How not to prepare for retirement

My latest Financial Independence blog at MoneySense.ca can be found under the above title here.

For convenience, here is the text, with a few minor tweaks at the end:

Despite the steady flow of retirement savings crisis headlines in recent years, it seems many Canadian couples haven’t even discussed the topic with their significant others, let alone started a savings regime.

Last week, RBC reported that 68% of not-yet-retired Canadians 50 or older who participated in its annual retirement poll have yet to discuss their post-career lives with their partners. Eighty-six per cent are reluctant to discuss health issues, 81% don’t want to raise the topic of what happens if one of them dies sooner than anticipated and two-thirds haven’t discussed what they will do together in retirement. And astonishingly, only 36% have discussed how to finance retirement and where they would live once it occurred.

RBC_Retirement_Myths

Retirement preparedness is no better in the United States. Thirty per cent of American workers have less than US$1,000 in savings and investments while three-in-four have less than US$30,000 saved in their retirement accounts, according to data from 2012. Similar to what RBC found, 56% of Americans have not tried to calculate how much they need for retirement. Little wonder the average expected retirement age in that country has risen from 60 in the mid-1990s to 67 today. In other words, many will merely wait for social security to kick in. As it stands, 35% of Americans over 65 rely entirely on social security for their income and 40% of U.S. baby boomers plan to work until they die, according to a 2010 AARP survey.

It’s clear that couples on both sides of the border can do better to prepare for their post-career lives and the first step is talking about it. Do you plan to work part-time or launch your own entrepreneurial venture once you leave your day job? Does your partner hope for the same?

Mark Venning recommends those 55+ plan for extended longevity, not the traditional full-stop retirement. Canadians can now expect to live to almost 82, versus just 57 in 1921, according to the most recent figures from Statistics Canada.

One Alternative to Saving: Early “Six-Feet-Under”

Imagine the daunting prospect of “retiring” at 60 or soon after and having to live another 40 years without a paycheque? As The National Post recently noted, some gerontologists are suggesting Canadians could expect to live to 120 in the near future. Now there’s a scary thought experiment: living 60 years without a paycheque!

The way I see it, those of you without a solid savings plan are either going to have to work a very long time into old age or hope for “Freedom Six Feet Under” before you run out of money. To the people who have saved only $1,000 or $30,000, just how long do you expect that money to last? If this is you, perhaps you should take up skydiving, stop exercising, start smoking and eat nothing but junk food.

Either that, or show this blog to your spouse and start having a serious chat about what your joint retirement looks like. And I can tell you from where I currently sit, it can look great, but only if you get serious about it.

Degrees of Findependence

Long Branch section of Lake Ontario. Photo by J. Chevreau

As my parallel Financial Independence blog at MoneySense.ca shows here, there are degrees of financial independence. For one-stop-shopping purposes for users of this site, I’ve included the blog below:

Degrees of Financial Independence

In researching the web for content clarifying the differences between Retirement and Financial Independence, I came across this May 8, 2014 post by J.D. Roth, of the Get Rich Slowly site.

In his “coming to terms” post, Roth finds the traditional word Retirement carries too much baggage, so he prefers the term I also like: Financial Independence. That’s a fairly common stance among the semi-retired and early retirees who write about this topic: the only difference is few have (as yet) adopted my contraction of Financial Independence: Findependence. The reason I invented that term is that I felt if we are to have a catchy popular alternative to the word Retirement, it should be shorter than the two-word seven-syllable mouthful called Financial Independence. Retirement is one word and three syllables; Findependence is also one word and has only four syllables.

A continuum of financial freedom

But whatever the term you prefer, it’s important to realize there are degrees of Findependence/Retirement, or a continuum. This is a point Roth makes in the article flagged above.  He talks about four types of retirement: the traditional full-stop version that begins (usually) at age 65, Early Retirement (launched usually in one’s mid 50s or early 60s, although there is a genre of Extreme Early Retirement that supposedly begins in one’s 20s or 30s). And finally there’s the concept of multiple Mini-Retirements championed by Tim Ferriss in The 4-Hour Workweek, and which I blogged on earlier this summer.

