local academic medical center is the regional expert.

When I was at home fulltime with little children and the big kids were in school during the day, my husband would come home for lunch once a week, during the little kids' naptime. This greatly increased our marital satisfaction, and would have been harder to manage with a Big City commute. Every year for spring break we would take the school-aged kids someplace educational and immerse ourselves in all the sites and museums: Philadelphia, Washington DC, New York City. When they were in college, spring breaks were London, Paris.

So what do we do with all this extra time from not commuting and not working 60 hours a week every week? We have both served in voluntary leadership for our national professional organizations. He has been a scoutmaster, and took a group to Philmont for a 10-day hike (which involved a lot of training in the year before). We are both involved with the League of Women Voters, and I served on the Family Advisory Council for my daughter's university. We are actively involved with our church: I teach children every week and he once spent four weekends in a row putting a new roof on a widow's home. I edit an online newsletter for a local community group, using the same email marketing system that I use for my paid employment (which blurs the line between paid work and volunteer efforts). And we are taking five weeks of vacation next year.

So yes, the COL varies greatly and can have a huge impact on one's life. And it may or may not result in lesser job satisfaction.
Frugal Disciple
Posts: 92
Joined: Mon Oct 13, 2014 5:13 pm

Re: Is semi-retirement a bad idea?

Post by Frugal Disciple »

grantham324 wrote: What am I missing? Why don't more people with highish retirement assets also do this?
Exactly! I have been thinking the exact same thing. Recently my first child was born and it really made me think about what I truly value in life. Being away form home for 12 hours a day is exhausting. By the time I get home, I barely have any quality time with my family. I'm compiling a plan to get myself out of the rat race. I don't hate my job, but I don't love it either. There are a lot more things that I can think of that give me fulfillment rather than spending 60 hours per week at my desk job. The idea of semi-retirement is very appealing and provides some freedom to change course if necessary.
**Insert witty and/or insightful quote here**
Dave1
Posts: 115
Joined: Sun Jan 05, 2014 1:18 pm

Re: Is semi-retirement a bad idea?

Post by Dave1 »

grantham324 wrote:
hoppy08520 wrote:I suppose it all depends on the OP's profession and how mobile/remote you can be and how long you can pull it off. For many professions, virtual offices are becoming more and more common so that might not be a major concern for the OP.
This is another major trend I see. In my full time job I already work from home more than half the time, and several of my "co-workers" are 1099 contractors who work 100% from home. I've also interviewed at 2 companies in the past 2 years (large corporations) that were advertising 100% remote positions. I work on the business side of technology, by the way.

I think we are just at the beginning of the remote work trend. I think in the future the only people who will not work from home are the ones that truly need to be physically at work, and in my field there's no real reason to be in an office.
Well, you view this as a positive, I view it as an issue. A number of people work from home in my company too, but "home" is sometimes within minutes of the office and sometimes on the other side of the world. I'd also disagree with your view that we are at the beginning of the remote work trend. Even in the 90s telecommuting a day or two was common, and it really took off in the last decade. If anything I think we are at the point where there is backlash to the trend, and people are being pulled back into the office. Case in point, yahoo.

That said, going back to your original question as to whether semi-retirement is a bad idea, IMO it's a great idea. DW and I scaled back our hours and we love it. You should go for it, but do make sure you have a concrete plan. And then make a plan B and a plan C. You have a lot going for you. Good luck!

-Dave
surfstar
Posts: 2853
Joined: Fri Sep 13, 2013 12:17 pm
Location: Santa Barbara, CA

Re: Is semi-retirement a bad idea?

Post by surfstar »

DO IT!

Screw working all your life! Life is for living, not working.

All these people warning you about a poor decision, etc - 80k/yr is well above median income!

I make less than that, rent in a HCOL area and still max my 457 and Roth. I'm single, but if you're in a LCOL area your family would likely fare just fine.

Yes you could have some unforeseen medical expenses, or who knows what else - also you could get hit by a bus tomorrow. You can't plan for everything, so enjoy the ride and spend less time working while you're here!


