A draft article on early retirement

I’ve finished a draft of http://philip.greenspun.com/materialism/early-retirement/ (originally sketched for some of my friends who were early employees of Google).  Comments/corrections would be appreciated, either in this Weblog or via email.  I would especially appreciate suggestions of relevant books and movies (see the end).


Thanks!

35 Comments

  1. dc

    January 30, 2006 @ 3:58 pm

    1

    Hi Phil: Yeah, I got some friends that made 50M+ over there at google. Lots of em. Same story at Yahoo and Ebay….

    I think the big thing is the loneliness. If you have friends you can retire with, great. But if there is nothing to do, it gets pretty old quickly. I argue it’s unhealthy.

    A body without physical activity is not a healthy practice. A mind likewise.

    Maybe a person not having anything to do but sit around a starbucks looking at all the pretty women that don’t have jobs (I just got back from there!) is ok. But it gets boring. I argue it could lead to mental unstability if you don’t have the right personality…..

    Maybe one example of this theory is “island” boredom which you may have experienced in hawaii. after a while, with no objective, even paradise gets old. maybe this is a warning sign that all is not well….

    .02$ worth or less.
    dc

  2. Trevis Rothwell

    January 30, 2006 @ 4:46 pm

    2

    Interesting article! At least some of what you suggest here is applicable to us not-yet-retired people as well. Although we may be working a lot of the week, we do still have some free time, and it can be made more productive time by setting goals and telling other people about it. I’ve found that just listing a couple of short-term goals on my website makes me want to stick to them a whole lot more, lest any readers think I can’t get anything done. 🙂

  3. J. Peterson

    January 30, 2006 @ 5:21 pm

    3

    “don’t read the newspaper or email in the morning because it will scramble your brain with lots of disconnected ideas and you won’t be able to accomplish any serious work for the rest of the day (very productive friend who has just completed his fourth book)”

    – I’m still working, but this is tremendous advice. In fact, I’ll quit reading this blog right now, and pick it up at bedtime…

  4. Pedro Vera

    January 30, 2006 @ 9:01 pm

    4

    Good draft. It reminds me of our “what do you do if you hit the lotto” arguments at the office. There is always one idiot bragging of going back to school and doing this and that.

    Me? If I hit pay dirt, regardless of it being the lotto, a good investment or stock options paying off, I would go back to the hobbie I could not afford due to its time needs: golf. With the kid in school and the wife with an unlimited spending account, I would be able to golf almost every day of the week. I know plenty of golf addicts, so I know I won’t have a problem finding people for my foursome.

  5. vimax

    January 30, 2006 @ 9:04 pm

    5

    I enjoyed your article and I laughed on several occassions. All I can say is I don’t think retirement should really be the goal. I think when you arrive at a point where you could be financially stable doing something different than the job you hate…go do it!

    The new job may pay less but if it is rewarding then it will be worth it in the long run. (As long as you have enough money saved up).

    I guess what I am saying is to never retire. Just find a new field you enjoy until, from old age you become disabled.

  6. Atilla

    January 30, 2006 @ 9:44 pm

    6

    why not lead by example, and post your own net-worth?

  7. Rob Schoening

    January 31, 2006 @ 12:48 am

    7

    In addition to basic time management, I’d say that basic intellectual curiosity and creativity factor in quite heavily in one’s ability to live well in an unstructured phase of life.

  8. Philip Greenspun

    January 31, 2006 @ 1:40 am

    8

    Rob: TIME magazine says that intellectual curiosity isn’t worth much in terms of happiness. The incurious are just as happy if not happier. “Fat, dumb, and happy,” apparently works well, despite Dean Wormer’s admonition (“Fat, drunk, and stupid is no way to go through life, son”).

  9. Philip Greenspun

    January 31, 2006 @ 1:51 am

    9

    Michael: My net worth to within a few years and maybe 20 percent is already posted on the Internet if you look carefully (the value of my crummy condo in Harvard Square is obtainable from the City of Cambridge Web site; the value of the shares in my old software company that I sold are obtainable from various sources). Maybe add 5-10 percent per year for investment growth. I very seldom look at my investments or try to figure out net worth. I know it isn’t enough to buy a Gulfstream or go crazy with real estate, but I also know that reasonable day-to-day expenses (that includes flying piston-powered aircraft and an unlimited amount of commercial airline travel) won’t put me in any danger of having to return to work.

  10. J. Peterson

    January 31, 2006 @ 3:30 am

    10

    “…net worth…isn’t enough to buy a Gulfstream…”. Hmm, I wonder if NetJets will give you a price break if you offer to help fly the plane?

  11. patxaran

    January 31, 2006 @ 7:09 am

    11

    Retirement should not be called by that name; a more appropriate word is manumission as in the Roman ceremony where the masters liberated their slaves. I have not accumulated enough “pecunia” to buy my freedom yet. Your piece on retirement is great; fun reading. I think you met your quota of interesting ideas for this quarter.