If you reframe the Retirement discussion as being about Findependence, it’s also possible to describe a similar continuum, just as it’s possible to describe different degrees of financial freedom. Roth notes we all begin life completely dependent on our parents, including financially. At some point, children leave the nest but will depend on an employer and/or financial institutions. Once free of consumer debt, a greater degree of financial freedom is achieved, and this freedom expands once you own a home free and clear: which is why I say the foundation of Financial Independence is a paid-for home. At that point, you are no longer paying a mortgage or paying rent to a landlord, although of course you will still have to pay municipal property taxes and if you’re a condo owner you may be on the hook for ongoing maintenance fees. Beyond that, you’ll still need external sources of income for heating, hydro, roof repairs and all the other expenses that home owners incur. And finally, true Findependence arrives (I call this Findependence Day), when enough money is coming in from multiple passive sources of income (Pensions, investments, etc.) that you no longer need to rely soley on income derived from the single source called an “employer.”

Cadillac vs Chevy retirements

But even then, there’s low-level Findependence and high-level Findependence. You may have saved enough not to have to go to work five days a week but may not be so flush that you can eat in fancy restaurants and travel the world 365 days a year. Most people on the Findependence continuum will be somewhere between the latter luxury Findependence and a barebones one that requires eating in most days and restricting exotic travel to a few weeks a year. If the latter, it’s perfectly logical to continue to work on projects or part-time to fund a few more luxuries and the occasional mega-trip.

 

 

YOUR Declaration of Findependence

Fireworks show over Khao wang Historical Park, Phetchaburi,ThailandIn advance of America’s July 4th celebrations, I thought I’d devote this blog to helping retirement savers prepare their personal “Declaration of Findependence.”

The other day at Forbes.com senior writer Richard Eisenberg devoted a piece to this theme, and cited my own recent experience in finally living the life I describe in my book, Findependence Day. Findependence, of course, is merely a short-hand description of the phrase Financial Independence. Findependence Day is the day in the future when you believe that income from all sources — including investments, pensions, rental income, business income, royalties – will exceed income from the single source most of us call a “job.”

So, without further ado. It’s up to you to fill in the blanks to reflect your personal circumstances:

Declaration of Findependence for ________ (your name here)

1.)  Based on my current age of __, I believe I should aim for  the __ day of the __ month in the year 20__. This happens to be the year I turn __.

 

2.)  I understand that as this milestone approaches, the actual date may have to be revised. If financial markets are very strong, I may even be able to move it ahead by __ years. If markets are weak, I may be forced to move it back by __ years.

 

3.)  I am currently employed by ________________ and am enrolled in a pension plan. The earliest date I can take an unreduced pension is ______.  I can also take early retirement by _______, provided I am willing to receive a smaller payout.

 

4.)  As an American  with ___ years in the workforce, I am eligible to begin taking Social Security benefits as early as age 62, which is ___ years before/after my planned Findependence Day. The latest I can take them is age __, in which case the payout will be much higher. Based on my annual contribution statements, the optimal time for me to commence Social Security is age  __.

 

5.)  Depending on whether I was born before or after Feb. 1,  1962, I will be eligible to take Old Age Security (OAS) benefits at age 65/66/67. (Circle one). If OAS is my only source of income in old age, I will also be eligible for the Guaranteed Income Supplement. Ideally, so is my spouse, in which case the day we’re eligible to receive combined OAS/GIS benefits will be our joint Findependence Day.

 

6.)  As someone who enjoys work but not necessarily all the stresses of full-time corporate employment, I see myself being semi-retired or self-employed by age ___.  By adding  $_____ thousands of dollars of part-time income a year to all the above sources of income, my Semi-Retirement could begin as early as ____, which is the year I turn _____. I will call this my Preliminary Findependence Day.

 

7.)  Instead of having one long extended Retirement at the end of my life, I prefer the concept of multiple “Mini Retirements,” and therefore of multiple Findependence Days to fund them. I would like to set the year _____ as the year of my first Mini Retirement, and therefore _______ will be my first (but not necessarily last) Findependence Day.

 

 

 

 

One late Mega Retirement or multiple Mini-Retirements?

