Over the last few months I’ve been thinking a lot about the next step for my career/work life. As I see it, I have 5 options:
- Continue working at my current job
- Continue working at my current job and start doing some financial planning on the side for a small number of select clients
- Quit my current job and start working full-time for a financial planning firm
- Quit my current job and start my own financial planning business
- Retire
I’ve listed these in order of least risky to most risky. Making no changes is almost always going to be the least risky option. The most risky option is to just stop working all together, as I would be making no money and our existing net worth would need to support me, my wife, and our 2 young children for another 50+ years.
I’ll be digging more into these options in a future post, but for now I want to focus on a bigger question – does the fact that I’m looking to make any changes, including and up to full retirement, just mean I haven’t found my true calling?
The rich and successful rarely retire early
In studying and talking to the really wealthy and successful people it’s become obvious that the truly rich and successful aren’t working for the money. Warren Buffett is worth ~80B as of the end of 2017. According to this chart:
Warren Buffett had a net worth of around ~30M when he was 41 years old (the same age I am now). That was 46 years ago. ~$30M in 1971 is roughly $181M in today’s dollars.
I think that just about anybody would agree that $181M today is enough money to support early retirement. Assuming a 3% safe withdrawal rate that would result in $5.43M of sustainable income.
At 41 years old Warren Buffett had more than enough money. If I had $5.43M/year I’d quit my job and spend the rest of my life doing things I love.
So why didn’t Warren Buffett retire early? Warren Buffett didn’t stop working because he was already doing what he loved. As he has said, he ‘tap dances to work every day’. He’s doing exactly what he wants to do and the money is irrelevant.
The story is the same with many other hugely successful entrepreneurs. Look at the list of the wealthiest people in the world. Bill Gates. Jeff Bezos. Mark Zuckerberg. Larry Ellison. Elon Musk. Richard Branson. The list goes on and on. These people have more money than they could ever spend and yet they continue working.
Why? Well, since they have enough money to be able to do anything (or nothing), the fact that they continue to run their companies can only mean one thing – they love what they do.
Correlation vs. causation
The very, very rich continue to work long past the point where money is a motivating factor. But is this correlation or causation, and if the latter, which way does it go? That is, are the insanely rich that way because they love what they do, or do they love what they do because it makes them insanely rich? Or maybe they love what they do because they’ve become really, really great at it. Or maybe they became great at it because it’s what they love to do and are passionate about. Or maybe they love what they do because they are “the boss” and they enjoy huge amounts of autonomy in deciding where to spend their time.
My suspicion is that it’s hard to become really successful if you aren’t passionate about what you do. It takes a LOT of work to reach the top of any industry. You need to be willing to work 12-16 hour days, day after day, for years, and it’s hard to do this if you don’t believe in what you’re doing and enjoy doing it.
One could argue that using the top 10 richest people in the world as our sample group results in some self-selection bias. It entirely possible that it’s just not possible to become one of the 10 richest people in the world if you stop working at a young age, so using the few richest people as our sample group might be problematic.
However, I find that the trend of highly successful people continuing to work long after there’s any economic incentive to do so holds with more “normal” rich people too.
The President/Founder of the company I work for is probably worth around ~$1B. He’s in his 60’s, still works every day, and only very rarely takes vacation (maybe an average of a few days a year). He’s long past the point where money is a motivating factor. When asked why he still works, he’s recently been answering that he wants to change the world.
One of my best friends is an officer in a medical devices company that she helped found. The company is now worth around ~$1B. She’s 35 years old and despite being married and having a year-old baby she still works long hours, frequently travels, and has no intention of retiring. She keeps working because she believes in the product and wants to help people.
Does contemplating early retirement mean you should quit your job?
So here’s the big question – does the very fact that you contemplate early retirement imply that you should quit your job?
The more I think about it the more I believe the answer is yes.
Why?
For the simple reason that if you loved your job you wouldn’t consider leaving it. The fact that you (and I) are working towards early retirement and/or financial independence might just be an indicator that we just haven’t found our calling yet.
The fundamental motivation behind early retirement is that your current job requires you to trade your time for money. At some point you have enough money and no longer wish to make that trade, so you retire.
The equation for people who truly love their job is different – they spend their time doing something they enjoy and the money is irrelevant (but a nice added bonus). Hitting a certain level of net worth or passive income doesn’t change their motivation. These are the people who you hear say things like, “I love my job so much I’d work for free”. In fact, I’ve heard this exact comment many times from my dad.
My dad was an administrator at a community college for 40 years (~30 as a president). When I was younger I often heard him say that he liked his job so much that if he won the lottery he wouldn’t change a thing. When I was a teenager I assumed he was saying this to either inspire me to find something I love or trying to teach me something about work ethic. Now that I’m older I realize I should have taken his words at face value – he just loved what he did.
