Mini-retirements and work: A how to guide.

Mini-retirements and work: A how to guide.

Based on the huge response to my initial “Mini-Retirement” post, I think I can safely draw two conclusions:

#1: There are A LOT of you who don’t buy into the “save the best for last” philosophy of retirement.  No surprise here.  IR readers are all about living intentional rather than conventional lives.

And…

#2: While you love the concept, some of you are a little uncertain how to make it work for you.  In other words, the “want to” is there, but the “how to” is a little fuzzy.

The comment I heard most went something like this: “I love the idea, but I don’t think I could make it work because of my job.”  Fair enough.  I’m fairly attached to my paycheck too.  The good news is that living an interesting life and doing meaningful work aren’t mutually exclusive.  If you want to make it happen, you can.  Below are some ideas to get you thinking how.

Making mini-retirements work with work.

Note: Not every idea will work for every person, but I’ll bet there is more than one thing on the list that will work for you.

Take the easy wins.  Many of us have a certain amount of paid vacation and sick time each year.  Some companies even allow you to bank unused time year after year.  Rather than spreading those days out in one or two day increments throughout the year, take it all at once.  For many, this idea alone will be enough to move mini-retirements from pipe dream to possibility.

Rearrange your hours.  Some jobs have a great deal of flexibility.  Others are a bit more rigid and follow a basic formula of trading time for money.  For those with the latter, your employer’s primary concern is that you’re putting in the hours and doing the work.

A full time job is usually 2,000 hours per year: 40 hours per week for 50 weeks with a 2 week vacation.  What if you flipped that equation and worked 50 hours per week for 40 weeks and then took 12 weeks off?  Not sure your employer would go for it?  Propose 43.5 hours per week for 46 weeks and then take 6 weeks off.  Or even 41.7 hours per week for 48 weeks and then take four weeks off.  With any of those options your employer is paying you exactly the same amount of money, you’re working exactly the same amount of hours and you’ve got time each year for a mini-retirement.

Ask for your raise to be paid in time off.  Companies have been watching their pennies pretty closely since the meltdown in 2008.  Consequently, your boss might not be very receptive if you ask for a raise, even if you deserve one.  You could probably improve your odds if you ask for that raise to be paid in time off instead of dollars.  It’s a win-win.  The company keeps a lid on expenses and you get more time off.

Optimize your schedule.  Many of us have jobs where we’re not doing the exact same thing day in and day out.  There is an ebb and flow to our tasks and responsibilities.  We have busy times and slow times throughout the year.  Times that require a lot of face to face interaction and times where any old computer and phone will suffice.  My job is a lot like this.  It gets busy and interactive during client reviews or when I’m doing seminars, but summers and holidays are usually dead.  It wouldn’t take much for me to rearrange my schedule so that the things I need to be present for are all concentrated in certain months and the things I can do remotely are shifted to a mini-retirement month.  This is a good option for those who want to take extended time off while still maintaing momentum at work.

Batch tasks.  Improved productivity means that you can do the same amount of work in less time.  If you have one of those jobs that is more focused on completing certain tasks rather than putting in certain hours, batching can be a big help. Most of you probably already use batching when you do things like pay bills.  Rather than grabbing your checkbook every time you go to the mailbox, you save up that month’s bills and then pay them all at once.  Are there parts of your job that you can batch in order to be more efficient?  Once the work is done, what’s keeping you behind your desk (besides inertia)?

Use technology for location independence.  For many of us, our jobs are perfectly designed for the people who did those jobs 10 years ago.  We commute to a special building and then sit in a fabric covered box (cubicle) so we can use a computer and a phone (sounds glamorous!).  Technology has made the building and the box, if not obsolete, at least less important.

We still need the computer and the phone, but technology like Skype, Go To Meeting, wireless internet, cloud computing, instant messaging, Google Voice and collaboration software (e.g. Asana, BaseCamp) have made it possible for many of us to do some or all of our job from just about anywhere (a.k.a. location independence).

Being gone for a year might not be realistic, but would it be possible to take a month or two off and use technology to keep up with important projects and deal with urgent issues even while you’re gone?

Negotiate a remote work agreement.  According to Forrester Research, more than 34 million people work remotely.  That number is expected to hit 63 million by 2016.  I’m skeptical that most bosses would be ok with you working in your pajamas from home 365 days per year, but if you combine this idea with one or more of the previous ones, I’m guessing that a reasonable boss would be willing to allow you to work remotely for a fixed period (say 6 weeks) and only count part of that time as vacation.