  12. Ryan

    January 31, 2006 @ 11:18 am

    12

    As a newspaper reporter I am somewhat horrified, economically, at your suggestion to NOT read a newspaper on the morning. But I must admit I am intrigued! Have you tried this, does it work? And what do you do with your caffeinated brain in the morning once you untrain it from wanting a newspaper? Work on a project on a laptop, read a book? Read flight manuals? Hmmm.

  13. Woody

    January 31, 2006 @ 6:35 pm

    13

    Addition to your movie list: About A Boy, a film with Hugh Grant that is actually good. He plays a young man who, by his own admission, “does nothing” because his grandfather wrote an annoying Christmas song. He actually deals with a lot of the issues being discussed here.

  14. suzanne goode

    January 31, 2006 @ 9:08 pm

    14

    Concur with Woody — Hugh Grant is quite endearing and avunucular in that movie. With its dreary weather, London would be particularly inhospitable to the would-be retiree, but the movie doesn’t make any mention of his traveling outside the U.K. that I recall.

    This draft includes mention that having children increases people’s happiness. While this has held true for me (I have four children, who are four of Philip’s six nephews), a recent study published widely found that across all age levels, parents were generally more stressed and less happy than childless adults. So Philip, you might have to re-work that section.
    Recall that during a visit to my husband and me back in 1992, when the two oldest nephews were about ages four and two, Philip commented, “I’m never having children! They ask too many questions!”

  15. Richard Tallent

    January 31, 2006 @ 9:43 pm

    15

    I don’t want to retire, I just want to live off my investments so I can work exclusively on tasks that don’t currently provide enough funds to support my family (personal programming projects, fashion/glamour photography, music, blogging, etc.).

    But there’s an up-side to *not* retiring. In trade for _less than 1/3rd_ of my waking hours***, I don’t have the stress of seeing my life savings slowly being frittered away by life and inflation. Better, every day my savings goes up and I still have extra money to spend on new toys (like the 5D I have my eyes on). Also, no job is perfect, but I rather enjoy my job and coworkers, so that time trade pays for itself (plus free business travel that sometimes goes interesting places, people to eat lunch with every day, etc.).

    The average American is more “retired” than they might think. Our problem is, we waste as much time watching TV and commuting (avoidable lifestyle choices) as we might gain back in retirement.

    [*** 8 x 5 x (52.5 – 3 [vacation]) / 18 x 365]

  16. Michael

    February 1, 2006 @ 2:09 pm

    16

    For an excellent overview of what makes people happy and fulfilled, check out Learned Optimism and Authentic Happiness by Martin Seligman. (The book titles may sound like hokey self-help books, but Seligman is a serious researcher.) He points to research that shows that the happiness from windfalls and other good events doesn’t last long (in fact, he gives the lengths of time). It’s fascinating stuff.

  17. Tristan

    February 1, 2006 @ 3:17 pm

    17

    Mind Over Money by Eric Tyson is a great new book on this subject.

  18. Atilla

    February 1, 2006 @ 4:17 pm

    18

    I think it’s an interesting article. Do you really consider yourself retired? I think of you as a writer. Don’t you still teach a course or two at MIT? (I’m not the same Michael that asked you about your net worth; how impolite to inquire!) I especially like the part about nonprofits, it rings true from my Dad’s experiences.

  19. Philip Greenspun

    February 3, 2006 @ 12:54 am

    19

    Ryan: What to do with the half-awake brain in the morning? I actually find that answering email wakes me up more than reading a newspaper would because it is active. So sometimes I roll right out of bed over to the desktop machine. But this in some ways is even worse than reading a newspaper because it gets one’s brain into a responsive rather than a creative mode. A lot of my best days have involved getting up early and going right to the airport to fly.

    Michael: I do teach a course every few semesters at MIT, including this Feb-May 2006. And I do scribble notes to friends and family and post them on my server for anyone else who might learn from them. But I used to do those things AND run a $20 million/year (revenue) open-source enterprise software company. Ever since selling the company, it certainly feels as though I’m retired! And I don’t do anything that has the potential to add substantially to my ability to consume, which is a characteristic of retirees.

  20. Atilla

    February 3, 2006 @ 8:46 pm

    20

    Phil, this is a really great article, by the way. I did notice on minor typo on the “where-to-live” section: you have “Athens, George”, where I think you mean “Athens, Georgia.” Interesting reading, and please, do forgive my rudeness before.

  21. K

    February 5, 2006 @ 11:49 pm

    21

    Philip,

    If the TV networks devoting 90% of their “news”casts to health issues means anything, it seems that their target audience (the 55 & up set) is very preoccupied with its mortality. Since most early retired folks usually aren’t under 30, they may soon share some of the same concerns. Why not put more focus on using some of the extra time to get unusually physically fit, rather than waiting for the first heart attack? My early-retired neighbor competes in triathalons (the “senior division”, of course), for example.

