There is a poll at the end of this post, please vote! After all the buzz around the PFsphere about who is retired, early retired, not retired at all… I thought I’d present you the candidates and let you decide! You can also read PK’s post on Don’t Quit Your Day Job or Darwin’s Money to get an opinion of what is at stake. Are you retired if you live like a pauper on $10K/year and would need to work in order to afford any luxury, or healthcare, or clothing?
To me, being retired is not the same as being financially independent. If you are retired, you do almost nothing, play golf and get a pension check to live off. If you are financially independent, you do not have to work, because your bills are covered by your passive income. But you can still chose to be active with the things you like. Some people hate working for their boss. Being financially independent means no more bossy bosses. You can go to work when and if you want to. The common denominator seems to be working freelance, on contract or for yourself, and have no one on top telling you what to do. Since your bills are covered anyway, you can risk trying fun endeavors, and because you like what you do so much, you are good at it and end up making money off it.
Are you retired if you have a blog?
The polemic went as far as saying some of those people are not retired because they run blogs. My take on that is just like you used to write your memoirs on a piece of parchment when you (really) retired, if you run a blog as a hobby, and that hobby blog happens to produce some income, you are retired, good for you. If you put in an extra 20 hours/week to optimize the SEO, maximize Adsense revenue, and rely on that income to pay your bills, that is called working, self employment is still considered work. Funny how some bloggers say they took a leap towards self employment when they go blogging full time, and others say they retired, even though both dedicate the same amount of time and effort to their blog.
So without further ado, who do you think is retired?
Jacob from Early Retirement Extreme: Retired at 33 with a monthly allowance of $700, eats lentils every day, takes cold showers, used to live in a trailer to save on rent, and recently accepted a job that allowed him to afford an apartment. Does not blog much since he has.
Mr Money Mustache: Can live on $25K a year, which his investment produce, but always takes on construction jobs to make money, saying he enjoys it and is retired because he does not need those jobs to live.
Joe from Retire by 40: Looks like he needs the extra income from his website as well as his wife’s salary to make his budget work. Couldn’t stop working online just now but does what he loves.
Sam from Financial Samurai: Still manages several websites and plans on making $200K/year in online income or go back to being employed. Works 20 hours a week on the websites even though he has the highest net worth of our early retiree panel so far and would not need that income to be fully retired, he does not want to touch a penny and live exclusively off the online income. Missed a tennis tournament because he had to be in town for business, and does not want to take more than 20 days holiday at a time.
Me: I don’t normally introduce myself as retired, just retired from the corporate world. Could live off investments without working another day, but need something to do with my days so I build up a future guest house that I would like to run, develop a 90 acres piece of land, and run a blog. All are fun projects that make money (or will make money some day, hopefully). I am thinking about doing some diving around the lake, which I enjoy, but as soon as those ideas pop up I imagine ways to monetize the diving, taking more people with me so I can dive for free. Making millions is not a dream of mine, but offsetting my costs of living with a guest house or the cost of diving with other tourists is. I do travel for extensive periods, spent two months traveling around Morocco in 2010, 6 months Mexico/US in 2011, 6 month Europe in 2012, and even then found a way to offset some travel costs by writing travel articles for a few websites.
Grandpa and Grandma: They work over 20 hours a week as accountant and event planner for various charities, at the ripe age of 85. They do it for free but put the hours and dedicated work like they are employed. The charities are small operations that couldn’t function without them and even though they are getting tired, they feel like they have to keep helping, so they go to work even when they don’t want to. Are living off Grandpa’s government pension which is quite comfortable since he was an army general and fought in war time.
Let’s vote! I am new to this poll thing and not sure the results will show straight after you vote, so I will publish them on Friday recap next week!
PS this is not meant as an attack against how those people market themselves or view their lifestyles, just a fun way to see what the general consensus is.
This post was featured on Evolving PF , Financial Uproar, Don’t Quit Your Day Job
The frugal Path, thank you!
First, let me congratulates you by coming out these very nice topics and living free from the corporate world. I know you are living the the life of new rich lifestyle. I also salute Sam of Financial Samurai, Joe of Retire by 40 and Mr. Money Mustache for managing well their money and maintaining their lifestyle while they stop working. My vote goes to these 3 guys & one lady (Pauline)
You raise a good point. Are you really retired if you have to work to stay retired? No, probably not. However, if you want to work and you can say shove it, your also working. Honestly, out of all the people in your list I’d say none are truly retired. You probably come to closest.