Sacrifice.  All of the options up to this point involve still getting your paycheck.  If you didn’t find something on the list that works for you, maybe it’s time to take more drastic action.  This could include taking unpaid time off or quitting/changing jobs altogether.  Obviously, that’s a little more painful because it involves change and sacrifice, but I think it’s important to ask yourself this: “If my current job keeps me from living the kind of life I want to live, should I really stay there for the next 10, 20 or 30 years?”  If the answer is no, a change may be in order.

Putting it into practice

Anytime you’re trying to wrap your mind around something that is unconventional and complicated, it’s helpful to know that it’s possible.  That’s why it’s been so encouraging to me this week to hear how some of you are working to make mini-retirements a reality.  There’s the couple planning to move to Spain for a year with their kids.  There’s the family who, after reading my initial post on mini-retirements, read it aloud at the dinner table and had a mini-retirement to New York booked by the end of the week.  There’s the friend who is consistently updating me while living in the Congo for three months as a volunteer for Mercy Ships.  These stories and more are good reminders that, with a little planning and effort, we don’t need to defer our dreams until “someday.”  I hope you’ll join in with the rest of us.  Feel free to leave a comment or question on the site and touch base with me if there’s ever anything I can do to help.

Have a great week!

~ Joe

The case for mini-retirements

The case for mini-retirements

What is a mini-retirement?

Long-suffering readers know that I have a bit of a different take on retirement than most. Where others see something based on age or assets, I see something based on control. Where others see a life-stage, I see a lifestyle philosophy.

After all, why should living the life you truly want to live depend on how many birthdays you’ve had or whether or not you punch a time clock?  How in the world has it become acceptable to defer your dreams and push the best things in life to the very end?

The concept sounds great, of course, but how do you do it?  I’ve offered some ideas before (for example, here, here and here), but I’d like to expand on an additional idea that I’ve only briefly mentioned in the past: Mini-Retirements.   What exactly is a mini-retirement?

With traditional retirement, you save up the good stuff for that 20-30 year period at the end of life.

The idea of mini-retirements takes some of that 20-30 year period (say 5 years), breaks it up into 1-3 month chunks and spreads it out over your working years.  A mini-retirement is longer than a vacation, but shorter than…well…retirement.

As you might imagine, there are a number of benefits to taking these extended periods off:

  • You have time to actually experience a place rather than just visiting the touristy spots.
  • It allows you to enjoy some of the benefits of retirement while you’re still young and healthy.
  • It rejuvenates you and can help you come back to work more engaged and more productive.

I didn’t invent the idea of mini-retirements (I was introduced to it by Tim Ferriss), but the concept fits perfectly with my philosophy here at Intentional Retirement.  Namely that retirement shouldn’t be something that is delayed until “Someday,” but rather it should be an incremental process that is incorporated into your life now.

My mini-retirement experiment

Renting an apartment in Madrid or Melbourne and immersing yourself in the culture for a few months sounds great, but there are a number of challenges.  For example:

  • How do you pay for it?
  • How can you get the time off work?
  • Where should you go?
  • What about your spouse and/or kids?
  • What do you do with your house when you leave?
  • What type of planning is involved (e.g. housing, airfare, language barrier)?

To answer those questions, I plan on researching and writing a series of posts and then scheduling a mini-retirement for myself by the end of next year (You may have noticed a few of them on my 50-by-50 List).  As some of you know, I’m working, married and have an 8-year-old daughter, so this will be no small task.  I don’t yet know where, when or how, but I know why and as faithful readers know, why is half the battle.

So follow along and let’s figure it out together.  I’d love it if some of you were inspired to do something similar.  Feel free to email me questions or leave comments in the articles about your own thoughts and planning.    It’s always easier to tackle big goals when you have company.

Hope to see you on the road.

~ Joe

P.S. Have you read the IR Manifesto A Brief Guide to Retirement Bliss?  If not, you can download a free copy over here.

Photo courtesy of Mihhailov.  Used under Creative Commons License.
15 practical ways to live a purposeful life.

15 practical ways to live a purposeful life.

Earlier this week I talked about how time usually opens doors between the ages of 0 and 21 and then starts to close them from 21 on.  I promised a follow up email with some ideas on how to maximize your time and opportunities.  Here are 15 practical ways to live a purposeful life and get things done before time closes the door.

