What Life is Like in Early Retirement

The Financial Samurai has been retired for a year now. Well, at least kind of. It's not really retirement since he's still working (he runs a successful money blog). It's what I'd call early semi-retirement (where you quit your job/career and downshift a bit, but still work). I've written about it several times as follows:

• What the Heck is Early Semi Retirement?
• Is Early Semi Retirement for You?
• Is Early Semi Retirement Really All That Great?
• Early Semi Retirement Opens a World of Possibilities

Anyway, FS shares the positives, negatives, and other learnings from early semi-retirement. The highlights:

• He has more time (obvious). As such, his life is a lot more pleasant, organized, and less stressful. He's also in better shape and feels like he has "more purpose" in life.
• He hasn't had a lack of things to keep him busy (which is one thing people wonder about when they downshift).
• There are downsides, of course. He gets lonely and it's easy to "get lazy".
• He also recognizes the fact that "less money" is an issue. This would be one of my main worries. As he states, you want to be REALLY sure you have enough money saved (and can earn the rest) before you embark on early semi-retirement.

It's pretty much what I expected. But since I'm working towards early semi-retirement, the glimpse into what it's really like was a worthwhile read for me.

I'm still a few years away from down-shifting to a great degree. I also want to be REALLY sure that I have enough money saved up as well as income being generated, and I think it will take some time to get my real estate holdings to the point where I'm comfortable with their performance (which will be a key source of my income).

How about you? Anyone out there planning on (or getting close to) early semi-retirement?

Comments

[Kay]

I'm nowhere near any type of retirement, but his descriptions sometimes remind me of my graduate school years. The fact that you get most work done in a shortened time period... the late hours of fun, the midday naps. And the loneliness too, on the days you DID eat all meals alone. Also the lowered income, and somehow managing to be happy and still able to sustain yourself on that money.

I'd be lying if I said it didn't feel a little idyllic, but realistically... it wasn't 100% awesome, and it's interesting to hear that this semi retirement is much the same.

[Jane]

Very topical for us. We are 54 and have been planning for husband's early retirement at 60 (I am a homemaker). His employer has been struggling with not enough orders (business jet manufacturer) for five years. Recently (ahead of another layoff cycle commencing soon) they've offered an early buyout package for some salaried positions which includes nearly a year's severance pay (for those who've been there at least 20 years) along with other benefits. You must be at least 55 to qualify, so my husband missed on that one criteria so he won't be among those who take the package, but it made us reconsider our plans...if this had happened a year from now, were we in a position to move up our target date five years? Consequently we've been figuring and adjusting and the upshot is we are now living as though we were a year from retirement, even though currently we still plan to hang on until 60. We can see that we will be a little more comfortable financially if we wait until then, but we have scaled our current budget back to the amount we'd live on if he DID retire today. We're enjoying the challenge!

[Adam G]

I'm 30 and nowhere close to retirement but you also asked about "planning" and that's where I'm at right now. I'm loading up my Roth IRA with a max contribution each year and get a 25% of salary bonus from my employer each year into a SEP IRA so I figure I'm well on my way. Now, if I can just get some side income somehow then I'll be on track. For a 30 year old I think I'm well ahead in my retirement savings but I'm also trying to enjoy life in the present too and sometimes struggle with the balance. Hopefully if I can work for this current employer for another 5-10 years then I'll be in excellent shape for retirement near 50. That's the goal at least...

[Jenny @ Frugal Guru Guide]

Nope. Not interested. :) I'd rather create some things of value now and retire later.

[Old Limey]

I had just turned 58 in September 1992, had been working for my aerospace employer for 32 years and was planning to retire the coming March when my retirement pension would get its annual increase. However my employer offered an early retirement program to salaried workers with an inducement of 1 week's pay for every year of service, which for me was about $45K. It was a no-brainer to take it. Our investment portfolio was then $320K and the $45K allowed us to pay off the remainder of our home mortgae with money to spare.

My wife worked one more year while I used that year to carry out many home improvements.

I then started putting my Math & Computer skills to work educating myself about the analysis of market trends. I found that the current technology being used was simple to what I had been using at work analyzing rocket motors & re-entry vehicles for submarine launched missiles.

It didn't take long before I found a proprietary database of funds & indexes that came with some good analysis & charting software so I came up to speed quickly and used it to actively manage our investments.

My retirement couldn't have come at a better time because the Internet was coming of age. To make a long story short I then started writing software that complemented the software of the company whose database I was using and after 2 years of hard work I had a product that I was able to sell very successfully to a great many of my fellow subscribers.

The Internet Bubble came along at that time and generated the greatest boom that the Nasdaq 100 index has ever had and I was there to ride it to the top. Success comes when you have the right knowhow at just the right time in your life. History is full of great examples of this.

[Net Worth Snowball]

I am planning on early financial independence by my early 30's. Whether I choose to retire at that juncture (hopefully within the next five years)is still up in the air. I have been saving my net earnings between a 65-80% clip since starting my career five years ago, and I am excited by the prospects of early retirement.

[Retire By 40]

I think it can be pretty difficult to downshift if you are single. When you're working, you have a good social life. If you have a family or other things to do, then it's not that hard to get on with retirement.