4-hourweek

Photo Credit: Norman Evans, DigitalCitizen.com

Here’s a new concept I’d not considered until I started reading the book pictured in the adjacent photo. Last time, we talked about semi-retirement and sabbaticcals but you might want to add the term “mini-retirement” to all these concepts that (in my view) touch on financial independence.

In his book, The 4-hour Workweek, Timothy Ferriss floats the idea of periodic mini-retirements spread over a lifetime. So instead of the traditional route so many of us take – which he dubs “slave/save/retire” — Ferriss likes to work in two-month stints, then “retire” for blocks of a month or so (sometimes longer).

Death of Vacations?

Now you might argue that the traditional two-week annual vacation squeezed between 48 to 50 weeks of working is a mini retirement, or more accurately, a “Micro retirement.” But of course the very fact of you having a return ticket means a micro retirement is no retirement at all.

Even as he declares the birth of Mini-Retirements, Ferriss announces the “death of vacations.” He discovered mini-vacations after being “miserable and overworked” early in 2004. He originally planned to relax for a month in Central America but, seeing as he had only purchased a one-way ticket, extended his stay for three months and ultimately 15 months. Thus came the insight that semi-retiring baby boomers may well want to embrace: “Why not take the usual 20-30-year retirement, and redistribute it throughout life instead of saving it all for the end?”

An end, I might add, that might not be as hale and hearty as mini-retirements taken earlier. As I say in my book, the goal is to enjoy Findependence “while you’re still young enough to enjoy it.”

Alternating waves of activity and leisure

ferrissThe flipside of the mini-retirement strategy is that it also means those practicing it – many of them the oncoming wave of retiring baby boomers – will actually continue to work: as I said last time, probably well into one’s 70s, health permitting.

The difference is that this will be accomplished in alternating waves of activity and leisure. This actually also corresponds to my confession a week ago that I had a few early false alarms on my own Findependence Day. Now that I’m refining the concept, I realize that you can have multiple Findependence Days, each associated with separate and finite “Mini-Retirements.” Now that the World Cup has begun, I’m hoping to have one this summer.

Embracing the Mobile Lifestyle

A big ingredient in Ferriss’s approach is the mobile lifestyle, which is implied by the book’s subtitle: “Escape 9-5, Live Anywhere and Join the New Rich.” It’s harder for salaried 9-to-5ers to embrace this lifestyle, since it’s more suited to self-employment and a web-based mobile device culture. But even for what Ferriss terms “cubicle dwellers” there are ways to pull it off if you can negotiate it with your boss.

Next time, we’ll look at the idea of the four-hour work DAY for employees: a precursor to the four-hour work WEEK.

Yes, Millennials, you really can get rich … but slowly!

Today’s blog headline (minus the suffix I added) is also the subtitle of a free new investing booklet titled If You Can by William J. Bernstein. This is a terrific and short (16 pages) document that I wholeheartedly recommend be read and absorbed by today’s millennial generation. For that matter, it should be read by just about any investor at any age.

But a warning: if you’re in the financial services industry, you’re not going to like the content. The author is a neurosurgeon who learned the hard way how to invest his own money, and has written a few books along the way. If you’re not in the financial services industry, you may be merely amused by his depiction of most full-service stock brokerages and mutual fund salespeople as the equivalent of “hardened criminals” or “self-deluded monsters.”

At the outset, Bernstein promises to lay out an investment strategy that any 7 year-old could understand and will take just 15 minutes of work per year. Yet he promises it will beat 90% of finance professionals in the long run, but still make you a millionaire over time. The formula will be no surprise to MoneySense readers familiar with the Couch Potato approach to investing in index funds or ETFs. Simply, Bernstein advocates saving 15% of one’s salary starting no later than age 25 into tax-sheltered savings plans (IRA or 401(k) in the U.S., RRSPs or Registered Pension Plans in Canada), and divvying up the money into just three mutual funds: a U.S. total stock market index fund, an international stock market index fund and a U.S. total bond market index fund.