    Put another way, the risks of retirement seem to be:
    *Outliving one’s money
    *Outliving one’s purpose
    *Outliving one’s health

    It may be interesting to see a little more on issue #3.

    Also, a practical question: what to do about health insurance once COBRA runs out? It seems that many people in their 40’s would be turned down for private health plans due to some preexisting conditions (blood pressure, allergies, etc.). Does it just make sense to self-insure at that point, and cross your fingers that you don’t need cancer treatment, major surgery, or long hospitalization?

  22. Philip Greenspun

    February 6, 2006 @ 6:11 pm

    22

    K: Excellent point. And the TIME magazine article touches on it. Healthy people are definitely happier. Also on the health insurance. For anyone with real money in the bank, health insurance doesn’t make economic sense IF there were a free and fair market for health care. But because insurance companies pay less than half the “retail” rates for a lot of services, you almost have to have health insurance just so that hospitals and doctors won’t rob you blind. If you show up with a credit card and no insurance at a hospital right now, you’ll pay 2-10X what an insurance company would pay for the same care. So perversely, health insurance is one of the only kinds of insurance that makes sense.

  23. DeAngelo Lampkin

    February 8, 2006 @ 10:54 pm

    23

    I read the blog subject heading and I thought you were going to write an article on how to *reach* early retirement, not one for people already there. 🙂

  24. Philip Greenspun

    February 10, 2006 @ 4:09 pm

    24

    DeAngelo: The bookstores are full of books on how to get rich quick! No need for a Web article on the subject.

  25. Dana Welts

    February 11, 2006 @ 10:54 am

    25

    “Non-profit organizations exist to provide their staff with great jobs and the fun of making decisions and spending money. The folks who work at a non-profit organization are very interested in drawing a salary higher than their skills and working hours would command at a for-profit enterprise subject to competition. They are not especially interested in efficiency or accomplishment.”
    Oh really??, you know these are the kind of comments that make people think that that you are out of touch with the real world Phil.
    For the past 16 years I have worked for a not-for-profit residential school serving kids with behavior disorders who can’t be served in public schools. We provide documented effective treatment for kids who have been sexually abused and traumatized, kids with histories of fire setting, kids who are more than likely to become adult sex-offeneders and more. We compete on an exteremly serious basis with for-profit schools for referrals. Our not-for-profit status and public auditing requirements allow us to put any profits back into staff salaries, improved facilities for students and exploration into new treatment strategies. The profits generated in a private for-profit special needs school go into the pockets of the owners. Believe me, the difference in working conditions and environment of care for the students in a private not-for profit special needs school and a private for- profit school are dramatic. For-profit schools are characterized by low salaries, frequent layoffs, and sub standard services for students. As a not-for profit school we have been able to provide our staff with an annual 3% raise as well as bonuses for the past 10 years. We have been able to use profits to improve facilities and infrastructure and receive national accredidation status (JCAHO).
    I could go on but the differences should be obvious.
    Perhaps the not-for-profits you have dealt with are populated by individuals who are “interested in drawing a salary higher than their skills” but this description certainly doesn’t fit any of our 600+ employees.These are people who work demanding schedules with some of the most demanding student populations imaginable. The 600+ jobs we generate (jobs that provide generous starting wages, health coverage, insurance coverage, 403(b) contributions, tuiton and education support and more) don’t hurt the local economy either…
    Please be a little more careful with your crass generalizations in the future- you appear so educated and informed in most areas but you really struck out here.

  26. Atilla

    February 15, 2006 @ 8:58 pm

    26

    What about a section on some of the relatively inexpensive niceties of being financially stable? E.g., is it worth it to have maid service where you live? In many developing nations, and places where there are plenty of undocumented immigrants, it’s cheap and easy to get live-in service or weekly cleanings of your home. But if you do it in the USA legally, does it make sense? What about 1st class air travel? Luxury hotels?

  27. Anshu

    February 15, 2006 @ 9:49 pm

    27

    Dana,
    Did you not just prove Phil’s point that “The folks who work at a non-profit organization are very interested in drawing a salary higher than their skills…. competition”. You say you give annual salary increases, bonuses, generous starting wages …. as part of a non profit. You seem to be implying that ‘for-profits’ dont pay their teachers and staff as much as your ‘non-profit’ does. In other words you pay your employees more than what they will be paid in the ‘for-profit’ competitive world.

