Wednesday, December 10, 2014


A tired looking friend asked me the other day, 'how do you retire at 53 from a low paying job with mediocre benefits'?  Need less, was all I could reply.  Retirement is about supply and demand.  We tend to focus too much on maximizing supply and not enough on minimizing demand.

When we are working hard and we are making silly money we tend to spend silly money, to justify the singular focus and our time dedication to the working world.  We take extravagant vacations and drive in ostentatious cars, live in outlandish Mc Mansions, eat at trendy restaurants and send our kids to trophy schools.  If you desire that kind of lifestyle in retirement you will be working until you are 106.If you can scale back a bit to reasonable spending levels you can retire at half that age.

You can do all the calculations in the world to determine if there is enough money saved to last forever but when what you really need to calculate is how much do we really need.  Can you down size the house or turn the BMW in for a Hyundai?  Can the kids go to a state school or can you enjoy road trip camping vacations instead of the luxury cruise or the behemoth motor home.  Retirement is cheaper than real life.  There are no commuting fees, dry cleaning fees, fancy wardrobes, lunches, gifts, office pools or parties and other work expenses.  You don’t have to keep saving for retirement either, you are retired.  Earning less will put you into a different tax bracket so there are savings there too.

Saving for a semi minimalist retirement or pension is easy.  When asked what the greatest force in the universe was Einstein purportedly said ‘Compound interest’.  Save five dollars a day for thirty years, the price of a good cup of coffee.  This compounded and increased at a 10% annual rate will give you 1 million dollars.  Then you can withdraw 50,000 dollars a year, forever.  If you need more, save two cups of coffee.  More than 100,000 dollars a year and you are wasting silly money again.

The question becomes, do you really want to retire.  If you love your work, keep working.  If you don’t love your work, life is too short for bad jobs.   Family and friends, passions and hobbies are infinitely more important.  We have everything but time.  Time is money?  Time is equal to money times the speed of life squared.  Minimize, mobilize, monetize.  Retirement is not about money, it’s about choices. 

Choose to reconnect with old and new friends, your spouse and your children.  Retirement is a transition in life and like all transitions it takes time to get used to and enjoy and thrive.  Make it a slow transition if you like.  Maybe just work less.  Retirement does not have to be a hard break where you get the gold watch and go fishing every day.  It can be a gradual lifestyle change.  Phase out the 80 hour weeks and just consult and advise and let the young ambitious folks take care of the details. 

They say that free time is the burden of the lower and upper class but it is the indulgence of the middle class.  Make sure you have a plan and are comfortable with your free time.  Every day is a Saturday when you are retired.  What do you choose to do today?  Have a plan to stay busy, socially, physically, intellectually.  Reinvent yourself.  What do you really want to do?  Enjoy sleeping in, long breakfasts, chores and projects where you have the time to do it right and enjoy the process.  Look forward to things you used to dread because it was just one more thing on your busy to-do list.  Read.  Write.  Consult.  Teach.  Volunteer.  Nap.  Think.  Appreciate.  Need less.

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