(BTW, I added a few pictures from a recent trip to Washington as inspiration.  If they cause the email to display incorrectly, just click the title above and you can view the post in your browser.)

  1. Know your “Why.”  If you don’t have a good answer for “why” you won’t have much success with “What” or “How.”
  2. 80/20 your life.  Pareto’s Law says that 80% of your results will come from 20% of your efforts.  Look at every area of your life from your work day to your wardrobe; from your friendships to your finances; from your possessions to your future plans.  What if I told you that you had to cut 80% from every area?  What 20% would keep?  More than likely, that is the 20% that will make the biggest impact on your life.  Focus on those “Big Wins.”
  3. Don’t let meaningful dates sneak up on you.  On January 1st of each year, print out a list of holidays, birthdays and other special occasions.  Next to each one, jot down some ideas for how you want to spend that day and what you need to do in order to prepare.  Once December 31st rolls around, time has closed that year’s “doors” for good.
  4. Always know “What’s next.”  What are the key things you need to do at work tomorrow?  What is the next trip you’re planning?  What is the next date night with your spouse or activity with your kids?  Don’t just be O.K. with what the day throws at you.  Have an agenda.  To help in this area, I use a free software program called Asana.
  5. Add more time.  We all have 24 hours in our day, but some have more days than others.  If you want to keep time from shutting certain doors, don’t overlook the obvious solution of getting yourself healthy so you can do more things over a longer period of time.  It’s like shoveling sand into the top of your hourglass.
  6. Control more of the time you have.  Each day subtracts from fewer and fewer.  No matter how healthy you are, you won’t live forever.  Once you’ve done your best to add days (see #5), work at controlling more of each day that you have left (e.g. save more to achieve financial independence, be intentional with your free time, outsource as many tasks as possible, negotiate a remote work agreement, etc.).
  7. Focus on milestones (e.g. family, relationships, meaningful work, education, adventure), not maintenance (e.g. paying bills, mowing the yard, worthless meetings, pushing paper).  When you reflect on your life, the milestones will be the things that stand out.  They will be the things that you are most proud of.  The maintenance will just fade into the background.
  8. Given the choice between “more stuff” and “more experiences,” choose the latter.  A life spent in dogged pursuit of rich experiences will usually have a much better payoff than one seeking the latest gadget or gizmo.
  9. Consistently shake up your routine.  There’s nothing wrong with having a place you go for coffee every day or a list of tasks that need to be done each week, but be careful that your routine doesn’t become, well…routine.  Try to live a life where you have 60+ years of great experiences, not 1 year of experiences lived 60 times over.
  10. Create some margin in your life.  One problem that business owners often have is that they spend so much time working IN their business that they don’t have much time to work ON their business.  The same can be true for individuals.  Create margin in your life so you can spend some time every day or every week thinking about and doing things that will actually make your life better.
  11. Schedule the “fun” stuff.  If something is on your calendar, it gets done.  Don’t just schedule the things you have to do.  Schedule the things you want to do and then keep that “appointment” just like you would any other important meeting or obligation.
  12. Make a Bucket List.  You can see mine over here.  If you have specific plans, you’re more likely to follow through with them.
  13. Curate your life.  Your life will largely be defined by what you allow in and what you keep out.  Choose everything—friends, hobbies, work, philanthropy, clothes, vacations, meals, gadgets, books, etc.—with a discerning eye.  Be a tough curator and you’ll have an interesting life.
  14. Dream big.  Daniel Burnham (designer of such small projects as Chicago, Washington D.C. and Union Station) once said “Make no little plans.  They have no magic to stir men’s blood and probably will not themselves be realized.”  When you dream big, it changes how you think and how you act.  It inspires and changes you.  Dream big and have a vision for your life.
  15.  DON’T WAIT!  The longer you wait, the less you believe yourself when you say “Someday.”  Your dreams begin to atrophy.  Your opportunities begin to vanish.  You aim lower.  You talk yourself out of things.  Time begins to close doors.  Before you know it, it’s too late.  Don’t wait.

Your “trying to make the most out the time he has left” blogger,

~ Joe

The funny thing about “Time”

The funny thing about “Time”

Quick note to Gmail users: You may have noticed that Google is making some changes to Gmail and they are putting emails like this one into a “Promotions” folder even though it’s something that you signed up for and confirmed that you want to receive.  To keep from missing emails from Intentional Retirement you can either a) disable the new folders or b) drag this message from the Promotions folder to the Primary folder and click “yes” when Gmail asks if you want to do this to future emails from Intentional Retirement.