  28. Dana Welts

    February 15, 2006 @ 11:25 pm

    28

    Anshu, I’m not real clear on Phils “point” but I get his snide implication that not-for –profits are some type of slacker haven where people who can’t cut it in the real world of competition can reside. In the world of special needs residential treatment this just isn’t true. We provide our staff with wages and benefits that are competitive with private for-profit schools but certainly not higher. None of our staff has to work any less hard than the staff of a private for-profit school. We aggressively compete with for-profit schools for “heads on beds” and if the performance of a staff member is under par they are gone just as fast as in the for-profit world. Our mission is to heal kids and make a positive contribution to the community. The goal of the for-profit schools that I have experienced (during my 30+ years in the business) is to generate a profit for the owner and the treatment of students has always been, IMHO, secondary. I don’t know which not-for-profits Phil is alluding to but they certainly don’t describe the environment I work in.

  29. sa

    February 17, 2006 @ 12:32 pm

    29

    Great article. I think I’d agree with most other people & say retirement (ie. not working) isn’t the real goal — it’s finding other employment that’s more fullfilling than what you were doing before. And employment is any activity that you devote time to, paid or not. So I’d argue that your teaching & writing leaves you pretty well employed!

    As for the non-profits, I don’t know if I’d peg ALL non-profits the way you have. However, as a person who does review applications from institutions/non-profits for funding from a family trust, I am often appalled at how much overhead is salary and how little money is actually spent on what the non-profit was set up to do. Then again, I’ve also noticed that many people don’t actually take a look at an institutions balance sheets before investing/donating…

  30. Terry

    February 17, 2006 @ 7:56 pm

    30

    I HIGHLY recommend “Yes, You Can Still Retire Comfortably” by Ben Stein and Phil Demuth. It is the best book on investing for retirement and income that I’ve come across, plus has some advice on other life choices from college years to well after retirement.

    The web site http://www.stein-demuth.com/ provides links to the book and other retirement and investment resources.

  31. BadBilly

    February 20, 2006 @ 10:11 am

    31

    Phil-I agree with the people busting on you about non-profits. I’m sure there is a boatload of truth in what you say, but…How about spending 1 hour a week with Meals on Wheels or volunteering at a soup kitchen? Exposure to the less fortunate sods helps one keep in mind that we could have been born in India or Africa (etc., etc.)with the exact amount of brainpower, charm, and good looks and been a dirt farmer with no chance of escape…proper perspective can and should be a powerful tool for achieving happiness….

  32. Emile

    February 23, 2006 @ 9:20 pm

    32

    Hey Philip;

    I sense you are a kindred spirit. I stumbled on your web site because I love dogs and photography. The “Early Retirement” piece was the icing on the cake.

    I think of “early retirement” not as retiring from work, but as an impending opportunity to change tracks… to do something else as an occupation…. something that I have more passion for. I think we can all expect to live a long time and it’s not unreasonable, with the gradual gain of perspective and maturity, to want to try something else. Maybe we have discovered, through experience, that we have a passion other than that which launched our careers. ( Why not, everything else around us changes and evolves )

    I’d like to see you add a discussion of how one can gracefully make that transition.

    My specific dilemma is how can I evolve over to that (lower paying) passion sooner, rather than later.

    A helpful book is “Second Acts”, by Stephen M. Pollan (c) 2003 Harper Collins. “Second Acts is a guide to reinventing your life”

    thanks… Emile

  33. Emile

    February 23, 2006 @ 9:21 pm

    33

    Hey Philip;

    I sense you are a kindred spirit. I stumbled on your web site because I love dogs and photography. The “Early Retirement” piece was the icing on the cake.

    I think of “early retirement” not as retiring from work, but as an impending opportunity to change tracks… to do something else as an occupation…. something that I have more passion for. I think we can all expect to live a long time and it’s not unreasonable, with the gradual gain of perspective and maturity, to want to try something else. Maybe we have discovered, through experience, that we have a passion other than that which launched our careers. ( Why not, everything else around us changes and evolves )

    I’d like to see you add a discussion of how one can gracefully make that transition.

    My specific dilemma is how can I evolve over to that (lower paying) passion sooner, rather than later.

    A helpful book is “Second Acts”, by Stephen M. Pollan (c) 2003 Harper Collins. “Second Acts is a guide to reinventing your life”

    thanks… Emile

  34. Chai Life

    January 20, 2007 @ 5:38 pm

    34

    Might be interesting to get your take on splitting time between 2 close states; 1 with no [or low] income taxes and the other: where you really want, or have, to live. E.g. Nevada/California, New Hampshire/Massachusetts. Has anyone here tried this? What are the tradeoffs? California is pretty strict about checking on ex-pats, to see if they really spend 51% of their time in Nevada. Any ideas for tax strategies such as this? Nice to save 9% tax…

    C.L.

  35. Chai Life

    January 20, 2007 @ 5:41 pm

    35

    Phil,

    BTW, great site. There are a lot of us trying to combat the ennui that early weath provides.

    C.L.
    (A PP-ASEL, living in SoCal)

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