This is a guest post by Dave, who is also looking to retire no later than 45, but unlike Tim has no kids and doesn’t want any. Dave is from Ontario and is working towards his CGA certification.
As time goes on and my wife and I move through our financial plan, we sometimes discuss our options for the future and review what we’re doing now and what we could possibly do in the coming years. One of the topics that constantly come up is the question – when will we be able to retire? Once in awhile, I put financial variables and different situations into Firecalc to examine the odds of going broke before my expected lifetime is over. At a point when there is a 0% chance of ending up destitute, we’ll probably add more of a buffer to the portfolio to provide for any unforeseen health emergencies or otherwise that would impact cash flows utilized in the simple calculation.
One thing that we talk about sometimes is working after we’re done with our “careers”. There are two situations that we have talked about working:
1.) To retire earlier than our projected 2025 date. At a certain point, our portfolio will be large enough that we can just allow it to compound year-over-year and work to subsist, rather than adding to the nest-egg. If, for example, we need $25,000 to survive between the two of us, we could work part-time until we’re 50 or so and let our portfolio get to where we need it to.
2.) To ensure we won’t run out of money. By nature, I am a fairly cautious person. I keep a savings account that is probably larger than necessary, and limit expenses to levels that are probably lower than needed. Working to an income level that just covers our (relatively low) expenses and not tapping into our retirement account would provide additional security in retirement.
Ideally, we would either be able to work a consistent part-time job, or find a job that we could do seasonally. At some point this year, I will hopefully get an accounting designation. One possibility for me would be to prepare tax returns or assist in creating financial statements during tax time. This kind of career works well for Canada, as the majority of the work could be done when the weather is terrible and allow for free time in the summer.
Alternatively, I could compete for entry-level jobs which are more transitory than a stereotypical career and I could work to a point that I’ve earned enough for the year and then quit. This situation would allow for me to (maybe) find a different career or company that I have interest in, but would probably result in some sort of repetitive work (based on what I am aware of for the majority of entry-level jobs in my company).
I’m not sure what my wife and I will eventually decide – we may both stay with our respective companies for the long-term. Alternatively, a significant switch in careers could lead to less pay, meaning an earlier exit from full-time work may not even be an option. A lot can happen in the next decade or so – I have only been working full-time for 10 years at this point, and I’ve already held three different jobs, while my wife has worked for around 5 or 6 different companies.
Would you work part-time for an additional 5 years or so to have more free time now? Or will your exit be a “clean break” from working?