Archive for the 'Family' Category
Wednesday, August 27th, 2008
My mom is trying to organize and simplify her financial accounts, which I applaud. A major part of this is to finally move her orphaned 401(k)s and IRAs into one location. I recommended Vanguard, since that’s where all my IRAs are. She was okay with sticking with low-cost and passive index funds, which is Vanguard’s specialty. They are also known to be investor-oriented and have high client loyalty.
If you intend to buy individual stocks or ETFs, I wouldn’t go with Vanguard Brokerage Services because they are relatively expensive. Open an account elsewhere – check out Zecco, TradeKing, or Sharebuilder.
Make A Phone Call To Old Administrator
There are a variety of ways these rollovers can happen. They may want to know the name of the company you’re going with, and also have some various paperwork to fill out. With some companies, you can request everything be done online. Even so, I think the easiest way is to simply call them and ask them the easiest way to do it (my mom didn’t like having to deal with the old company “Why are you leaving us? You can simply rollover to an IRA here…”).
You have to ask for a “direct rollover”, because otherwise you may be subject to a 20% automatic withholding, taxes, and also penalties. If the transfer can’t be done electronically, the old company will liquidate your account and send you a paper check made out to your new company. Be sure to send the check to your new company within 60 days.
Open An Account At Vanguard
Just go to Vanguard.com, click on “Open an account” at the top-right, and follow the guide. We went with “Invest for retirement” > “Roll over a 401(k) or other employer-sponsored plan” and then “Vanguard® mutual funds”.
Choosing Initial Investments
If you don’t know what to buy yet, just choose a conservative money market fund to get started. One popular option is the Prime Money Market Fund (VMMXX). You can switch into other mutual funds later easily as there are no transaction fees.
If you have over $100,000 in assets at Vanguard, you reach their Voyager level which includes a discounted financial plan. The pitch: “Pay just $250 for a plan developed by a Certified Financial Planner™ from Vanguard—a $1,000 value.” I haven’t actually paid for this myself, so I don’t know how customized it is.
Don’t want mom getting hit with crazy fees! Vanguard charges a $20 annual fee for each Vanguard mutual fund in which your balance is under $10,000. Again, if you are at the Voyager level ($100,000+ in total assets at Vanguard) these are all waived. After that, the easiest way to avoid this fee is to sign up for electronic delivery of documents. Most people are willing to save a potential $20-$100 a year by printing out their own statements.
So now she has a funded Vanguard IRA. Next task is to provide her some investment options which fit within her overall portfolio.
Monday, July 28th, 2008
Money magazine has an article this month about how many married folks don’t know the details about their spouse’s finances. In one study, half of the pairs questioned came up with completely different answers when asked to estimate their family’s income and net worth. Are you and your partner similar? A quiz was included that is designed for each partner to take separately. Here are the quiz questions, as well as the answers that my wife and I gave.
How much money did your spouse make last year, including salary, bonuses, commissions, and freelance pay?
Me: I did the taxes, so I got this one correct.
Her: She was about 20% below my actual gross income last year. She reads this blog, so she know the after-tax and after-spending results, but I guess she underestimated how much in taxes we get hit with. Also, I have variable side-income which is not easy to track.
What’s the last big purchase (more than $100) your spouse made, and how much did it cost?
This is a tricky question. Is this a purchase meant solely for ourselves? Although it’s not like we never spend money, we both had a hard time remembering the last time we bought a $100+ item for ourselves, like a purse or a gadget.
Me: I remembered that she bought a plane ticket for work-related opportunity for $300 yesterday.
Her: She noted that I gave a $100 gift for a friend’s wedding (from the both of us) last week.
How much does your spouse owe, counting credit card balances, car loans and another other debt, aside from your mortgage?
Me: Nothing (correct).
Her: Nothing (effectively correct, if you ignore making money with 0% balance transfers).
What is the current value of your spouse’s 401(k) or other principal retirement account?
Me: About $15,000. This is actually incorrect – it is more like $25,000. I forgot that she had been working at this job for two years already. Oops! This is kind of sad, considering I actually check and record the balance every month in a spreadsheet for our net worth updates.
Her: $15,000. My Solo 401k is actually around $23,000. She admits that this was a wild guess.
If your spouse passes away, how much will you collect in life insurance (counting both workplace and individual policies)?
Me & Her:: We both currently have ~$300,000 each in mostly-subsidized life insurance through work. We have been discussing life insurance in general recently and were looking into getting individual term life insurance policies, although we’ve been “looking” for months now.