Time: The early years.

In the years after you’re born, the passage of time seems to open doors and present you with new opportunities.  At first you can’t do anything but mess yourself and cry when you’re hungry.  Then a little time goes by and voila, you’re walking.  A little more time and you’re talking.  Before you know it, you can drive and you’ve got a curfew that lasts until the small hours of the morning.  You make friends, get involved in extracurricular activities and gradually gain more freedom and control in your life (assuming you don’t make any decisions that cause mom and dad to take that freedom away).

Once you cross into adulthood and become a functioning member of society, you wake up one morning and you realize that “Time” has quietly opened all of the remaining doors and you’ve got the freedom and opportunity to do just about anything you can think of.  It’s an amazing feeling.

Time: The middle and later years.

Then a funny thing starts to happen.  Not long after you can buy a house or legally take your first drink, you come to a door that’s closed.  “Hmmm.  That’s weird.  I thought everything was open.”  Looking around, you see that all the other doors are still open, so you write it off as a fluke.

But as the years continue to pass and you go about living your life, you start coming across other doors that are either slightly ajar, closed or (worse yet) locked.  And that’s when you realize that rather than opening new doors, Time has started closing them.

It’s gradual, but consistent.  Each year Time closes 52 doors marked “Weekends,” one marked “Christmas” and one marked “Birthdays.”  You make decisions that put you into a certain career or location and the doors that you didn’t choose get closed.  Your physical abilities change and doors like “Marathon” or “Learn to Snowboard” that were wide open in your 20s are now marked “Do Not Enter.”  Your kids grow up and doors like “Bike Riding 101” and “Family Road Trip” quietly click shut.  You lose a friend or a family member and the doors to those relationships close for good.  It can all be a bit depressing if you dwell on it too much.

Not only that, but there’s a certain irony to the whole situation.  That’s because society has developed a process called “Retirement” whereby we go through life compiling a long Bucket List of things that we want to do only to arrive at “Retirement Age” to realize that Time has closed many of the doors that we’ll need to go through in order to do those things.

The good news is that there are ways to recognize this process for what it is and maximize your time and opportunities so you can live a life of few regrets.  On Thursday of this week, I’ll publish Part 2 of this email with some practical ideas on how to do just that.

Have a great week!

~ Joe

What is your shot clock?

What is your shot clock?

In the 1950s, basketball had a problem: It was boring.  So much so that NBC passed on airing the finals because they didn’t think anyone would watch.  Why was it so boring?  At the time, there was no requirement for players to shoot the ball.  When a team got ahead, they would do everything possible to slow the game down and burn time off the clock.  They would dribble, pass and basically play a grown up version of keep away.

By 1953, fans, coaches and owners had had enough.  Enter Danny Biasone.  He was the owner of the Syracuse Nationals.  He felt that games were most exciting when each team scored at least 80 points.  He looked at the statistics and found that it took teams an average of 60 shots to get to 80 points.  With two teams per game, that’s 120 shots.  The games were 48 minutes long or 2,880 seconds.  Divide that by 120 shots and you get 24 seconds per shot.

He took his math to the league and “Voila!”, the 24 second shot clock was born.  No longer could teams hold the ball and run time off the clock.  Once a team got the ball they had 24 seconds to take a shot.  How did this change the game?

  • It was much faster paced and exciting
  • Scoring went up dramatically
  • Attendance jumped 40%
  • Players had to get faster and stronger
  • NBC began airing the finals
  • A win was usually always in reach because games went to the last second

What does this have to do with retirement?

Too often we treat time like it goes on forever.  If we aren’t under any pressure to do the things that are important to us, we dribble and pass, but we don’t shoot.  We get bogged down in daily life and tell ourselves that there will be time for that “Someday.”  Meanwhile, the clock keeps ticking down, down, down.  If life were a game, the fans would be booing and asking for a refund.

What’s the solution?  Institute your own version of the shot clock.  Decide what you really want out of life and then force yourself to take action on those things on a consistent basis.  Maybe your clock is based on time, money or some other metric.  Whatever it is, set it up so that it is consistently forcing you to “take the shot.”