Bernstein a big fan of Vanguard and John Bogle
In Bernstein’s view, the index funds should be supplied by the only financial services company he seems to trust: the Vanguard Group (which sells both index mutual funds and ETFs).

Bernstein is addressing young Americans just embarking on their working careers but the basic idea would apply to Canadian millennials too. Judging by recent Portfolio Makeovers we’ve run showing ETF-based Couch Potato portfolios, the equivalent mix would be 20% each of Canadian, U.S. and international equity index funds or ETFs, and 40% of a bond ETF. And as I’ve written before, don’t even wait till age 25: if you can get your parents to match your savings starting at age 18, the TFSA is the place to put in place these bedrock principals of investing.

And the 15 minutes of work? That would be an annual rebalancing exercise to get the proportions of the three or four funds back to their starting levels.

Millennials can’t count on employer pension plans
Despite this, Bernstein warns younger people that they’ll have a hard go of it because the traditional defined benefit employer pensions of previous generations probably won’t be around much longer. This is pretty much what I wrote in the Editor’s Note for the April issue of MoneySense: that we’re all forced to be our own pension managers these days.

Bernstein says the operative word in his booklet’s title is “If,” because following his simple recipe for wealth (I’d call it financial independence of course) involves a very big “if.” He lays out five hurdles. Number one is excessive spending, second is understanding the basic principles of finance and investing, third is learning and applying market history, fourth is overcoming yourself: the biggest enemy being your face in the mirror; and hurdle five is the conflicted financial industry that is supposedly there to help you with your financial goals. He goes so far as to declare, “The financial services industry wants to make you poor and stupid.” Fighting words, indeed! I might not go that far but it’s certainly a way of looking at the world.

Bernstein’s homework assignments
Bernstein assigns some “homework” to his young readers. They have to read his document twice and read a few books, starting with Thomas Stanley and William Danko’s The Millionaire Next Door and John Bogle’s Common Sense on Mutual Funds. He’s too shrewd to plug his own books but I’ll name one on his behalf that I’ve reviewed positively in the past: The Four Pillars of Investing.

The fact that Bernstein has gone out of his way to give away the booklet should tell you a lot. You can find the link for a PDF here. If you act quickly (today, May 5) you may also be able to get the Kindle version free rather than the 99 cents Amazon.com normally would charge.

To parents of millennials, I’d urge you to download and print this document and hand it over to your kids, perhaps after highlighting the passages you feel to be most relevant. You could give them the link but you know how distracted they tend to be with all the social media noise that abounds these days. Sure, they may say they want to get rich some day but to paraphrase the old saying, “We all want to go to heaven, but no one wants to die first to get there.” For millennials, saving 15% of salary is the financial equivalent of dying, which is why Bernstein titles his document “IF you can.”

The new American dream: Living debt-free and attaining findependence

bookwithelecsignConventionally, the American dream refers to a well-paid job, a family of two or three children and a new home along with a sturdy retirement nest egg. However, the impact of the economic meltdown as well as over trillion dollar student loan debt has left many to reconsider that dream. They are now introspecting a lot about the reasons for their own financial plight. Moreover, they are looking for ways to resolve the issues that plague their financial independence or “findependence.”

A new survey by Credit.com and GfK Custom Research found 25% of respondents defined their version of the American dream as being able to lead a debt-free life. Such a response comes second only to the definition of becoming financially stable by the time one reaches the age of 65.

This answer came mostly from the group who belong to the retirement age of 65 or above. In addition, 18% of the survey participants have responded that they dream to buy a house of their own, while 7% want to opt for higher studies and pay off their education loans.

Despite the continuous grim economic outlook, people are positive regarding their ability to fulfill their customized American dream. Another survey by Credit.com has revealed that 54% have a belief they are about to fulfill their dream, while another 24% declared they have already attained it. This summed up to a total of 78% who were affirmative about their retirement prospects.

The advantages of being findependent

Post the the Great Recession of 2008, Americans have chosen a path that is not wrought with underwater-mortgages, overwhelming credit card balances, tedious car loans and multiple lines of student loans.

Instead, their new road leads them to a life that is debt-free – where they’re no longer burdened with an exhausting budget, a dreadful mailbox and life that’s controlled by the debt collectors and spiralling interest rates.