Overall self-grade as a couple: B. We weren’t completely clueless, but there is a lot of room for improvement. I think there is a good chance that a lot of people who read this blog have significant others who are not quite as interested in finances as they are. So why not give them this quiz and see how they do? It definitely helped us get closer to being on the same page.
Wednesday, June 18th, 2008
If you’re looking to reduce expenses, why not start with your most expensive category – usually housing. While it can be a lifestyle change, one of the most effective ways to save money is to share a household with others, as it also can reduce your costs in other areas like utilities. In this article The “N” Factor and Retirement Planning, columnist Scott Burns focuses on the financial impact of having kids but also shares a interesting way to estimate how the size of a household affects how much it spends overall:
Here’s the algorithm: The cost of living for a household is the square root of the number of people in the household. So if you are single, your cost of living is the square root of 1 or… 1.
But if you are recently married, your cost of living is the square root of 2, or 1.414. Yes, two can’t live for the price of one. But they can live for only 42 percent more than the price of one. Economists call this “economies of shared living.”
Expanding on this, if you have 3 people then the √3 is 1.73 (73% increase over a single person). But if we are talking about adults and not kids, then it is probably more helpful to simply focus on the effect of each person’s share.
If you’re single and live by yourself, your total cost of living may be $2,000 per month. This includes things like food, transportation, and utilities.
- Get one roommate, and your cost of living is now 1.414/2 = 71% of living alone, or $1,420 per month.
- Get two roommates, and your cost of living is now 1.73/3 = 58% of living alone, or $1,160 per month.
- Get three roommates, and your cost of living is now 2/4 = 50% of living alone, or $1,000 per month.
Using Rentometer, I found the median rent levels for a one, two, and three bedroom rental in my area. (Yes, they are really high overall for the US.) This should provide a quick check for this rule, even though we are just looking at housing. It turns out to be pretty close:
One bedrooms: $1050/month – $1050 per person
Two bedrooms: $1600/month – $800 per person, or 76% of living alone
Three bedrooms: $2175/month – $725, or 69% of living alone
According to the √N Rule, the biggest relative benefit comes when you stop living alone, at a savings of nearly 30%. While it is easy to dismiss communal living, I think it is important to realize that is an option, even if you choose not to go that way. In many cultures even having multiple families living under one roof is common.
Burns also extended this concept a bit in showing us how a retiree can survive on $15,000 a year. Of course, the same idea can also apply to non-retirees. “Cooperation is a wonderful but generally overlooked substitute for money.”
Thursday, May 8th, 2008
My wife got to ride in a single-engine Piper airplane for the first time a couple of days ago, which was exciting for her and scary for me. She even got to fly a little bit. I was surprised she agreed to go since usually I am banned from such “extreme” activities.
This, along with a recent Vanguard article about estate planning, got me thinking. Many of you reading this are the Chief Financial Officers of your households, but would your spouse or partner be able to run things well without you?
It’s funny, right now I don’t feel an urge to buy life insurance (my wife is paid well and does not depend on me for financial support), nor do I feel like I need a will (we are married, so most things would just shift to her naturally), but I do feel like I need to compose some sort of “Financial Will” because currently I take care of most of the finances. In fact, my wife hasn’t paid a single bill since we’ve gotten married! That leaves a lot of instructions to compile…
Where is all the money?
Although she knows where all our major accounts are, I have a lot of smaller accounts. I need to create a list of all financial institutions where I have accounts, what the approximate balances are, as well as a secure system to show her the account numbers as well as usernames/passwords. She already knows where all the bank statements and important legal documents are.
I should also write down all the bills, although this is another reason why I still like receiving paper statements. If a credit card or utility company wants money, she’ll get a letter.
Where do I learn about money?
As for the whole spending less than you earn thing, I think she can handle that just fine. She’s much less familiar with investing, so I would leave her this list of books to start her education. I might change this list later, but I think it offers a decent mix of basic advice and some more slightly advanced concepts.
What if I would prefer professional help?
Let’s say she feels overwhelmed and would prefer to hire a professional. I would encourage her to hire a fee-only advisor who does not work on commissions, and preferably one with a simple passive investment philosophy. I would tell her specifically to avoid names like Merrill Lynch, Ameriprise, and Edward Jones. (There are fine employees at these companies, but the conflicts of interest that exist greatly decrease the chances at finding one at random.)
