I’m a completely 100% risk averse person. This is a bit of a conflict when it comes to the topic of early retirement. I’m not totally comfortable with the 4% rule, and I think there is too much unpredictability in life and the economy. This is totally about my comfort level (or lack of) with risk, and my confidence in my ability to generate an income, if needed, in retirement. I think about that a lot as Mr. LSF and I work on hashing out our early retirement escape. One interesting solution is dropping down to part time work.
Mr. LSF and I are fortunate to both pull in pretty good salaries as engineers, but we’re also realistic about our prospect to grow in our careers. Neither of us have an interest in climbing the corporate ladder, nor do we have the personalities for it. We also both enjoy relatively low stress positions that don’t require us to work crazy hours, something we value and appreciate, but is also reflected in our salaries. We could certainly find other engineering positions that are higher stress with longer hours, but with a higher payout. With our current salaries we are able to live comfortably frugal with a reasonably high savings rate. Unfortunately, at our saving rate and current annual expenses, it would take longer than we would like to reach FI.
It’s worth noting that we could still reduce our annual expenses, and in turn increase our savings rate. I think we will continue to do that, to a point. There are some things, such as travel and certain family obligations, that we’re unwilling to give up in our pursuit of FI. This is a topic that is probably worthy of it’s own post, so I’ll leave it at that.
With all this in mind, we’ve been starting to play with the idea of eventually downshifting to working part time in our current positions. The more I think about working part time, the better it sounds. The thought process behind it is that we’d continue to work full time and save at a high rate for some period of time, probably in the ballpark of 5-8 years. Once our 401k’s and taxable investment accounts are built up, we could transition to working part time. We would still be contributing to our 401k’s at that point, but at a lower rate, and would likely stop investing in our taxable investment accounts. However, we also wouldn’t withdraw any funds from our investments and savings. We could live off of our part time salaries, still contributing modest amounts to our 401k’s, and let our investments grow grow grow until we’re ready for full retirements.
My hope for this is that part time work will strike a balance for us. It will give us more time away from work to do the things we want to do, while still providing the security that comes from a steady paycheck. There’s still some risk here though. What if part time work is still a significant drag on us, and by going part time we’ve lengthened the overall time it takes us to reach a point where we can fully retire?
A few additional benefits of working part time:
- Employer sponsored health care, which eliminates a big question mark in early retirement of how expensive and variable is purchasing private health insurance.
- Maintain our current indulgently frugal lifestyle by living off our part time salaries with modest contributions to our 401k’s.
- Greater ability to go back to work full time if sh*t really hits the fan, something that would be hard to do after you’ve been fully retired for awhile.
- Keep us busy. While I love the idea of being fully retired ASAP, 50+ years of not working is a lot of time to fill. There are so many things I wish I had more time for now, but I do worry if I will be able to productively fill all of my time over the long haul.
- Flexibility to fully retire at an opportune time in the market. Since we’d be working part time, hopefully we would be able to patiently wait to fully retire during a period when the market is strong. Or maybe timing will be in our favor and the market will be strong when we hope to retire full time. No one can know.
One thing I have to remind myself of is that working part time wouldn’t just be about continuing to pad our investments for going into full retirement early. Although that is definitely something we’d be looking to do. When I think about working part time I start thinking about how quickly we can get out of working part time and into full retirement. Really though, working part time is a risk mitigation tactic, and a stepping stone to full retirement. It would make our journey to full retirement longer, but also hopefully more enjoyable.
This whole idea is hinged on my work allowing me to do it. There are a handful of people who work part time, but I’m not sure what the process is to get to that point. Working part time is still in the idea phase, and really our financial plan is still in the works over all.
What do you guys think? Do any of you work part time?