Maybe that’s taking a trip every 6 months or learning a new skill every 30 days.  Maybe it’s setting up a weekly date night with your spouse or calling your kids every Thursday.  Whatever it is, set it up and stick to it.  If you do, your life will be richer and more interesting.  You won’t procrastinate as much.  You’ll take more shots, have more wins and be more fulfilled.

Remember that retirement is not based on age or assets, it’s based on control.  We’re all at least partially retired because we all control a certain percentage of our time right now.  What are you doing to make sure that you are a good steward of that time?  What is your shot clock?

Have a great week!

~ Joe

This post was inspired by the “Game Changer” episode of the podcast 99% Invisible.  Photo by Jeffrey L. Cohen and used under Creative Commons License.
The 15 minute retirement readiness review

The 15 minute retirement readiness review

 Quick note:  Greetings from home base (a.k.a. Omaha).  I’m back home after several weeks of travel through Colorado, Oregon, Washington and Vancouver.  While I get caught up, I thought I’d post an article that I wrote recently for Dow Jones MarketWatch.  It has some great info on gauging your progress toward retirement, but my apologies to those of you who may have already seen it.  Stay tuned for more in the coming days as I process some insights from the trip and ease back behind the writing desk.

It’s summer vacation time again and all across the fruited plain kids are pestering their parents with that age-old question: “Are we there yet?”  Any answer other than “Yes” prompts the inevitable: “How much longer?”

When I was a kid, my parents would answer that question with an educated guess or just tell me to quit asking.  Nowadays we have GPS devices which, as near as I can tell, use a scientific process called “Magic” to determine where you are and exactly how much longer it will be until you reach Walley World.

Wouldn’t it be nice to have a similar device that could tell you how close you are to having enough saved for retirement?  Knowing where you are puts your savings into context, provides incentive and lets you know when you need to make adjustments.  A trusted adviser can provide you with a detailed retirement readiness review for your unique situation, but if you want a quick, back of the envelope way to gauge your progress, ask yourself the following three questions:

What will it cost?

We all have different plans for retirement, so there’s no one answer to the question “How much is enough?”  A popular rule of thumb, however, is that you’ll need about 85% of your pre-retirement income during retirement in order to maintain your standard of living.

Multiply your current income by .85.  If you were to retire today, that’s approximately how much you’d need to pay the bills.  For example, if you’re making $75,000 now, you could bid work adieu and get by on about $63,750 due to fact that increased spending on things like healthcare would be more than offset by reduced spending on things like taxes, 401(k) contributions and office birthday parties.

It’s important to note that the 85% Rule is a bit of a minimum standard.  If your retirement plans involve things like expensive travel or hobbies, you might want to plan on replacing a greater percentage of your income to avoid running out of money.  Also, if you’re many years away from retiring, you will want to adjust your income for inflation before calculating the 85% replacement ratio.

How will I pay?

Now that you know about how much income you’ll need, it’s time to take a few minutes to figure out where that money will come from.  Some are lucky enough to have a pension, but most will need to rely on a combination of savings and Social Security to fund retirement.

Recent research by Aon Hewitt shows that a person will need Social Security plus savings worth about 11 times their annual income in order to hit the 85% benchmark discussed earlier and maintain their standard of living through their retirement years.

Charles Farrell did similar research several years ago and concluded that the typical person should aim to have about 12 times their annual income (plus Social Security) saved for retirement.  To track your progress, he suggests having 3 times saved by 45 and 6.5 times by 55.

With that in mind, divide your assets by your income.  What’s the number?  If your goal is to have an asset/income ratio somewhere around 11 or 12, how are you doing?  Are you on track or do you need to make adjustments (e.g. save more, change your asset allocation, work longer, downsize your plans)?

For a more detailed review of your finances, you can download a free Financial Checkup Checklist at www.intentionalretirement.com/checkup.

What will I do?

Money is important, but it’s a means to an end.  As Emerson once said: “The desire of gold is not for gold.  It is for the means of freedom and benefit.”  I doubt that your end goal is to have a bunch of money.  More likely, it is to use that money to have and do the things that bring you joy, meaning and purpose.

Your retirement is more than just a math problem.  Save all you want, but you won’t truly be ready for the next phase until you have a good idea of what you want to do.  Think about your ideal day in retirement.  What do you want to do?  Who do you want to be with?  Where do you want to live?  As you answer those questions, the non-financial aspects of your retirement will come into focus.

So how are you doing?  Are you there yet?  If so, great!  Send me a postcard.  If not, keep at it and continue to gauge your progress until retirement comes into view.