Although I’ve never met with any of these firms, based on my limited knowledge of their philosophies and reputations, I would give them a shot:
However, these advisors can be very expensive for smaller portfolios, so I would definitely prefer for her learn on her own first. Maybe I would suggest a simple Vanguard Target Retirement fund as an auto-pilot option in the meantime.
How do I keep any passive income flowing in?
Some people may have rental properties, or royalty income, or some other sort of settlement income to preserve. For me, if I die then my day job and freelance income will stop, but this website has the potential to keep earning advertising money for many additional months if not years. I would need a brief manual on how to keep this site up and running (pay the hosting bill!) and who to call if something breaks. Also I would need a list of important contacts to maintain relationships with.
Of course, I would also tell her to read the contents of this site and other sites I link to for more support and advice!
I would also write down a trusted accountant and lawyer, although we already have those within the family. Hmm… anything else?
Friday, May 2nd, 2008
Sound a bit bleak, but this lecture by Professor Elizabeth Warren explores how a middle class family in 1970 differs financially from one in 2005. The full title is The Coming Collapse of the Middle Class: Higher Risks, Lower Rewards, and a Shrinking Safety Net. The actual talk starts at 4:45 in, and lasts about 45 minutes. Via Economist’s View and gbs at Diehards. My notes below.
Starting around 1970, more and more mothers started working full-time. How did this affect finances? Household income indeed went up from 1970-2000 from ~$40,000 to ~$65,000. However, the inflation-adjusted income for employed males actually went down slightly. So the increase was entirely due to the additional women working.
But hey, households are still earning more. Good, right? Next, she crunched some data on what a dual-income, 2-kid family spent their money on in 1970 vs. 2000.
We actually spend less on an inflation-adjusted basis on many things nowadays:
- 32% less on clothing
- 18% less on food – including groceries, eating out, and yes, even Starbucks
- 52% less on appliances
- 24% less on car expenses, per car
Not so fast, we also spend more in many areas:
- 76% increase in home mortgage payments . Surprising, the actual house size didn’t grow that much based on number of rooms (5.8 vs. 6.1). I wonder if this would hold true if it was based on square footage, however, as my research on that indicates a big increase in size.
- 74% more for health insurance, even adjusted for healthy family with employer-sponsored health plans.
- 52% more for cars, since now we have more cars per household. We gotta get to work, right?
- Infinite% more for childcare
- 25% more in effective tax rates, due to higher income
In 1970, credit card debt was 1.4% of annual income for the median household. In 2005, it is 15%.
Finally, we spend a lot more on education. In 1970, you needed a high school diploma to get a good job, which took 12 years of government-provided schooling. Nowadays, the average family pays for 2 more years of pre-school, plus 4 more years of college, all out of pocket.
Net Result: Not Good
Note that the cheaper things are the smaller, more flexible expenses… while the more expensive things are the larger, more fixed expenses. So a family now earns a bit more, but also spends a much, much larger percentage of their income. So much, in fact, that now we need both of those incomes to afford everything we buy. If either spouse loses a job, the family falls behind. Studies show that a family with children has between double and triple the bankruptcy rate of childless households.
I was kind of hoping for some solutions at the end… but none came!
Sunday, April 6th, 2008
We are considering renting a room to one of our siblings temporarily. She’s moving out here for a new job, and since we live in an pricey area living with us will offer her a way to save up some money. On our side, we are two people with four bedrooms, so we have plenty of room right now.
Of course, horror stories abound when renting to family members. I don’t know what to say about that. I don’t foresee it being a problem as we are pretty close, and we are all responsible professional adults, but I’m sure everybody else says that as well. Being that we recently rented a unit from a another family member successfully, I also feel good being able to “pay it forward”.
We would collect “rent”. The idea is that she would pay 1/3rd of all utilities (gas, electric, water, garbage, cable, internet) plus some buffer for other miscellaneous household maintenance items. This obviously will be much less that what it would cost to share an apartment on the open market, let alone a studio. So she’s paying her way, but we aren’t making much profit if any, ideally preventing any guilt or resentment on either side.
The Problem: Fair Rental Price
But then I did some research about the potential tax implications. Is rent always taxable income, even if from a relative sharing a home? From what I can tell, the IRS says yes. (Someone please correct me if I’m wrong.)
However, if I am reading the IRS “Renting to Relatives” regulations right, the good news is that if I rent out the room at “fair rental price”, I can start deducting a portion of my expenses – including interest, taxes, repairs, maintenance, utilities, insurance, and depreciation. This has the potential to offset the rental income completely (resulting in no net tax owed), although I can’t create a loss since it’s my personal home.
