1, 2, 3, RETIRE – Ready or not

For many people, retirement comes along whether you want it or not. However, recently some are choosing a different path. Some in the FIRE community (Financially Independent, Retire Early) are choosing to continue at work whether they are financially independent or not. I read an article recently by Monevator on why the FIRE acronym no longer really meets today’s choices. Those who have achieved FIRE are still carrying on….  It is well worth a read.

Co-incidentally I was at a retirement ‘leaving-do’ of an ex-colleague recently. I used to work in IT and the person who was retiring last night had just turned 55, had accepted a very helpful package, and definitely meets the FIRE criteria. He doesn’t intend working again. At least at the minute, and that takes me to the subject of my current post.

Why continue working, if you are FIRE?

At the retirement event, I caught up with many ex-colleagues. I have worked with lots of them, in quite a few cities, at all sorts of hours of the days and nights. It is 40 years since I first started work in the organisation, (August 1977), and at least 8 of the people there last night, I have known since 1980 or longer. Scary. Some I hadn’t seen in thirty years. They had moved on, one had even emigrated to US, now has dual nationality, but has come home to Scotland for a while to look after her Mum.

Now, in general, IT is pretty well paid, so the vast majority of last night’s gathering were in the ‘pretty secure, if not very secure’, bracket, given they had mainly 30 years experience behind them. Even the pensioners (of which I am one) are generally in a good position.

Several people I spoke to, didn’t need to work from a financial point of view. They were ‘FIRE’, but they jumped in and out of IT contract work, mainly through the winter. The comment ‘Why not?’ came up several times. Now, I personally don’t want to work again. The stress had got to me, but my friends were explaining that if you do a short term contract for a specific piece of work, it isn’t stressful at all. You aren’t running a team of 250 or even 2500 people, you’re not responsible to Directors, or the Board for the work, that is the role of someone else! All of us are still sharp, we haven’t lost our analytical brains, we can still ask pertinent questions. We just don’t want to do it every day, day after day, for years to come.

So the question then becomes

If you are FIRE – why stop work?

In my case – maybe I have just not been offered the right opportunity?

• I have no desire to get on a plane every week and see many more hotel rooms. I’ve done that and have no desire to repeat the experience
• I don’t really need the money. Yes, it would boost the bank balance, but I would also have to pay more tax, set up my own company, pay an accountant to do the End of Year books. I wouldn’t spend it (We already save 71% of our income -See Half Year Checkpoint), so either the taxman would get it, it would be used to provide me with a nursing home, or it would be left to my kids. Not a compelling reason. Even my kids say – spend it, we don’t need it! (they might like it, but that’s a discussion for another day)
• I don’t want to get up 5 days a week when the alarm clock rings. I might still get up at that time, but it is my choice

Many are choosing to do ‘just one more year’ as Retirement Manifesto covers in a recent blog.

Some just aren’t ready to go. They don’t know what to do with themselves, having given 24 hours a day for years on end, they haven’t built up their hobbies. They maybe don’t have a partner, they might be lonely. Who knows? My husband enjoys keeping going part-time (though he is an engineer – no big IT salary…) He says it keeps his brain active.

The answer is Choice

It all comes down to choice. If you are FIRE (or one of its many variants) ultimately you have Choice. You can stay or go. You know you have the money to go, but you might want to stay on, or change your working hours – whatever – it is your choice.

However, if you are not FIRE, have only a small pension, or indeed none, you don’t have the Choice, you need to carry on to feed and house yourself.

I posted recently on the Top 3 things for a Great Retirement  – Money and health are sort of obvious, but knowing how to use your time is extremely important. As one of my friends pointed out, there are only so many games of golf you can play in a week. If you don’t know how you are going to spend your time, then think hard! Develop a new interest – blogging is mine. It’s almost addictive. How are my stats (poor!), How can I improve them, how do I get onto that fast track – who knows?? A friend is treasurer for his golf club, another volunteers for a local charity, a friend’s father aged 85 still volunteers at a local charity (goodwill) shop. One is an organist in his church. The options are endless. Many organisations are looking for support.

On the other side of the coin, I read a post by Justin of Root of Good where he talks about his 9 week trip through Europe, while his investments grow. He even managed to fit in some consultancy. (that paid for a few pizzas). For him FIRE means something more than just money in the bank, it gives him valuable time with his family. It was too late in the day for me to catch on to the FIRE concept sadly. I wish I had thought about it 35 years ago! But hey, we hadn’t even got the internet then!

FIRE is only one step on the way.  A very important one. It opens up a different world. After that it is up to you. It’s your life, your choice.

However the flip side of the coin is

Retire – But I’m not ready, I can’t afford to stop work?

I mentioned earlier that being financially secure gives you choices. But what do you do if your pension is non-existent, you may have had a low-paying job,  haven’t saved very much, and now, all of a sudden you don’t have a job. You may have been made redundant or been ‘encouraged’ to retire. (In the UK you cannot be forced out of a job when you are over pension age, except some emergency services roles)  Your health might not be great. You might be one What do you do?

In the UK, if you have not yet reached state pension age, you can ‘sign on’ as unemployed, and for some weeks you might get JobSeekers Allowance, but again it comes with some restrictions. Just at the moment, we have low unemployment, but even part-time / Zero Hour contract jobs are quite hard to come by.

Julia Unwin, Chief Executive of the Joseph Rowntree Foundation, said: “Older workers are trapped between a rock and a hard place. The high cost of bills means that many are unable to save more for retirement, while a lack of opportunity to gain new skills or progress at work is making it difficult to work for longer. Unless action is taken, these problems could continue into the future as the high cost of housing and childcare make it difficult for those who are further away from retirement to save.”
Source: Joseph Rowntree Foundation

Several people I know are using their savings to fill the gap until the State Pension turns up. They own their own home, so fortunately don’t have rent to pay. Their children are struggling themselves with young families, and don’t have any spare cash to help their parents. There’s maybe a bit of temporary work to be had at Christmas, or peak holiday times. One friend worked for the Post Office at Christmas, another works part-time at the check-out in Sainsbury’s, another got part-time work at B&Q. None ideal, it isn’t what they want to do, but permanent openings are hard to come by.

When the State pension does arrive, given it is only £159 p.w. ($200) you aren’t going to be too well off. If you are a couple, it isn’t too bad, but as a single person, paying rent, there is very little spare cash.

So sadly, if you haven’t any savings or a pension due when you retire, you have little choice but to keep working, doing whatever comes along, regardless of your qualifications. A post for another day.

Best get saving….

If you’ve got some working years ahead of you, you have an opportunity to become Financially Independent, regardless of whether you want to retire. Even if it is not enough to consider retiring on, a good money cushion behind you will be invaluable. It eliminates at least one worry!

However, it retirement is imminent, and you don’t have much, whatever money you have coming in, save something. Even £5 a week put away when you are working, adds up to £250 after a year. That would keep you in food for a month. Retirement rarely increases your income! If you’re in debt, go seek some advice. The Citizens Advice Bureau is a great place to start

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