There are numerous benefits to living debt-free that would entice anyone living on the edge of bankruptcy to start following a debt management  strategy to get rid of his or her financial woes. Some are as follows:

Reduced interest charges – CreditCards.com has said that, on an average, rate of interest on credit cards is 14.95%. The average credit card debt for the consumer carrying a balance is almost $5,000. So, a lot of interest is paid by people that is also weighing down their monthly budgets. However, these are just the averages. For people with bad credit histories, the rate of interest could be several notches higher. Hence, being debt-free allows you to steer clear of wasting your hard-earned money on interests that would leave little tangible benefit for you to use at a later stage.

Increased retirement fund – According to a combined statistical data compiled by the Federal Reserve, the U.S Census Bureau and the Internal Revenue Service (IRS) of 2012, 25% of American households do not have any savings whatsoever. What’s more surprising is the average retirement fund is only $35,000. Indeed, avoiding sky-high interest debts could leave these people with more disposable income. It isn’t difficult to understand there are numerous ways to dodge long-term debt.

More, they could even find out the ways to direct their income as well as increase their savings at the end of it all. The bottom line is the absence of monthly bills with exorbitant interest lets you save all the more aggressively for retirement, home purchase, college and even build up an emergency fund.

Finally, that one benefit sought by everyone is complete solace and peace of mind. Hence, being debt free and attaining financial independence would translate into a life with less worries. These are a few of the advantages of findependence that you cannot support with a survey report or reflect through statistics.

 This blog was written by Zindaida Grace, a financial writer and researcher associated with the Oak View Law Group.  

 

 

Why Findependence is a Better Goal than Retirement

Here’s a guest blog I wrote that’s just published on the Retirement and Good Living site, a boomer lifestyle site whose audience is 75-80% American with the balance Canadian. The theme is of course why, especially for younger folk, Financial Independence may be a more accessible, less threatening goal than traditional Retirement. The link is here.

7 reasons to pursue Financial Independence

Here’s the Financial Independence blog just published at moneysense.ca. I’m posting this here for those who may have missed it, even though it reprises a similar guest blog I did for Roger Wohlner at his blog this weekend over at The Chicago Financial Planner. You can find a link to that one via the MoneySense post and indeed to the original blog that spawned both of them at My Financial Independence Journey blog.

However, unlike those other blogs, in this version I’m continuing the publishing of the end-of-chapter summaries that appear in the new US edition and e-book. Those who bought the original edition of the book won’t have those summaries, nor the glossary at the end.

Chapter 5:  You can’t always get what you want

 A paid-for home is the cornerstone of financial independence; paying down mortgages

•A paid-for home is the cornerstone of financial independence.

 • Bad debt is consumer debt that charges high rates of interest and cannot be deducted from your income tax bill.

 • A home mortgage is good debt, especially in America, where you can write off the interest charges from your taxes.

 • The faster you pay off your mortgage, the less interest you’ll pay.

 • Aim for a 10 or 15 year amortization period, not 30 or 35 years.

 • Pay Yourself First by setting up an automatic draft to transfer 10 to 20% of your paycheck into investments.

 • Leverage means borrowing money in order to invest. It can work but requires emotional fortitude to stick to the program when markets are down.

 • Because you can write off some expenses, self employment is an often overlooked tax shelter.

 • Real estate is a major part of a diversified financial plan but those who don’t want to be landlords can instead buy REITs, or Real Estate Investment Trusts.

 

 

Independence Day and Financial Independence

Findependence Day US Edition

Now that Independence Day has come and gone, perhaps it’s time to start thinking about your Financial Independence Day, or my contraction for the same thing: Findependence Day.

Whether it arrives in the near future or many moons from now, we know that the day of leaving the workforce must some day arrive. The timing may or may not be under your control: health and employer willingness to retain your services also come into the picture. What IS under your control is the financial resources you can mobilize to maximize your freedom and flexibility once this event occurs. And this must be done while you’re still gainfully employed.

One difference in these terms is that while Independence Day comes around every year, Financial Independence Day is a more unique event. It’s not carved in stone, of course, and can be moved forward and backward depending on circumstances.