The bad news is that if I don’t charge fair market rent, then I can’t deduct anything. 100% of the rental income is now fully taxable as passive income. Having to pay taxes on money that is basically covering the utilities just doesn’t sound right.
From anecdotal evidence, I’m sure compliance is spotty at best in this area. What if a son pays $200/month to live with Mom and Dad? But to fall in line with the rules, it seems like I should either (1) charge something close to “market” rent and maybe buy her a nice gift later or (2) not charge anything at all. My idea was simply have her pay some of the utilities directly. This way I don’t actually accept any money. Any suggestions?
Wednesday, March 26th, 2008
I received a very sad e-mail today from reader Tina:
…A recent crisis with my cat has deeply taxed my savings. [...] I have spent more than $4500 on my pet in the last three months. She developed lymphoma and the initial hospitalization and testing to find out what was wrong accounted for the bulk of the expense. The rest has been spent on follow-up chemotherapy treatments.
I’m curious how you would handle such a crisis (heaven forbid). Do you think you’d ever get to a point where the price was too high to keep your pet alive (assuming doing so will give it a relatively good quality of life)?
I think this is an important topic, but at the same time it’s very touchy because I’ve found that people tend to have very polarized views on pets. Here is a quote from VPI pet insurance founder Jack Stephens:
Pet insurance is a nonstarter for many pet owners, simply because they take a pragmatic approach to their animals. If the cost of treatment got too high, they would choose to put the animal to sleep.
“About half see the pet as disposable. If it got really ill they just wouldn’t treat it,” said Stephens, whose company conducted research on the issue. The other half “were willing to treat, whatever it took.”
Now, I don’t think it’s nearly as black and white as that, as I think most pet owners love their pets to some degree. But the people on the “pets-as-children” camp are often just as militant as the “they’re just animals-not-humans” camp.
A recent Slate.com article subtitled What I wouldn’t do for my cat also addressed this issue in depth. (The editor’s choice response letters are also thought-provoking.) It refers to refusing care due to cost as “economic euthanasia”. From reading it, cultural norms seem to be shifting. But in the end, I think it still all comes down to personal priorities.
What is the benefit? Are you talking about the cat or dog coming back to 100% health like a broken bone? Or are you paying to extend its life by weeks while lying in pain? There is a time that palliative care is the most humane choice.
Where is this money coming from? Don’t just look at the number, look at what you’d be giving up. At $2,000, is this money that would go to a vacation to Mexico otherwise? A new HDTV? Payment on your nice car? Now, let’s say it means you can’t buy gas for work or food for your kids. Different story.
Give it away? I think most vets can draw their own line as to what is “necessary”. So if you’re not willing to pay, maybe you should let one of them handle it:
Recently, I called our vet, Dr. Timothy Mann of Northside Veterinary Clinic in Brooklyn, N.Y., to ask him what would have happened if we hadn’t opted to pay for surgery.
“We don’t believe in putting animals to sleep because of money,” Dr. Mann said. “If someone can’t afford or won’t pay to save an animal who can be saved, we’ll save the animal and then keep it or find it a good home.”
Also, be sure to contact local rescue groups. They will be happy to take your sick dog, and will find some way to pay for the care. We are signed up for rescue lists for our specific breed of dog, and we would gladly take another one in if the need arose.
Plan Ahead With Pet Insurance
One way to avoid such difficult decisions is to buy pet insurance. Although it can be expensive at around $30 a month, it will definitely help soften the blow of a huge unexpected bill (although it likely won’t cover it all). Alternatively, put away money regularly in a “pet health savings account”. If you put away just $20 a month and your animal experiences issues at 5 years old, you’d already have $1,200 + interest to cover it.
My Own Doggie Evolution
I never had any pets growing up due to a broad parental ban. Not even a goldfish! My wife, on other hand, was always surrounded by animals. Rabbits, hamsters, guinea pigs, fish, dogs… When we got our first dog from the local Humane Society nearly 3 years ago, I didn’t really know how I would react. Would I love it? Would I ignore it? I must say that our little dude has burrowed his way into my heart. I mean, how can you say no to this buttercream-covered face?
For us, we would give up just about all of our luxuries before withholding healthcare for our dog. We are both in agreement as well, which is great because I know for other couples it can be a point of great tension. Heck, my wife the fashionista would probably wear a potato sack around while selling our car and taking the bus 2 hours to work every day if it came down to it.
