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Tuesday, July 22, 2014

Work Options

Posted by Dave on February 19, 2013

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?

Comments

9 Responses to “Work Options”
  1. Alternatively, consider working in a career now that you enjoy enough that you don’t feel the need for an end date on it. And the time for that change is now :) .

    I have an associate who’s still working fulltime at 75. No plans to quite, he loves what he does and has the flexibility to schedule work around his lifestyle.

  2. Elizabeth says:

    I’d love to be partially self employed at some point. That would give me the freedom to dabble and do research while not needing to work set hours.

  3. Dave says:

    I think you’re onto something about taking time off now/working less and pushing retirement out. I don’t think that our society, in general, supports that lifestyle choice very well. Most companies want their workers to be there consistently and the two employers I’ve worked for (so far) both are against me taking a 6 month sabbatical. The only way to do this is quit. If you do that every 6-7 years and push out your retirement a bit, I think that’s a good option.

    I also agree with LifeInsuranceCanada’s comment about finding work you enjoy now and it won’t feel like work. I think that usually means working for yourself.

    Good article – it’s right in line with what I’ve been thinking about lately

  4. Jacq says:

    Brave New Life had a great post on nano-businesses today. That’s what I’d consider at my stage now vs. working in a cube for set hours / set months.

    http://www.bravenewlife.com/02/nano-businesses-bridging-the-financial-gap-for-early-retirement/

  5. greg says:

    part of my consideration is likelihood of reasonable employability, so my first focus before going part-or-no-time is to get a start on a second career in a few years

  6. jon_snow says:

    I’ve thought about the part time work scenario, but I’ve opted to stick it out on a full time basis, continue to save 75% of our income until we hit “the number”. Once this has been achieved, I won’t have to think about work – at all… Ever.

  7. Kestra says:

    We usually discuss option #1, at least for me. We are 36 and should be able to retire around 46-50 – depending on how part time I work leading up to that point.
    I think it depends on your job and your goals about what would work better. My husband and I are a good example of both sides. He works a high paid job but in a field where full time year round and shift work is the norm. It is hard on his health to work rotating 12 hr shifts but pays well. So for him it’s probably better to keep working full time until he can retire fully. He may chose to switch to part time in 5-10 years by going back to truck driving, which is good for part time work.
    For myself it makes more sense to work part time but for more years. Technically I am already part time at my company and they are fine with part time and seasonal workers. I get bored easily and like to have time to do other things so I work 28-35 hours a week generally. My goal is to only work in the summer so we can RV in the states in the winter. Hopefully within 10 years that’s what we’ll be doing.

  8. I think it depends how struggle you are at work. Some people do enjoy some part of it even when they are reached financial independence.

    The other thing – what are you planning to do in your “second” life? Do you have time consuming hobbies?

    I would probably do some part time work, if I could. To stay connect and maintain an income stream.

    However this is security talking, rather than anything else.

  9. Chris says:

    Not sure if your career path allows it but I would suggest taking on contract work rather than quitting after only 6 months of employment. Quitting after only 6 months will surely have adverse effects on your future marketability. In certain industries where keeping abreast with the latest technology and best practices (e.g. IT) is essential, it would be ideal to stagger your re-entry to the market place. For example, work in the first half of the year and then again in the 2nd half of the year. While taking some break in between jobs, you also get a fuller picture of the technological advances for the year.

    Whenever I discuss Early Retirement with my wife, we talk about replacing our conventional source of income (i.e. through employment) unconventional ones (e.g. rental properties, dividend generating stocks).

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