However, many seem to be doing exactly what they want so I suppose most have financial freedom.
I have a very strict definition of retired – basically not working for money.
All of the above are financially independent by my strict standard, but your grandparents are the only ones on that list that come close to being retired.
Exactly! And most AREN’T financially independent. Financial Samurai is, and Pauline is, but no one else on the list even qualifies as that. The rest are part-time employed by choice. Which isn’t the same thing as financial independence. 🙂
I think MMM is too?
Not a chance. He needs those period jobs to make his ends meet, and I don’t really see how his $25k, apart from the rental income, is going to grow with time to keep up with inflation.
It’s his life, of course, and if he loves his lifestyle, that’s great. I’m not so sure how much he’ll love it in 20 years on essentially a fixed income that is becoming steadily smaller by the year.
By the “loose” definition, we’re “retired,” too. And I can assure you that we are NOT! 🙂
If people find it romantic, like an artist in a Paris loft at the turn of the 19th-to-20th -century, that’s fine. It’s just not retirement. Which is also fine.
One of the reasons I hold such a strict definition of retirement is because people are starting to use it as a marketing term for their lifestyle, book, and/or blog. I’m simply applying the same critical examination to what they’re selling as I do to someone selling me TVs or a timeshare.
I could write a lot more on this, but I couldn’t keep the sarcasm and vitriol at appropriate levels for a blog comment.
Nice article Pauline! I would say that you are retired when you can live off of passive income only. If you choose to work part-time, that is cool. However, I wouldn’t consider blogging to be very passive – and therefore not retirement. I’d call it self-employment.
Depends whether you just write or actively promote/network/seek revenue for your blog.
Writing is active. I’ve got 6 published novels under my belt. Nothing passive about it!
No doubt it is a lot of work!
It’s all really semantics. But to me, it’s a state of mind that I equate with feeling completely free.
Nice definition, although a 65yo ex minimum wage worker on a $600/month pension will not feel so free but is retired. For early retirees your definition works.
Good post & topic Pauline! At the end of the day I would generally view retirement as not HAVING to work but doing what you want. I think a lot of people miss that, as well as I think a lot of people view retirement as sitting on your butt doing nothing. I imagine, for us, being close to your grandparents and doing things that keep us active and giving back to society.
me too, I think social interaction and sense of purpose is what keeps them in such great shape at 85.
Fun post on one of my favorite topics 🙂 Nice job approaching it in a nice way w/out vitriol. I’m most fascinated with why folks who have to work for a living care so much for those who do not.
One thing I’ve observed about fellow retirees is that retirees have and make often times a lot more than others think. And thanks to a nice government safety net forming in America as well as a bull market in stocks and real estate, we don’t have to work as long or as hard anymore.
Cheers
I guess if you work for a living and you hate or barely tolerate your job, you always wonder why the “retired” guy is still working construction jobs or building an online empire. Many 60yo retirees who count the days until retirement find themselves useless to society and without a purpose, sink into depression, when they were sure while working that retirement would be the best years of their lives. Only when they get there do they realize that the early retirees, too, need something to fill their days.
Then they come OUT of retirement and do the second career gig.
My mom will be ABLE to retire a little early. She’d rather take her retirement pay and also do some part-time stuff on the side. 🙂 Then she wouldn’t be retired.
I’m not sure why retirement has such a peculiar emphasis in the PF community. What’s wrong with freelancing? What’s wrong with self-employment? What’s wrong with a salaried job you love, for that matter?
It’s like the obsession with “passive income,” which has a hysterically broad definition.
BTW, where did you get I only want to take 20 days off? I’ve already gone on vacay and travelled for 20 days in the first quarter alone and am off to Hawaii for 10 days later this month 🙂
Just don’t tell anybody I’m taking so much time off OK? I got a reputation to keep!
I won’t tell, don’t worry! you said so when talking about Costa Rica, that you never take more than 15/20 days at a time because you don’t want to look like you are on a perpetual holiday.
Ah yes… i can’t do much more than 20 days off at a time. I begin to miss my own pillow. But, I solved the home sick feeling in an older post entitled, “How To Never Feel Homesick Again While On Vacation.” Check it out some time.
