Retired by 50?

Many finance bloggers are on the Early Retirement track.  They save a high percentage of their income in order to get out of the rat face, preferably no later than age 40. While early retirement has never been my top priority, I can see the attraction of spending more time on doing things you love/like and with friends and family.

However, I have seen way too many older workers get laid off in their 40s and 50s who are then unable to find a new job.  Maybe a forced Early Retirement will be the new normal?

layoffAs I approach my mid-40s, it’s hard not to wonder if I’m next on the cutting block. I enjoy learning new things and am relatively digital-savvy but I still find it hard to keep on top of technological changes. When I first got a smartphone, I had to ask a younger co-worker how to use it!  I still have no clue about Apple TV or other ways of streaming video to your TV set. I rarely use Twitter and haven’t even tried SnapChat or Instagram.

There’s a huge difference between getting laid off in your 20s/30s than in your 40s or 50s. Age discrimination is very real in corporate circles, from the lower echelons up to middle management. Even an experienced middle-aged managers with a stellar history can be passed over in favor of someone younger who is experienced but presumed to be more, tech-savvy and less expensive.

I’m not so much as focused on retiring in my 40s as NOT being retired by age 50 or sooner!


Yes, There Are People Who Work 40 Hours A Week And Want To Get Ahead

Financial Samurai once asked in one of his most popular posts, “Are There Really People Who Only Work 40 Hours A Week Or Less And Complain Why They Can’t Get Ahead?”  I would like to add my response in the form of this post.

First, the answer is “Yes”.

I think it’s okay to work “only” 40 hours a week and complain about not getting salary increases and/or not getting promotions.  At the same time, I focus my complaints on wage stagnation, rather than a better title, because I know that most companies reward the person who puts in the most hours.  I’m not saying that the promoted person is not smart or deserving; it’s just that many equally smart or deserving people often get overlooked for the wrong reason.

One of the commenters, DoveArrow, had an excellent response to that way of thinking:

“While I agree that people who take 90 minute coffee breaks have no room to complain that they aren’t getting promoted, I do think that there is a tendency to reward people who are busy rather than people who are efficient.

Now compare what I do to my co-workers. Many of them can barely open a spreadsheet, much less use one. When looking for duplicates on two separate spreadsheets, they will print out both and go through them laboriously line-by-line, rather than running a simple query in Access…As a result, they work 50-60 hours a week in order to get everything done.

Now here’s the rub. I have seen people like my co-workers, who make less efficient use of their time, get rewarded with overtime and promotions time and again. People like me, who are more efficient and innovative, get rewarded with laborious, boring shit jobs that need to get done, but nobody else has time to do. That’s because busyness in our culture is equated with ambition whereas efficiency is overlooked and often equated with laziness.”

Are we really making the best of our (human) resources when we promote base on looking busy, rather than creativity, innovation or effectiveness? This way of thinking actually excludes many smart people who want a work/life balance.

40 hours is long enough to do a job well — very well. With all the technological advances that have taken place in the past 20+ years, worker productivity has soared.  Think of the days before fax machines, smartphones, or computers.  In an office, every facet of a person’s job from filing to booking travel to creating presentations took twice as long to accomplish.  Yet we adhere to this “clock in – clock out” mentality that insists putting in the hours is the best way to measure productivity, when people should be measured by results.

I grant that there may be times that over-time is needed but if we expect someone to work 50-60 every week, there’s a problem that can and should be fixed by adding another employee or two. The real loser in this scenario is the person who puts in those long hours, and actually makes less per hour.  As venture capitalist Nick Hanauer revealed in a popular post about income inequality:

“…we capitalists will never actually ask you to work overtime. I don’t even track your hours. I just make it clear that I trust you to get your job done in the time allotted. And then I hand you twice as much work as you can reasonably do in a 40-hour week….And so you work even more hours, pushing unemployment up and wages down. And that, my friends, is one of the little tricks that keeps you poor and me rich.”

workerThere is also ample research showing that the optimal work hours for most people is about 40 – 50 hours max. Working longer hours does not make a person’s work more valuable.  He/she can make more mistakes and be resentful.  He/she may create work, like pretty reports and charts, just to have enough work to fill up those extra hours. I have personally seen that happen many times.

Even though this is a response to Financial Samurai’s original post, it’s not an attack on him or his beliefs.  However, I disagree with his core statement that “anybody who wants to be better than average can’t work 40 hours and expect to be more than they’re not.”  This implies that anyone who works “only” 40 hours per week cannot be exceptional.  I disagree. Consider that the extra hours can be consumed by office politics, back-stabbing, fixing mistakes, sitting in long meetings, and doing mindless work. Therefore it’s very possible and probable that a smart, efficient worker could average 40 hours a week and still be very valuable and worthy of promotion.

Finally, I think this 80-hour week mentality causes many qualified professionals to exit their careers due to burn-out or family needs, especially working mothers. In this day and age, where companies have zero loyalty to its employees, is it really worth it to put in all those additional hours just to get pushed out when you can easily become dispensable due to age or circumstance?

HTSMC: Sorry, You Have To Make Hard Choices

Everybody has to make choices in terms of time.  Most people have to make choices in terms of money.  For those in the upper-class, it may be a choice between buying a bigger house or renovating their current home. The lower-income may have to choose between putting food on the table or keeping the lights on. For the middle-class, it’s a never-ending juggling act among various needs and wants.

In order to stay in the Middle-class, it’s essential that you learn how to make the “right” choice for you at the time.  There is no ONE RIGHT CHOICE.  There are simply choices you make which require sacrificing something else.


There is no place like Paris

Ideally you would do some sort of “swap” which is mentally easier, i.e. I will spend more on travel & spend less on dining out this year.  For example, if you want to travel to Paris without incurring credit card debt, you have to budget for trip-related expenses. This means cutting costs elsewhere.  For a long time, my husband and I prioritized travel.  Now with two school-aged kids, we decided to spend more for housecleaning and baby-sitting.  No matter how we looked at it, there was no way we could have it all.

Of course, how much your choices affect your regular day-to-day life depends upon your spending habits and income.


iPad Air

It isn’t fun or easy to make these choices. That’s why I’m calling them Hard Choices!  You have to be able to delay gratification, plan ahead, miss out on some fun events, or wear last year’s fashion.  It’s even harder when big-budget needs (like home or car repairs) always seem to take precedence over wants (like travel and new smartphone).

Not all choices are between a need and something that is clearly a want. There will be times you want or need to spend on career development whether that is joining a professional group, attending a conference in your field, or getting additional education.  What makes this choice one of the hardest is that you can’t know if this “investment” will pay off. You can attend many conferences and not meet the right people.  You can pay for an advanced degree and not get the job of your dreams.

Finally, if these choices involve other family members or friends, you will not agree on priorities every time.

Organic Mattress

Organic Mattress

Here’s a look at my family’s current want/need list:

1) Dental Work (Both) – $500 to $2,000

2) iPad or Tablet (Kids, Me) – $600

3) Organic foam mattress or topper (Both, more me) – $1,000 – $2,200

4) Airplane ticket to home country (Spouse) – $1,300+

5) Semi-professional camera (Spouse) – $1,800 +

6) Car #1 Repairs (Spouse) – $1,000

7) Car #2 Maintenance (Me) – $200 to $500

Without any additional details, can you easily prioritize the above?  I will add details (justifications) in another post. More to come!

This is one in a series of tips/ideas to help you stay middle-class (HTSMC).  Whether you consider yourself on the lower- or higher-end of the spectrum, you can probably find some useful tips to help you stay there and find save more for retirement even as wages stay stagnant.