One of my favorite Jeff Bezos ideas that has been quoted frequently, is to think long term on your goals. If you are only thinking about the next 3 months you have tons of competition. If you are thinking about 5 years, 10 years from now, the crowd disappears. We are wired for instant gratification. 11 years ago I learned how the compensation system worked at a job I had just been hired for and I charted a course to make a lot of money in a short amount of time…about 10 years in the future. Thanks to that I’m at a great point in my career now, and I am setting myself up for the perfect semi-retired part time job.
When I think about retirement and financial independence its all about buying time. Most people work 8 hours or more a day, 5 days a week, 50 weeks a year for around 45 years. No thank you. The idea of stopping work completely and having all 24 hours a day, all 7 days a week, all 52 weeks a year to myself is an intriguing one, but there may be a better balance. Doing some work keeps you as a productive member of society, helps with being “stealth wealth”, prevents you from drawing as much on investment accounts, and can keep you mentally and socially engaged.
Option 1: No Work: This is classic retirement. Save up enough assets to never work again and have full control over every day of your life. Winning.
Option 2: Part time work: Part time work is working less than 40 hours per week all year round and typically doesn’t come with benefits. One of the main problems with part time work is that once management discovers that you are a competent human they tend to schedule you for more hours and pressure you to take on more responsibility. Another problem with part time work is that many part time jobs tend to pay less than full time jobs. I know of several semi-retired people who left jobs where they had been earnings an equivalent of $20+ per hour plus benefits, and then went to work part time jobs at half that rate. This is the wrong way to go on the scale. Now let’s look at time off. Sure, working 20 hours a week instead of 40+ gives you a lot more time, but is it how you need it? What if you have to work 4 days a week every week to get those 20 hours? You really only bought yourself 50 days of time throughout the year. Sure having a long weekend every weekend is a nice perk, but you’re making maybe a quarter of the money and still working 80% of the days. Even though the days are shorter, it still keeps you from fully enjoying that time.
Option 3: Intermittent Work:
Intermittent work is doing something now and then whenever you feel like doing some work. For some people this is a side hustle, for others it is a collection of temporary jobs. It’s always good to have the door open to potential intermittent work, but it isn’t something to depend on fully.
Option 4: Scheduled Temporary work:
Projects that are scheduled with a definite start date and a definite end date. These can be planned around and can give you the most total days of freedom. Additionally temporary projects need educated specialists to be successful and often offer long hours. This is the type of work I prefer. Personal Finance bloggers often recommend setting up multiple streams of income for retirement, and I think one of these streams should be temporary work, as long as it is actually temporary, and high paying.
What I Do:
I work outages at nuclear power plants. Most plants shut down for refueling on an 18 month cycle and are down for about 30 days. During this time an immense amount of maintenance work takes place to keep these plants running in good condition for the next 18 months. Nuclear plants are base load plants and it is a big deal if they have to shut down for unplanned maintenance. During these refueling outages most maintenance workers are working 12 hour days for 6 days a week. Typically contractors try to string together 2 -4 jobs each season. Plants tend to only have refueling outages in the spring and fall, giving most workers the summer and winter months off.
When I worked my first outage for $14 per hour I learned the pay scale for each position our company had, and how many hours the people in those positions work. I learned that eventually I could earn up to $27 per hour with that employer, if I became a “topped out” supervisor. As people left for other jobs I moved up, it took me around 8 years to reach that level and in the few years since then I have gotten a few bumps over that level. For the past 11 years I’ve been cultivating the perfect temporary job for retirement.
For an outage at my home plant I work 3 weeks at 40 hours per week to prepare for the outage, 2 weeks of 52.5 hours for our online portion of our work, and 4 weeks at 75 hours per week. In this 9 week span of time I can earn over half of our yearly expenses on our retirement budget (once the house is paid off and we are no longer funding retirement accounts).