However, if it meant sacrificing the health or safety of an immediate (human) family member, I would think twice. By this I mean taking on a dangerous level of debt, or cutting corners in the essentials like nutritious food, health insurance, and safe housing.
But this doesn’t mean I spend my time judging other pet owners for deciding against care due to high cost. For many people pets are not humans, and there is a line to be drawn. But again, if you can’t or aren’t willing to pay please make sure you’ve considered all your options.
Thursday, March 13th, 2008
Now that we have a fixed monthly mortgage payment for the foreseeable future, we are looking ahead to our true mid-term goal of living on one income. Specifically, we’d like to live on two half-incomes when we have children. We live in one of the most expensive areas in the country. Can we do it?
Both of our incomes are somewhat comparable, so our plan is to actually pretend that only one of us is working, deposit that person’s paycheck into a checking account, and work only from that checking account. The mortgage note, utilities, food, gas, all expenses will be deducted from that account. A reasonable percentage (15%? 20%?) for retirement will still be taken out. I have no idea what a child will cost, but maybe we’ll take out an extra $500 a month for food and diapers as well? The second person’s income will still be dealt with, but just separately.
This way, we will get as close as we can to simulating living on one income. If the checking account starts to shrink too fast, we’ll have to think of ways to cut expenses further. I think this is an interesting idea that could be applied to anyone who wants to stretch into a new financial goal. You may think you can do it, but failure might be costly.
- Buying a new home. Can you afford a mortgage payment that is significantly higher than your rent? You should be sure, otherwise you might be joining the million other people in foreclosure.
- Kickstarting your retirement contributions. Maybe you’re afraid of putting too much in a 401(k) or IRA and not being able to take it out. Why not just use savings account and stick your imagined contributions in there for a while? That way you won’t have to deal with penalties.
- Increasing your debt payments. Some people are afraid to pay off too much debt in case they need the money for later. An emergency fund would help solve this, but also the “pretend” debt account might be a good temporary solution.
- Going back to school, switching careers, etc. Again basically the same idea – how will you react to living on less income?
Thursday, March 6th, 2008
From Washington, D.C. to New York City, from Atlanta to Portland, a huge part of finding a house is balancing the desire to have a shorter commute to work and the higher price tag that inevitably comes with it. Some people live farther away to spend less, while others simply want more house for the same price. I know people who commute 2 hours each way, every day. They are not alone – According to the NY Times, the Census Bureau states that nearly 18 percent of New Jersey workers leave their homes before 6:30 a.m. every day. Nationwide, over 3.4 million workers take more than 1.5 hours to get to work one-way. That’s a 95% increase since 1990.
How do you strike a balance? It’s easy to measure how the housing prices drop the farther you go out. Just look at the MLS listings. As one quote puts it – “Keep driving until you can afford it.” However, it’s harder to measure the many costs of a longer commute.
Increased Car Costs: Gas, Depreciation, Repairs, and Maintenance
The more you drive, the more all these costs add up. Let’s say I want to move 20 miles further out. If I get 25 miles/gallon in commuter traffic and gas costs $3.50 a gallon, and I work 22 weekdays per month, that works out to an extra $120 per month in gas alone.
That also amounts to an extra 10,600 miles of driving each year. So more oil changes, more frequent repairs and other maintenance. Your car might depreciate faster by an extra $1,000 per year. That could work out easily at least another $100-$150 per month.
Treating Commute Time As Unpaid Work Time
Now what if we convert that commute time to actual paid working time. If you earned $30 per hour x extra 2 hours commuting per weekday x 22 weekdays per month x 12 months = $16,000 per year (essentially 25% more). Even if you don’t get paid hourly, there is some value involved. Imagine if you used that time to perform better at work and impress your boss, or if you used it to start a business of your own.
Let’s use the very rough multiplier that you can afford a mortgage that costs 3 times your gross income. Saving an extra $270 per month in car costs would let you theoretically buy $10,000 more house by living closer. Earning another $16,000 more per year would let you theoretically buy $48,000 more house. Earn $60 per hour, and that’d be $96,000. I just pulled some numbers from the air here, but the idea is simply that there hard costs involved with that longer commute.
Effect of Fatigue On Work, Family, and Happiness
Forget the extra wear and tear on your car, what about the extra wear and tear on you. If I had just spent two hours in traffic, by the time I get to work I’d be tired and ready for a break. My work quality would suffer. Then instead of arriving back home by 6 or 7 pm, now you’re looking at 8 or 9 pm. You don’t have time to cook, so you buy take-out. It costs more and is less nutritious for your family. You have less time to exercise, less time to play, less time to relax. You get the picture.