[Old Limey]

Retirement sounds very nice indeed to most people. I was actually very happy at work and used to look forward to going in every day. I was in a group with a great bunch of engineers and enjoyed their company as well as the very stimulating, rewarding, and creative work, as well as the satisfaction from producing software that helped other engineers to do their analysis faster and easier than before.

Once you actually retire you have to undergo a lifestyle change. What are you going to do becomes the question of the day. You can't just sit in your easy chair and watch TV, you can't just go and play golf or tennis every day, so what are you going to fill up your time with. Vacations are great but even they get old after a while. If you have led a creative and productive working life you will eventually find that you also need to lead a creative and productive retirement life.

I was fortunate that after I had produced my software and had a lot of happy customers some of my day was spent answering e-mails, filling new orders etc. but that alone wasn't enough. I joined a hiking group and did a lot of that. I also intensified my interest in gardening and did all of my own, including having a nice vegetable garden every year. I also did many exciting things that included a 225 mile, 14 day solo hike of the John Muir trail in the Sierra Nevada wilderness. I also went on an exciting group trip to Peru where we hiked to Machu Picchu, spent a night in an indian encampment and the canoed down a tributary of the Amazon. Then followed three exciting group treks in the Himalayas of Nepal with porters and sherpa guides, exciting trips in America climbing several snow covered peaks such as Mt. Rainier, Mt. Baker, and Glacier Peak. There were also many trips with my wife where we went to exciting places such as Bali, Thailand, Morocco, Turkey, Africa, and of course Europe and the Caribbean, but stayed in nice hotels and saw a lot of interesting places with guides. All of these kind of trips are also very expensive in addition to expensive airfares half way around the world.

Bottom line - Before you jump ship and quit work make sure you have a pretty good idea what you are going to fill your empty days doing. If you're married your plans also have to include those of your wife since she might not want to stay at home while you are off climbing mountains.

[Matt]

I am slowly working toward that goal and when it happens it happens. It may happen earlier if things go right but I know the earlier I reach that goal the better off I would be with less stress and worries.

[Pauline]

I am 32 and in early semi-retirement, have been for three years. I actually have more money than before since I used to save most of my income to meet my goal. It is weird at first when you run the numbers and see you are good to go, then run them 10 times more and get to the same conclusion! My target was around 40 but with a little extra work it worked out to be shortly before 30.

[Ed Mills]

This past August at age 48 I gave early semi-retirement a try when I quit my teaching job and took an employment break. Overall, I really enjoyed it, but at times it was a little lonely / boring. I jogged and worked out most days, read, studied and worked on my book some. Had my wife and son taken a break with me, I believe that it would have been a much better situation.

In January I took a short-term teaching job that will allow me to save $35,000 in 4.5 months of work. Starting in June my wife and I will start our family sabbatical; we'll probably home school our son during that time. We plan on taking a trip to either Mexico or Costa Rica, an extended Florida beach trip and catch up with our numerous relatives.

In the future, we will take new teaching jobs and save most, if not all, our salaries in 457, 403, IRA, ESA and HSA accounts. We estimate that we can save $125,000 every year we teach. At this point, I do not envision us teaching more than one year at time. Each year will be followed by a 18 month self-financed sabbatical.

We have pensions that we will qualify for at age 60 and we have enough money to live on now.

[Sarah]

One of the scary issues raised here is the possibility of needing to return to full-time employment, only to be faced with the stigma of "being old" and having been out, or semi-out, of the marketplace. It can be very challenging right now for people in their 50s and early 60s to find new jobs if they need them right now, and even harder for people who have been out of work for more than six months. By stepping away from the job market early, you're essentially spiking your future career opportunities--so you'd better be pretty darned sure that you won't need to go back. For most people, that will entail getting a grown-up (CFP) to go over their finances with them carefully. I shudder to think of how many people are planning now on early (semi)retirement based on the last two years of stock market returns.

[Sam]

Take the leap FMF! You've got a side business and a large blog. The one thing I was presently surprised about is needing much less income than necessary to maintain my lifestyle and remain happy.

We think we need too much!

Cheers

Sam

[BillyBob]

Getting closer to the time and looking forward to it. 47 now but will make my goal by 48 most likely and will start to slow down. I am in fact this week shopping for a home in the US. Next entry in link will reflect that experience and a few other observations. I found a way to get from zero to 1M in less than 9 years and am in year 9.

[Steve]

Sometimes my new business feels like its an unintended stumble into semi-retirement. I'm early 40s and 15x expenses saved (so not FI, but getting there if the market complies). I work from home and stay busy around half the time. Going from used to 60 hrs/wk of work to having weeks off at a time, I fully admit it is easy to "get lazy", which is seems crazy given what I used to work.

The profit works out fairly well anyway and we've never spent close to what we made in the past, so even on the worst years our net worth has still increased. Though income is down for now I certainly make much more per hour than I did before. I have found myself being extremely picky (take on low risk stuff) in growing the business, so if/when I do end up with a full workload again it should lead to quick FI and new decisions as to what to do then. If things continue along as they are then I guess I'm an early semi-retiree....