This is what we posted about on Monday!
The bottom-line though is that the best definition for retirement is self-defined retirement. That means that anybody who says they are retired is retired. HOWEVER, it also means that people who try to control the definition of retirement (by, for example, saying that people who don’t agree with MMM’s definition are poopy-heads) are dead wrong.
I guess everyone has a different definition, sure. As long as you work less than you used to and could survive if you resigned tomorrow, you could call yourself retired.
Some people work more hours in their self-defined retirement. For example, someone who had a 9-5 job and now has a nice pension but also has a 50 hour/week small business. Those folks will often say they’re retired. And that is ok! They’re retired from a career job. They’re receiving a pension. (Either of which qualifies for retirement under some definitions.) More power to them.
Financial independence has a set-in-stone definition. Retirement does not.
I have a very strict definition of retired, too. If you tell me you’re retired, I always say, “That’s awesome.” Very strict about that.
haha!
I guess few people these days really retire completely.. My dad is 67 and is supposed to retire this summer, but he`s off looking for new jobs!
Is that normal retirement age for Norway? seems pretty old, in France people retire between 60 and 65 generally.
I didn’t realize that Mr. Money Mustache was a fellow construction worker. I’ll have to start reading his blog! 🙂
If you are working for pay, I don’t think you are retired. I think we as a society worship retirement so much that people want to call their situation retirement just so they can say they are retired.
But me, I have no intention of ever retiring if I can avoid it. Slow down at some point? Probably. But stop working altoghether? I’ll do that when I’m dead.
yes, MMM recently took a construction job in Hawaii to double it as a family holiday. I think I’ll stay active too but in a job that doesn’t feel like one, helping a charity, taking care of my grandchildren or the neighbor’s kids, … not working for a bossy boss who is half my age.
that is if life goes as planned of course.
My definition of being retired is if someone is free to take a job if it’s offered to them, or not take it:
If you’re too tied up in something to take the next job, then you’re not REALLY retired.
And if you have the luxury to decline the job offer for no other reason than you don’t need the money, then you’re retired.
It’s unfortunate that retired seems to have acquired a bit of a negative connotation for many. I almost feel embarrassed these days to tell people I’m retired and I blog for the fun of it. They look at me like I’m really a drug dealer or something: “Why aren’t you doing something useful for society?” Hmmm… I like to think me just staying out of other people’s way can’t be all that bad! 🙂
I would say everyone on that list is financially independent. Which is great, but to me retirement is the ability to never work again, which means I am not taking any job that is not for charity.
Right now the only people I know who are actually retired are my parents. Neither of them has a job, nor will they ever need a job. They saved/invested like crazy and both are lucky enough to have Social Security AND a pension from their employment (Heck my dad makes more in dividend income than my wife and I do combined from our paychecks!) They travel whenever they want and do pretty much whatever they want. They volunteer their time to their church and other organizations. They are my motivation for working hard and saving.
No Bill Murray? Probably a Financial Independent by the strict definition!
I voted, but I won’t pollute your comment section with my discourse, haha. I do love this topic though!
I think both terms can be used loosely and defined however the individual likes. Perhaps it’s more of a state of mind than a hard cold fact. In my own mind though, retired would still mean wanting to be active and doing something productive, whether I was making some money at it or not. But at the rate I’m going, I’ll never be either retired or financially independent. 🙁
Wonderful post, Pauline. I define retirement as having enough money saved up (combined with passive investment income) to live off of without working another day in your life. You’d have to be able to afford health care, your home, car, vacation, etc. until you are at least 90 without running out of money. If you need to work or actively make money to live, you are not retired. Not that there is anything wrong with that, you just aren’t retired by my definition.
That is kind of my definition too, although the passive income can be complicated to define. I have a rental property, people call it passive income, if I had a dozen properties to manage, people would call me a real estate manager. That is why those people from my panel consider they are retired even though they actively manage a blog or several.
