The Benefit of Half Retirement
The Benefit of Half Retirement
I have a secret. I don’t need to work anymore. Based on my calculations, I should be able to weather most post retirement sequence of returns scenarios. I am truly financially independent. Yet, as you can tell, I have still decided to put my hours in at what most would consider a W2. Although, as a contractor, I have much more control over my life, it is still a job. Plain and simple. I am employed. While this may seem contradictory in this community, the benefit of half retirement far outweighs the risks.
If time is a commodity that can’t be bought, how do I justify spending some of mine in such a manner?
Purpose, Identity, and Connection
I have written much about leaving medicine to pursue a life as a writer, podcaster, and public speaker. Financial independence has given me the ability to concentrate on my unique purpose, identity, and connection. Medicine wasn’t filling those needs, so a transition was quite appropriate.
It would be a mistake, however, to say that doctoring should be completely banished from my sense of purpose. It wasn’t the practice of medicine, but rather the stress, guidelines, and compliance based atmosphere that was making me so miserable.
The benefit of half retirement is that I can concentrate on all the identity affirming aspects of the profession, and drop everything else. Hence the move to hospice. I am a doctor, to deny that would not lead to greater happiness or fulfillment.
Over the years I have built a community around myself based on this profession. My work in hospice allows me to continue to build connection with nurses, social workers, chaplains, CNAs and administrators who are all mission driven. We have common passions and goals.
These are my friends.
Risk Mitigation
The benefit of half retirement is that it is not the one more year syndrome. As opposed to being driven by fear, my choice to continue working is based much more on the positive aspects of employment. This is part of my life’s work.
But, I would be remiss not to mention the benefit of risk mitigation. I have talked in the past about all the different asset classes. We all consider stocks, bonds, and real estate as part of a smart diversification plan. Should we think about the W2 asset class any differently?
As I have said in the past, a good financial plan has at least four legs. My hospice work is one of those legs.
The Fatest FIRE
I am definitely a proponent of FatFIRE. I simply don’t want to have to budget. Or plan. Or worry about travel hacking. If my rental properties go a few months without being rented, I don’t want to stress. I want to live a post financial independence life where I think about money as little as possible.
My W2 income is like an extra. Given that I have my own perpetual money machine consisting of the other asset classes, whatever I make at work is completely play money. I can do with it whatever I want guilt free.
Why travel on a budget? Why bargain shop? The benefit of half retirement is that you don’t have to.
I can easily afford luxury if I want to.
Final Thoughts
For those out there who hate their job, I think full retirement is reasonable as soon as financially possible. For the rest of us, the benefit of a half retirement should be considered. It has allowed me to hold on to the parts of being a doctor that reassert my purpose, identity, and connection. It has helped me both risk mitigate, and also afford a life with even less money worries.
Why ever wouldn’t you consider such a path?
I like your thoughts and have a similar approach.
I’m at the edge of FIRE, and by some calculations, could stop working if I wanted to. But if I did, I would have to live within a tighter budget (cutting coupons and other hacks) than I really want to. I find I make very good use of my paycheck and won’t stop working until the mortgage is paid off (among other things). I have a new baby as well, and I want to make sure his 529 is fully-funded and we don’t run out of diapers.
In addition, I’ve worked very hard, and continue to work very hard, at becoming a knowledgeable and effective physician. Mastering the art of medicine is an impossible goal for one lifetime, but I’m better at it now than I ever was. It would be a shame to quit just when I’m starting to develop better skills and some comfortable competence.
After working locum tenens for many years, I finally found a terrific “full-time” job where I work 7 on/7 off. I work 24/7 on the days I’m on, so it’s not really half-time. But for someone who used to work much longer hours, it feels “half-time” to me!
This half-time schedule allows me to keep writing as a medical journalist and have more relaxed “at home” time. At the end of the 7 days, I can jump off the treadmill, and after 7 days off, I’m ready to jump back on.
Locum tenens is a one tool to achieve this part-time retirement. I address this option in my book, “The Locum Life: A Physician’s Guide to Locum Tenens.” I’m reviewing the final proofs this week and hope to see the book on Amazon by the end of January. I think the information the book contains would help physicians considering the locum tenens option to achieve FIRE and work/life balance.
Locums is a good option to stay in the game. Good luck with the book.
DocG,
I have lived this lifestyle since 2004. I can tell you that it has been freaking wonderful. There are few situations where I see a physician needing to quit Medicine entirely.
For those NOT defined by their work, Medicine offers immense flexibility. If you do not like what you are currently doing in Medicine- change it slightly.
Medicine does not owe you a wonderful life. It is up to ourselves to sculpt it using Medicine as a large brick in the foundation.
I agree. Medicine can be quite flexible. People forget that.
I think FIRE is smoke and mirrors. The original study was a back tested analysis of how much do you need to generate a certain income over the course of 30 years and not fail. So you quit at 60 and need to survive till 90. With no leverage you need pile defined by (yearly need * 30yr). The 4 x25 “formula” uses a tiny bit of leverage. You save 25 x yearly need and as you spend it down you expose the dwindling pile to a little risk premium and over the course on the average you can make your pile spit out 30 years of need. The original study was based around a 2 fund 50/50 stock bond portfolio. Then comes FIRE
In FIRE you work 10 years and need to cover 50 years. A very different proposition. This position is extremely levered. Above you had 25 years of dough and 30 years of need so you were 83% of the way home start, only 17% left to generate over a 30 year run. Mr FIRE has nowhere near 83% of need covered, probably more like 30%. So over the course of 50 years he has to make 70% more cash from his measly million. The risk profile between these two situations is stark. One is levered out the wazoo the other just a bit. There are 3 ways to pay off the leverage on your life. You can be a profitable owner and collect rent or premium or interest on your pile as you spend it down, freeing up your time, or you can use your time to work and generate income to pay down the loan on your future, or win the lotto. FIRE is a big distortion of the original premise. FIRE carry’s much risk of failure. FIRE portfolios tend to NOT focus on risk but on return since return is what is needed to pay off the mortgage on the future. Bad move. If you size your pile properly and risk your pile properly you can develop a plan with 98% chance of success using modern statistical financial tools. I’ve dome a LOT of work on this and it turns out 50/50 is pretty optimum. If you MMM it with “shockingly simple math” you leave yourself open to a nasty shock also known as failure. Risk mitigation is precisely the reason people half retire. The money doesn’t go to pin ball it goes to paying down the excessive leverage of “retiring early”. It just looks cooler to pretend to be so wealthy you don’t need to care. Nobody cares until the market drops 6%, why is that?
I agree that extreme early retirement has some real risk mitigation worries. The good side, is that most FIRE proponents find plenty of ways to make money in “retirement”.
Nothing against FIRE but you can’t optimize a portfolio if you’re living a “narrative”. It’s the portfolio not the narrative that buys the hamburgers