Creating a job you love
I’ve always believed it’s impossible to love doing something you get paid to do. The reality is that all jobs have aspects you aren’t going to like – endless meetings, filing TPS reports, dealing with annoying coworkers, etc. No job is “pure”. Non-profit jobs come with fund-raising responsibilities. Teachers have to deal with administrative oversight, changing government regulations, etc. Actors have to deal with auditions.
So how can you find a job you won’t want to retire from? Simple – you need to create the right job, and that probably means starting your own business.
Think about it – the people I referenced earlier in this article all started their own companies. They do the things they like to do and are able to delegate the things they don’t.
In addition, the amount of satisfaction from creating a company far exceeds whatever satisfaction you will get from working for somebody else. When you start/own your own company you’re offering a service or product you believe in. You are providing jobs to people. You’re creating value.
Conclusion
The considering early retirement probably doesn’t mean you don’t want to work any more – it means you don’t want to work at your current job.
This realization is helping to guide me as I figure out what’s next for me and my family.
The kind of person who has the self-discipline to be able to retire early is almost certainly not going to be satisfied sitting around doing nothing in retirement. Instead of concentrating on early retirement, maybe we should be working to create a job we don’t WANT to retire from.
And the best way to get a job you’ll enjoy is to create it.
What do you think? Is the act of considering early retirement a sign that you need to change your job? Instead of working towards early retirement should we be creating our own businesses and doing what we believe in?
I’ve been early retired for 10 years. I’m starting to come to the realization that perhaps there is no job or business I’d love to do.
How do you spend your time? Everything I’ve read about retirement (early or traditional) says that the key to being happy in retirement is to have a “purpose”. That can be volunteering, consulting, running a blog, or having some hobbies that keep you interested and engaged. The people who are most engaged in retirement tend to have the highest levels of happiness/satisfaction with retirement. The people who sit at home all day and watch TV tend to be unhappy and die early.
Since early retiring I put together a rental property portfolio, slow-travelled the world, did a lot of dating, got married, had a kid, started scholarship funds, became a gym rat, learned Chinese (speaking, reading, writing, the whole works). I rarely have time to watch TV (once every 3-4 months?) but I’m also often busy with things I’d rather not spend time on. I’ve lost lots of time to our income tax system, and maneuvering our health insurance/ health care system. These two items are like a part time job.
Joe – thanks for the details. Your complaints are exactly what I’m concerned about. I am thinking about some real estate investments, but I’m very much trying to streamline my life. Having simple investments (qualified dividends) should streamline both investment management as well as the tax implications of income. My real estate investments are great, but they certainly take up a lot more time and energy than my stock investments.
Yes, as you probably know rental property takes up time even with trouble free tenants and property managers. I recently received several HOA notices for issues that were no fault of the tenant but still needed to be resolved. The notices are sent only to the owner. Rental property is also more hassle during tax time because of having to track expenses. Major repairs always require owner attention. Property taxes and insurance, HOA changes, other bills need to be reviewed regularly. Tenants are people and sometimes require personal attention. For example, a tenant recently asked for a referral to my ex-employer. And turnover always requires some attention.
I’ve definitely found that it’s true that owning rental properties is as much of a part-time job as it is an investment. You can do things to offload some of the work onto others (for a fee, of course), but no matter what it’s much more work than just collecting interest or dividends.
You are spot on Commando. If you’re are not in the flow on a regular basis at work and you’re looking to a better future, then it’s time to reflect, make plans and make a move. As the oracle himself said, “There comes a time when you ought to start doing what you want. Take a job that you love. You will jump out of bed in the morning. I think you are out of your mind if you keep taking jobs that you don’t like because you think it will look good on your resume. Isn’t that a little like saving up sex for your old age? – Warren Buffett”
The big BUT on this, is that it’s really hard to find that perfect job/business/career/work-life-balance thing for the vast majority of people. I think people like Buffett and Branson, are rare for good reason, they’re unicorns. They say it themselves, they can’t explain how things worked out the way they did, genetics, timing, good upbringing, work ethic, luck, etc. There just seems to be so many random factors. I don’t have much more to add than a quote from one of my teachers, “… go with the one that makes you smile the most.” Just want to say that I believe you’re on the right track or at least I hope you are, because I’m right there with you. Thank you for sharing and keep the firing burning.
Thanks. I agree that Buffett and Branson and others like them are almost a different breed. They’ve been able to create their own jobs by creating their own companies. And by creating their own jobs they are able to keep all the stuff they really like and get rid of the parts of their jobs they don’t enjoy.
BTW, I’ve heard that “saving sex for old age” quote from Warren Buffett before and it’s one of my absolute favorites. He definitely has the rare genius of making everything so simple and straightforward.