RE: paper publishing or gaining "accolades" by earning more than your peers, etc - who gives a flying ____! If your ego needs that stroking to somehow make you feel that your life is "meaningful" - you have it all wrong, regarding the big picture. We're here but for a short stretch of time http://waitbutwhy.com/2013/08/putting-t ... ctive.html (if you fit into the above group, read this), so you might as well enjoy what free time you have. If working towards that big bonus and new car or higher net worth is what truly makes you happy - enjoy, but don't denigrate the OP for wanting to choose a different path.
User avatar
hoppy08520
Posts: 2193
Joined: Sat Feb 18, 2012 10:36 am

Re: Is semi-retirement a bad idea?

Post by hoppy08520 »

bluejello wrote: Everyone has a different objective function. My husband and I are in our 30's, and we are also fortunate to have enough assets that we really could retire if we wanted to, especially since we don't really care for a fancy lifestyle either. However, we honestly just love working. We both have big ambitions, like challenging ourselves, happily put in 50-60 hours a week and sometimes even more. We also love being in a community of like-minded "go go go" type people. Quite honestly, retirement or semi-retirement would be miserable for us.
I think this is a really cramped vision. I don't think "ambition" and "challenge" can only be fulfilled though a job. That would be pretty sad. If I could have an extra 20 hours a week away from my regular job, which is what the OP is trying to do, I'd have more time and energy to take on the challenges and ambitions that I want to do, regardless of whether I get paid for them or not. If your ambitions and challenges are all fulfilled in your job, good for you, but a lot of us would rather do something else.
User avatar
dbCooperAir
Posts: 1107
Joined: Tue Jan 07, 2014 9:13 pm

Re: Is semi-retirement a bad idea?

Post by dbCooperAir »

I think its a great idea in many ways, it may be even the "new way of life" for many. Its going to be hard for cooperate America to grasp I afraid however.
You wanna hear something really nutty? I heard of a couple guys who wanna build something called an "airplane," you know you get people to go in, and fly around like birds, it's ridiculous, right? And what about breaking the sound barrier, or rockets to the moon, or atomic energy, or a mission to Mars? Science fiction, right? Look, all I'm asking, is for you to just have the tiniest bit of vision. You know, to just sit back for one minute and look at the big picture. To take a chance on something that just might end up being the most profoundly impactful moment for humanity, for the history... of history.
For some reason the above quote from the movie Contact came to my mind when I was reading this thread.
Neither a wise man nor a brave man lies down on the tracks of history to wait for the train of the future to run over him. | -Dwight D. Eisenhower-
Bacchus01
Posts: 3182
Joined: Mon Dec 24, 2012 8:35 pm

Re: Is semi-retirement a bad idea?

Post by Bacchus01 »

Supporting a young family of 5 living in a $500k house on $80K gross per year? And planning to fund their education as well?

Highly unlikely.

You might want to sit down and draw up a realistic budget. Without housing expenses, our cost per person for our family of 5 is nearly $20K a year. We are not poor, but even half of that is $50K a year. Add property taxes, insurance, health insurance, etc and I think you're way short on $80K gross.
Leemiller
Posts: 1357
Joined: Sat Jun 01, 2013 12:42 pm

Re: Is semi-retirement a bad idea?

Post by Leemiller »

Consulting work can be difficult to get. In my field most people who do consulting work, do it for big companies and work very long hours. Getting your own work strikes me as pretty stressful as well. I've thought more in terms of having a different income stream, business, etc. As others have pointed out a 500k home is a very expensive home on an assumed income of 80k.

Personally, some of the reasons I still work in a HCOL area include my interest in the type of work I get to do and my recognition that my career may be cut shorter than I expect for any number of reasons. Besides I'm really only working about 40 hours a week now - maybe that is an option figure out how to scale back. Why not try scaling it way back and networking with some people who do make their living as independent consultants now?
Post Reply