Tag Archives: income

Early Retirement is Elitist

If you have been around the early retirement blogger community for a while you will notice we have a high number of members who were engineers. I initially thought that was a interesting fact as I drank the kool-aid of thinking anyone could retire early. Then after reading this article in the Atlantic, my realization that I was never middle class it hit me all over again. I have always been really am well off and honestly I like to think it is my own merit and skill but I should really should mention I was born with a significant leg up on everyone else. Yet the real truth of the matter is it extends farther than just me. The entire concept of early retirement in your thirties or forties is really a niche carve out mainly of the subset of the professional class (like engineers, lawyers and other high paying career tracks) who crave freedom more than anything else.

After all we personal finance bloggers continuously preach that it is all a matter of saving a high percentage of your take home pay and just about anyone can do it.  If you can save half that is great, but if you can push it even higher to saving 66% of your take home pay then your working career gets even shorter and starts to approach a mere 10 year career.

See by telling the story in terms of percentage we mask the little details like it a hell of a lot easier to save 50% of your tax home pay when you are making a combined household income greater than $100,000 per year (and in a lot of cases per person).  When in fact, the median family in Canada is only $70,330 per year (2015).  Now toss in the average house cost in Canada is $495,000 and suddenly saving 50% of the median income at that level gets a LOT harder when you could be spending around 40% of your income on just the mortgage payment.

I used to think I was somewhat noble for doing early retirement after all I was giving up the option to be really rich if I kept working…of course I conveniently ignored the fact I was already rich compared to most people just not multiple millions in the bank rich.

My kids for example are already better off than I was. I was the last of four kids so my parents decided to cut off my university funding after my first two years and co-signed a line of credit instead (not that I’m blaming my parents at all for that decision there were a lot of factors that lead to that decision).  But it did result in me owing $25,000 when I left university.  My kids haven’t got to high school and they already have over $40,000 each saved for their post secondary education. Not to mention the fact they now have two parents who work in the house and are available to help them with homework, attend school functions and otherwise support them in just about everything.

While I can’t predict if my own kids will ever go after FIRE themselves the reality is they would end up with a huge leg up over my own attempt as they will likely graduate post secondary education with zero debt.  Thus further enabling my kids to retire even earlier than I did if they also go after a professional  or other high paying career.

So the question becomes is FIRE really possible for everyone?  While in a pure theory sort of way, the answer is yes.  The reality is much different.  The difficulty of early retirement keeps getting higher the less income you make and the scale isn’t just linear.  For a family earning less than medium income the odds start to become vanishingly small.  You basically need to live in a low cost of living region with a higher than average local income to make it work.   So in the end I have to conclude FIRE is basically an elitist concept that is mainly limited to high income people and those that succeed at it will always be a minority as compared to the general population.

Do you think FIRE is elitist?  Why or why not?

The Money Still has to be Spent

This is a guest post from Sheryl in Ontario, who is 40 years old with a grown daughter, and is trying to rebuild her retirement dream just 20 years too late for early retirement.

May has been flying by. I’ve been back at my part time gig for a about six weeks now, and this year I’m enjoying it a lot more than I did last year.

When I started last year, I was already exhausted from the stress of having too much month left after the money was gone. This year my head and my spirit are in a better place, and although I have purchased a few more convenience foods in the past few weeks, I am still able to keep most of the extra cash I’m earning.

This month, it has certainly come in handy. Although my social circle is quite small, it seems everything is happening at once. All in the month of May, there has been a baby shower (gift expense), a bridal shower (not for the same person), my boyfriends birthday, Mothers Day, and my parents 60th wedding anniversary. I have economized where I could, the birthday was going out for dinner where the birthday meal is free, Mothers Day is more labor than cash (my daughter and I are doing the flower planting etc for my mother’s garden), the anniversary party was at my sisters home, so there were additional food costs. The showers (and the wedding present to come) are more of the socially expected offerings.

Yes, I knew they were coming when I did my “April spend nothing” month. That is what made me realize that although it is fun(?) to make challenges for myself to clear out my pantry or not spend, there are just some things I can’t get out of spending on, and does it matter when I make that expenditure?

Don’t get me wrong, the pantry reduction, and the lean April were valuable lessons for me (that’s for another post), but I have come to accept that delaying inevitable purchases doesn’t serve any real purpose.  If anything, I think it could increase stress by leaving too many things to the last minute.    I’m still very much in favor using up what I have before replacing it, and trying to accomplish things in the most frugal way I can find (or tolerate), but I’m also starting to feel that maybe I should accept that some money just has to be spent, and the most control I have over it is where and for what.

Too Much Work?

For the last month I’ve been under going an interesting experiment: I’ve been working full time at my day job.  Why?  Long story, but the summary version is I knew March was going to be nuts at work so I offered them a deal.  I moved my three usual Friday’s off in March into April after the long weekend (which then gives me a week off *grin*).  Yet during March I have realized: I don’t think I can work full time anymore.

It’s only been a month and I’m like exhausted all the time, but this is likely from a good amount of my evenings have been busy with school board meetings.  So I’m running at full steam at two of my jobs and I can really feel it taking a toll on me.  So in some regards this month has proved again what I already know: I really can’t work full time at my day job while I do the school board thing.  It’s just too much for me to handle well, which is good since my usual situation is working at 90% of the time at the day job.

So this got me thinking about other people that talk about being tired so often and I wonder if it is just too much work?  Do people end up mindlessly on the couch in the evening because their bodies and minds just can’t handle 60 or more hour weeks?  Do we all have a right amount of work that we should be doing each week?

I have to think that could very well be a reason, but I think that concept is particularly interesting is I know my productivity at work has gone down this month.  I’m used to having a rather good energy level all the time so I tend to be fairly efficient at finishing tasks.  Now I notice that isn’t the case as much.  So while I’m at work more right now, I would rather doubt over the month that I am getting a lot more done.  I’m running out of steam now so this last day off worked I think will have diminishing returns.

In the end, I wonder how much more productive people would be if the standard work week dropped off by 4 or 8 hours?  Employees would be happier, employers would have less wage costs (not in all cases, but some) and I have to really wonder if nearly the same amount of work would get done in the long haul (short term it wouldn’t work as you likely already have too many employees in burnout).  So what are your thoughts on a reduced work week for everyone?