From the BusinessWeek article Extreme Commuting:
This is what economists call “the commuting paradox.” Most people travel long distances with the idea that they’ll accept the burden for something better, be it a house, salary, or school. They presume the trade-off is worth the agony. But studies show that commuters are on average much less satisfied with their lives than noncommuters. A commuter who travels one hour, one way, would have to make 40% more than his current salary to be as fully satisfied with his life as a noncommuter, say economists Bruno S. Frey and Alois Stutzer of the University of Zurich’s Institute for Empirical Research in Economics. People usually overestimate the value of the things they’ll obtain by commuting — more money, more material goods, more prestige — and underestimate the benefit of what they are losing: social connections, hobbies, and health. “Commuting is a stress that doesn’t pay off,” says Stutzer.
Got Public Transportation?
While not a complete solution, all of this gets reduced if you have decent public transportation. The costs are most likely lower than driving, you might get some work done en route, or at least you’ll arrive less stressed. I’ve already noticed that housing near good public transportation commands a premium, and it should.
We really wanted to have a short commute, but we still ended up with a compromise like many others. We looked at houses that were 15 minutes from work and play, but they simply cost too much. So, we moved farther out where the houses were newer and cheaper. But thankfully not too far. Our commute is still about 45 minutes each way if we had to drive during rush hour. However, whenever we can we try to shift our hours earlier or later to make it more like 20-25 minutes. My main worry is that as time goes on the commute will only become longer and longer.
Tuesday, December 25th, 2007
Well, it’s official. My wife and I didn’t get each other anything for Christmas. For one, we were too busy buying gifts for others and trying to get our handmade holiday cards out on time. (Okay, she was too busy with all that. I was just a slacker.) We had the following conversation about 10 times while shopping for stuff:
What do you want for Christmas?
Nothing. What do you want?
Okay, I’m getting you nothing then.
Okay. You too.
Not that we are being especially frugal or eco-friendly or whatever, we just have too much stuff coming in from other folks as it is. Is that weird? I always thought it was a bit funny for wives and husbands to buy each other large gifts. Like how Lazy Man explores those Lexus commercials where the husband surprises the wife with a brand-new car.
If you use the “one-pot” method of managing married finances, doesn’t it just end up as you spending each other’s money without permission? Or it simply “letting up” when you usually would be like “heck no, you’re not buying that!” Anyhow, I hope everyone is enjoying their holidays and all the wonderful things out there that can’t fit in a box.
Tuesday, December 11th, 2007
I’ve talked about this in bit and pieces under the Goals category, but I thought I should organize our life goals into one post. Hopefully, this will outline our priorities and shed some light on why we choose to do the things we do.
First, I’d like offer what I am afraid people think our life goals are:
- Find the highest paying job possible. Work long hours, but tolerate it for the money.
- Live a very spartan lifestyle, with minimal luxuries and worrying about money constantly.
- At age 65, abruptly stop working so hard, finally relax and begin enjoying our life. Hopefully live long enough to enjoy this period.
In fact, that’s not what we want at all:
Actual Goal #1 – Finding A Job That Fits
If your going to spend almost 50% of every weekday doing something, shouldn’t you enjoy it? Sure, even great jobs have their challenges – bureaucracy, boring meetings, office politics, the occasional annoying co-worker. But finding a job where you don’t dread getting out of bed in the morning was a huge priority for me. It took a few different degree programs, a couple of resignations, some stressful interviews, and several rejections, but we are definitely making progress in finding work that is challenging, enjoyable, and reasonably well-compensated.
I would also add that having a simple lifestyle initially allowed us to take some risks in order to get where we are now.
Actual Goal #2 – Less Work, More Life
Read the rest of this entry…
Tuesday, November 27th, 2007
There are lots of reasons to retire early, but will it help you live longer as well? One study seems to suggest so, and is often cited in websites discussing early retirement. Dr. Sing Lin wrote a paper in 2002 called Optimum Strategies for Creativity and Longevity which studied the relationship between the age of retirement and the average of death for retirees of Boeing Aerospace. The results are startling:
As the retirement age increases, the average age of death decreases almost linearly. The average person who worked until age 65 lived for only 18 months after retirement! In contrast, the person retiring at 50 lived for another 36 years.
There is some dispute as to the validity of this data, but I haven’t found anything solid either way. The author does make some very bold conclusions, though:
Read the rest of this entry…