In total, that’s 525 hours, or 1/4 of what most people work, but it’s only 17% of the year. There’s still 43 weeks left of the year to do whatever I want with. Since outages are every 18 months and my home plant has 2 units once every third year there will be a dual outage year. Then I will be working 18 weeks, having 34 weeks off, and earning over 100% of our expenses. Over the long term this averages to a total of 700 hours per year of work.
What I’m Cutting Now:
Right now I’m dropping to around 26 weeks of work. I had been working closer to 39 weeks for the past 4 years. This change will result in me dropping my lowest paid contract job. The job lasted roughly 12 to 13 weeks and represented around 15% of my yearly earnings. Cutting a third of my work weeks out and only losing 15% of my earnings is a pretty good deal. I think most people would take a 15% pay cut if they could get 12 weeks extra of vacation a year.
My dad is 54 and plans to retire shortly when he turns 55. He is financially secure and the main reason he is still working is to get access to his 401K without having to jump through the SEPP rules. He only gets a couple weeks of vacation time per year from his employer and they won’t allow him to take UNPAID time off. He can’t take a pay cut for more time off, it’s just not an option. Building a career that allows that option is highly important.
For the last 3 winters I have worked as a maintenance supervisor for the facilities department at my local plant, with the primary activity being snow removal. Leaving this position is the right thing for me for several reasons:
1. As mentioned above taking a 15% yearly pay cut is well worth 12 extra weeks off per year.
2. Mrs. C.’s has taken a job where she will be working 5 days a week instead of 2. This would make me working full time during the winter more difficult.
3. This is a night shift job and working nights is extremely difficult with young kids. I have done a LOT of night shift work and at this point in time I value my sanity more than the money. Besides working nights in the winter these past 3 years I worked exclusively at nights for my main contracting job between 2006 and 2014.
4. The job didn’t have any room for me to move. I was stuck at my pay rate. Every other job I’ve worked at I’ve been able to get a decent bump in pay over time. In the 3 years I worked there my pay was static.
5. My outage season is actually starting a couple weeks earlier the next 2 springs. I’ve already been leaving in mid February with is a difficult sell. Now leaving in late January would defeat the purpose of the position since I would be missing half of the winter snow season.
What if you could earn 1/2 of your yearly expenses in 8 weeks?
Instead of withdrawing 5% from your nest egg, withdrawal 2.5%, allowing your nest egg to grow much faster, and you still have 10 months of the year off, which is 21X the amount of time off your average worker gets.
Starting with a $600,000 portfolio earning 8% per year, taking a 5% withdrawal would result in a balance of $806,000 10 years out and $934,000 15 years out.
Starting with a $600,000 portfolio earning 8% per year, taking a 2.5% withdrawal would result in a balance of $1,020,000 10 years out and $1,339,000 15 years out.
Clearly working a little bit allows your nest egg to grow much more, even in a relatively short time frame.
The Joy Of Working Less; Why We Are Squandering Our Productivity Gains
87 years ago economist John Maynard Keynes postulated that future generations in 100 years will work just 15 hours a week and our primary problem would be figuring out how to occupy our time.
“For the first time since his creation man will be faced with his real, his permanent problem, how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well.”
(BTW I am not advocating for Keynesian economics, I’m just pointing out that it was theorized that we would be able to live without work as our primary activity in life for the first time in all of human history, and in truth if we REALLY strive for it we can do just that)
“Now it is true that the needs of human beings may seem to be insatiable. But they fall into two classes – those needs which are absolute in the sense that we feel them whatever the situation of our fellow human beings may be, and those which are relative in the sense that we feel them only if their satisfaction lifts us above, makes us feel superior to, our fellows. Needs of the second class, those which satisfy the desire for superiority, may indeed be insatiable; for the higher the general level, the higher still are they. But this is not so true of the absolute needs – a point may soon be reached, much sooner perhaps than we are all of us aware of, when these needs are satisfied in the sense that we prefer to devote our further energies to non-economic purposes.
Now for my conclusion, which you will find, I think, to become more and more startling to the imagination the longer you think about it.