The illustration is from the cover of the new US edition of Findependence Day, complete with fireworks and balloons. The calendar depicted is from the future (2027), and July 4th is circled as the “Financial Independence Day” of one of the lead characters in the book – for this is a novel as well as a financial primer for young people just entering the workforce and embarking on family formation.

Recent reviews

The point, as financial planner Sheryl Garrett remarked in a recent Marketwatch.com review of four books (including this one) is that the book’s title is about making a target: a point in the future you are working toward: “Findependence Day is the day you have choices and freedom. It’s redefining retirement and reaching financial independence.” Sheryl wrote the foreword to the book, which you can access via this free preview here at Amazon.com.

You can also read a blog on the book just published at NextAvenue.org, tied to the Independence Day theme — here — as well as a podcast on the book, where  Al Emid interviews me for New Books in Investment: here.

Posted July 2nd, is this review from Book Pleasures’ Conny Crisalli, which is also posted on Amazon.com here. Click on “newest reviews.”

And finally, on July 4th (yes, Independence Day) is this interview with Preet Banerjee on his “Mostly Money” audio podcast.

The power of visualization

Anyone familiar with goal-setting and visualization will know that, as I say in the book, there’s some power in setting an actual date in the future as a goal by which something is to be achieved. Jamie feels that on the day he turns 50, his income from all sources will exceed the income he could get from a sole employer and so he will become “findependent.”

I note that there are starting to emerge other books that also focus in on Financial Independence rather than Retirement, even though the term so beloved of the financial industry and the media is Retirement. In his recent non fiction book, Financial Independence: Getting to Point X, author and financial advisor John Vento describes Point X as the inflection point when financial independence is achieved. I”ve not yet read the book or talked to the author but it seems to me that Point X and Findependence Day are very similar concepts.

It’s worth reading Wikipedia’s entry on Financial Independence, which reads as follows.

   … the state of having sufficient personal wealth to live, without having to work actively for basic necessities. For financially independent people, their assets generate income that is greater than their expenses.

I first became aware of that entry just a few weeks ago when I wrote a guest blog for fee-only planner Roger Wohlner, aka The Chicago Financial Planner.  Since I’d finished the book by then it had no bearing on the book but the concept was not dramatically different.

Seek Findependence, Not Retirement

As I wrote for Roger in a blog entitled “Seek Findependence, Not Retirement,” the two terms are not the same. To be sure, you can’t really have retirement if you don’t first achieve financial independence, but seen the other way around, you can be financially independent and yet not choose to retire. Just look around at any big success in the business or art worlds and you’ll see the truth of that. Mick Jagger is findependent but still rocking, and the same can be said for Warren Buffett, Mark Zuckerberg and any number of other artists, musicians, actors and other celebrities.

Most of us are not born on Independence Day but we can all pick a date in the future – not necessarily a birthday – circle a figurative calendar and declare “That’s my Findependence Day.”

A warning though. It’s quite possible that the day after Findependence Day will be very little different than the day before. It happened that I turned 60 in April, almost to the day when the US edition of the book was published. fireworksAs I related on my Financial Independence blog at MoneySense.ca, I hosted the world’s first Findependence Day Party, complete with balloons and fireworks. The following Monday, I was back at my day job at MoneySense magazine.

Findependence works in concert with related concepts like early retirement, phased retirement and even sabatticals and staycations. My thoughts on the latter can be seen in the blog published just before the one you’re reading now: Rehearsals for Retirement.

To everyone in America, I wish a happy Independence Day.

 

Rehearsals for Retirement

ochscoverIf you like folksingers from the 1960s, you’re probably familiar with Phil Ochs, who sang “I ain’t marching anymore” and many more catchy protest songs. He came to a sad end (self-inflicted) and one of his last albums was entitled Rehearsals for Retirement. (Yes, I still have the original vinyl and the song title is actually one of the chapter titles in Findependence Day).

That title also serves as today’s blog title and happens to be a key strategy for those who are pursuing financial independence. I’m taking this week off from my day job at MoneySense but it’s more or less a “Staycation”: a working vacation spent at home. Other terms for this are “Veranda Beach” or (in Quebec), “Balconville.”