Very interesting. There is probably some personal semantics involved, but I view “true retirement” as able to live well without employment. You still may be generating passive income, but it should require very little effort from you. I also think many people view retirement as the time when they can quit a corporate job and afford to do something they love even if it pays substantially less and have flexibility to take long periods of time off. Minute differences. Yes. 🙂
the definition of “living well” is the important one here. For most it means a big house, expensive city, putting kids through college, for the early retirees it can be eating canned soup and having no healthcare. Out of my panel only one would be able to afford the former lifestyle. Then we are all living different lives from really extreme like Jacob to kind of normal like me or Joe.
Another great post. I don’t consider most of them retired, more that they are just financial independent. I want to be financial independent, and don’t see myself ever just completely not working.
I think I’ve quit trying to define what retirement is except to say that for me, the goal is to have enough passive income to not rely on my day job to sustain my cost of living. I’m sure I will always be doing something, so if that means I never retire, I have no issues with that.
That said, I think when I get to that point, I will live most like Pauline or Mr. Money Mustache in doing things that I enjoy, but none of them dictate my ability to not rely on my day job.
I know very few people who retired at retirement age and do nothing, so for the younger people I imagine it is almost impossible to sit there and wait until the end while doing nothing.
I guess I’m pretty by the book and consider only your grandparents to be retired, while everyone else is financially independent. I think the latter sounds way cooler, anyway – it has a nice, autonomous sound of freedom to it, whereas in retirement I’m just telling kids to get off my lawn. 🙂
me too, I guess the retirement word sells but I like freedom more.
Retirement to me, and many others my age, is when you are free to choose how you spend your day without worrying about having to make x amount of dollars. Retirement to me does not necessarily mean you aren’t working. I feel that MMM, Sam, and Pauline are all retired. Joe is retired, but his household is not. Jacob does not sound retired to me.
Ok, let me dust off my history degree and remind folks that retirement at 65 came about because Roosevelt was hoping to entice enough older people to leave the workforce and get on social security so younger workers could have the jobs. Life expectancy at the time was around 62.
The modern notion of retirement as never working is a bogus one. Humans are happiest when they’re doing meaningful work.
So I guess I don’t consider any of your examples retirees. But people living their lives in a way that has meaning for them.
Hmm. Retirement is just a way of thinking about it. If you are still doing things, you are not really retired, even if you don’t have to do things. In my book only Grandma and Grandpa are really retired – their occupations are more a hobby. I think people confuse retirement from being able to do what you want. Is Bill Gates retired? No way! He is probably as busy working on eliminating malaria than when he was full time CEO of Microsoft.
Interesting post Pauline. I think that if you enjoy doing what you are doing then it doesn’t feel like work and that is probably why people who quit the corporate world to work full time on a blog feel as if they have retired.
Well, that’s my take on it anyway.
Retirement = Freedom.
If you feel tied to a blog, an activity, a job, whatever you want to call it, and you feel like you CAN’T give it up if you wanted, you’re not retired.
No more than 20 days holiday? I’m screwed in this regard. I like 2-3 months at a time.
Guess I’ll never retire 🙂
(by the way, Grandma and Grandpa are not retired to me either. Free or not, they are tired and DON’T want to go to work at the charity but do it anyway. Smells like a job without monetary benefits, to me.)
Everyone has their own definition of “Retirement” for some its sitting on a beach all day drinking drinks with little umbrellas in them. For others its trading in 80hr weeks in the corporate world for 20hr weeks blogging and doing side jobs.
It’s a topic that’s come up before where FI should be the goal because it gives us the freedom to define what our “retirement” looks like.
absolutely. I like the concept of lifestyle design, defining what you really want and putting the work to achieve that life.
Certainly, I’d like to be retired. And working damn hard on it. My parents would shit themselves if they heard me say it, but that’s not really relevant. Guitar compositions, hiking, and writing call. Who am I not to answer?
I also believe that people have their own meaning of retirement and that’s fine with me. I try not to get caught up in the whirlwind or fixation about it all and if someone is happy with their life, what more to life do we want. If I’m volunteering my time or doing something I love part-time and it brings in cash that I don’t really need but enjoy doing then so be it. If I’m able to spend time with my loved ones and enjoying my one shot at life then I’m happy. My parents are retired and have some homes that are paid and they live off the passive income and bank their pensions because they don’t need all the money. They travel many times per year and hang out with their friends playing scrabble, dinner nights and dance their nights away.they volunteer in their community to give back and stay active and also enjoy that. If someone tells me they are retired, I say, more power to ya!!
sure they are retired, and not even touching their pension is awesome. glad they taught you well!