I draw the conclusion that, assuming no important wars and no important increase in population, the economic problem may be solved, or be at least within sight of solution, within a hundred years. This means that the economic problem is not – if we look into the future – the permanent problem of the human race.
Why, you may ask, is this so startling? It is startling because – if, instead of looking into the future, we look into the past – we find that the economic problem, the struggle for subsistence, always has been hitherto the primary, most pressing problem of the human race – not only of the human race, but of the whole of the biological kingdom from the beginnings of life in its most primitive forms.”
I argue that we are on the precipice of this moment. Despite the doom and gloom of the media about the new retirement age being 70, we are not so doomed. More 30 year olds, 40 year olds, and 50 year olds are retired now than at any point in human history. The average person can pay for his yearly food faster than at any other point in history. Yes we may feel the need to work forever if we choose to live in Mcmansions and drive $40,000 vehicles that we switch up every few years, but by and large it is possible to live the vision that Keynes wrote about today, as long as we keep our second class “needs” in check.
So many people focus on building their career to make more money, while I focus on building my career towards working less. I still want to make more money on an hourly basis, but I’m at the point now where more money will not increase my happiness as much as more time will. I just read an interview in GQ magazine featuring Aziz Ansari. When he was asked if he felt the need to keep making projects he replied:
“I was talking to a friend of mine the other day. We both have more money than we ever imagined. And I was like, Can you imagine if someone called us a few years ago and said, “All right, you’re going to have this much money when you’re this age. What are you gonna do with it?” You would say all sorts of fantastical things, right? No one would say, Oh, I would figure out how to make more money and keep working all the time. Everyone just buys into this, like, Oh, I need to keep making stuff, I need to go make more money. I don’t need to make more stuff. I’ve made a lot of stuff! I’m financially okay. I’m not gonna make stuff just for the sake of making stuff. I want to make stuff ’cause I’m inspired. Right now I don’t really feel inspired.”
I think this sums up the human brain quite nicely. We are hardwired to produce, even if we don’t need what we are producing. One of my coworkers mentioned that he plans to be done working at 55 and another guy said “What the heck are you gonna do with yourself?” I replied that of all the problems to have, that’s a pretty good one.
What The Heck Will I Do With My Time?
For the past 10 summers I have not gone to work. Wow, that sounds amazing to say, but it is 100% true. I also didn’t go to work for 5 of the past 10 winters, so I have some practice with having my days free of work. I have four boys that I will certainly spend a good deal of time with. They are 14, 8, 6, and 4.
I also plan to do some volunteer work for my kids pediatrician. He has a few community gardens set up throughout the city and always needs some extra hands. He also is working on setting up a youth shelter and I may help with some repairs on the building.
I plan to exercise more and get in better shape. When I was a teenager I loved in line skating and mountain bike riding, two things that I have done very little of as an adult. Now that I will actually have time off while all of my kids are in school, I can do some of that.
I plan to plant trees and grow a food forest on my land.
I plan to grow this website and help more people reach financial independence.
I plan to hike at state parks more and go to the beach more often.
I plan to read more.
I plan to not worry as much. I tend to have a fair amount of anxiety and stress and not having to go to work and not having to worry about money certainly help to alleviate that.
When I was a kid I remember telling my dad on a long car ride what I was going to do if I was a millionaire. I can’t remember what I said, but I’m sure they were fantastic ideas like flying my private helicopter and swimming in money like Scrooge Mcduck. I remember my dad saying, something to the effect of “spending a million is really easy to do, what’s hard is earning a million. Spend some more time thinking about how you will do that.” Now that I’m well on my way, having crossed a quarter mil net worth last quarter I certainly view money differently than as a child. Rather than a private helicopter being my status symbol of choice, summers and winters free from work, and of course a paid off house are mine.
Well, that blog post turned into a rant, oh well, it’s my blog and I’ll rant if I want to! Here’s the million dollar question; If you could take a 15% paycut for 12 weeks of vacation per year would you? Even if it meant delaying reaching complete financial independence by a couple years?