In the book, I write that the day after Findependence may well be the same as the days and weeks before: you continue to practice whatever craft or profession that got you to Findependence. You’re not “retired,” you’re still productive and you still wish to be engaged in the world, connecting with the workplace, colleagues, friends and family — either virtually or physically.

Definition of Findependence

Let’s step back a second and review the definition of financial independence (findependence for short). I wrote about this on my Financial Independence blog last week at MoneySense.ca, which you can find here. Based on how I interpret the Wikipedia definition of financial independence, it is a prerequisite for retirement: that is, you can’t have retirement without findependence, but on the flip side, you CAN have findependence without retirement. Findependence is also the precursor to such variations on retirement as phased retirement,  semi-retirement and today’s theme of “rehearsals for retirement.”  A one-year “sabattical” is one long such rehearsal but as I write below, even a one-week paid vacation from your day job can be a rehearsal if it’s a working staycation.

Varieties of Staycations

There are I suppose two or three types of staycations: one is where you really take a vacation from work of any kind; another is where you continue to work, but on your own projects rather than an employer’s.  Your time being your own, you can also do a hybrid of these, which is the route I’m going this week: doing various errands and chores one normally might tackle on weekends, but also engaging in social media, writing and other work-like tasks.

As I experience this, I’m reflecting that a working staycation is very much like Och’s Rehearsals for Retirement. I have several friends who are both findependent and fully retired, in that they no longer perusue economic (money-making) activities. But of course, they end up as busy as anyone else: household chores, shopping and maintenance don’t go away even if full-time employment ceases to be. You may pursue various artistic or entrepreneurial activities that may or may not lead to economic reward down the road.

If you still have a day job but have reached the point where you have several weeks of paid vacation each year, you may find a working staycation an excellent trial run for retirement. When I wrote the first edition of Findependence Day in the summer of 2008, I began the writing during my paid vacation weeks from my newspaper staff columnist job. Since I had been a freelance writer for several years in the 1980s, I was familiar with the rhythmn of writing at home. At some point I can see finishing my journalism career in the same way, supplementing the various “Findependence” sources of multiple income with the odd freelance assignment, book royalties and the like.

As I write the first draft of the blog entry you’re now reading, I’m doing so on a MacBook Air in my back yard. The sun is shining, a waterfall is splashing into our fish pond, cardinals and blue jays are pecking away at a bird feeder and life is good. I’ll go back into the house to polish this and format it for the web but this is an example of the kind of life I describe as “findependence.”

If you’re contemplating such a step but unsure about whether you’re suited for it, I recommend trying a week or two of a working Staycation during paid leave from your current day job.

Not yet retirement, but perhaps a rehearsal for it!

Note to US book reviewers & financial bloggers

One of the activities in which I’m engaged this week is promotion of the US edition of Findependence Day. Any journalist in the mainstream media can request a review copy by emailing promotions@trafford.com.   If you’re a financial blogger or a financial planner with a newsletter or good social media followings, I’d be glad to mail you an access card in order to download the e-book edition in most major formats. I’ll also email you a Word file of the end-of-chapter summaries, such as the one below. You can reach me at jonathan@findependenceday.com.

Chapter 3 summary

Finally, as promised, here’s the next installment of the end-of-chapter summaries of the main lessons learned in the book:

Chapter 3: Poor Boy Blues

You can’t save by spending; Be an Owner, Not a Loaner

• Frugality needs to be a lifetime habit, ranging from brown-bagging work lunches to taking public transit half the time.

• Don’t just focus on cutting expenses through small sacrifices; find ways to increase your income.

• Beware financial industry gimmicks like “spend ‘n save” cards.

• Department store credit cards charge the highest rates of interest.

• The secret of building wealth is to be a business owner.

• Be an owner, not a loaner means investing in stocks rather than bonds; or better yet, starting your own business.

• While the biggest fortunes come from starting a business, most of us are better off diversifying our equity exposure through index funds or Exchange-Traded Funds (ETFs).

 

 

 

 

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