Everybody has their own definition of retirement, so I’m not sure there is one exact formula for it.
That being said, my own interpretation of retirement means a person is doing absolutely zero work. Not 1 hour of paid work. Someone should be able to literally do absolutely no work at all, and be able to survive with at least the basic needs met (including health care)
It is very subjective indeed, for you it includes healthcare, for others maybe going without a car, etc. In my basics is a yearly trip to Europe for a month, that most would consider a once in a lifetime thing, if at all.
I think that everyone you mentioned is doing what they want to do… if they’re happy, the label matters less 🙂
This is a great topic. I’m not sure if I’d consider everyone on this list to necessarily be retired or even financially independent. Don’t get me wrong – its amazing what everyone has accomplished. But I’m not sure that cutting your expenses down ridiculously low and calling it “retired” counts. My vision of being financially independent looks just a little different: When you can’t afford to have a little fun or enjoy even just a few luxuries, it seems like you didn’t plan very well.
the thing is luxury is a different thing for everyone. I don’t need to buy new clothes every month but I want to go back to Europe once a year and that costs me at least $3K. I want to buy a car cash but don’t need it to be a new agency model. And I can afford that so I am fine with my level of “luxury”. Eating lentils and taking cold showers, not so much but some people find it acceptable, retired or not. Some zen minimalists live a spartan life even if they can afford more stuff.
Savings is very important in retirement planning. This is what you are going to spend during your retirement period. The hardest part of retirement planning and retirement financing is calculating how many years we are going to live after we retire.
The hardest part of retirement planning and retirement financing is calculating how many years we are going to live after we retire. We want to ensure that we will have enough money to last throughout our retirement.
Only Jacob is really retired. The others work! Semantics are important as they frame our way of thinking.
Employed @ a 9 to 5 = Working for some one else.
Financial Independence = Can live on passive or semi passive income sources. I would only consider income sources which are not paid by the hour
Retirement = One does not need to work to live comfortably and to have whatever makes him or her happy.
I’m late to the party, but I just wanted to do a fact check.
1) The “allowance” is about right, but allowance is the wrong word. I’ve been spending about $5-7,000 per year since 2000. However, I’m wealthy enough to “allow” myself about twice that amount. I’m happy with my current spending level though. Don’t need more, don’t want more.
2) I ate lentils in grad school 10 years ago because it was quick and healthy and a much better option than cafeteria food. I do not eat lentils anymore. I mostly eat a combination of Mexican and Indian cooking. Unfortunately my association with lentils have taken on a story of its own on the internet. I wonder whether others have the same problem of having their life associated with a dish they ate more than a decade ago 😛
3) Taking cold showers was an exercise in tolerance and pushing physiological boundaries. The savings from not warming a few gallons of water are ridiculously small and not a good reason to do it.
4) We lived in an RV for the adventure. In the past two years we have lived in an apartment which costs about the same as living in an RV. We are about to pay cash for a house which will make our housing costs cheaper than living in an RV.
As for the “dictionary wars” over the word ‘retired’, there are a lot of preconceptions out there. The problem is that we have many different living situations but only one word to describe them all.
Basically my situation is such that I can do what I want without any concern about my financial situation. I can quit my job tomorrow. I can pull my book down from amazon. I can shut down my website entirely. It would not hurt my living situation. I’m essentially independently wealthy and thanks to the market performance over the past three years, so is my wife.
My grandparents have the same freedom; not that they receive a check from their investments like I do, rather they get theirs from the government.
However, that does not mean we should live the same way and do the same things.
Ultimately I decided to use this freedom to as _I_ wanted without regard for any conditions the _internet_ want to impose on me. I quit my previous career because I lost interest and I haven’t touched it since. I stopped blogging and now recycle all my posts because I don’t feel like writing anymore. I kept the forum because I like interacting with people who aren’t complainypants. If my forum starts sucking (like blogging did), I’ll just shut it down. I keep selling my book because 90% of those who read thinks it’s great. If everybody thought it sucked, I would stop selling it right away. When someone offered me a job to pursue my hobby at a higher level, I took it freely. I can leave it freely too should I suddenly make it a high priority to sit on a beach towel all day or drive a golf cart.