Author Archives: Pretired Nick

Why I’m pursuing pretirement

No way I can work at a dead-end job until I'm 65

No way I can work at a dead-end job until I’m 65

It’s difficult for me to talk about my own situation.

In addition to my many embarrassing financial mistakes, there’s a worry of being a know-it-all among people I know or just being judged for every crazy move I make. Not to mention issues of privacy and security.

So I’ll be a bit vague on some of the details, but will try to provide enough information to explain where I’m at and where I’m going.

Your first question is: Are you “pretired” currently? And the answer to that is no by my own definition.

For myself, I try to be pretty strict about the definition: ALL monthly expenses are covered by passive income. (For others, it may mean being just close enough to work part-time to cover the bills.) Now I’ll get into some numbers and complicating issues soon (such as inflation), but for now it’s the concept that is important. Many (many!) have written about this before, most notably Robert Kiyosaki in Rich Dad Poor Dad.

Unfortunately most of what is out there is either fairly benign advice about saving relatively small amounts of your income, and trying to game the tax system OR it’s selling get rich quick schemes, usually in real estate.

What I have learned is the standard investment advice (401K, Roth IRA, mutual funds, etc.) may be great advice if you want to be a wage slave for several decades, but if you want to get out of the rat race, you’ll need to do much more. (NOTE: I’m not saying those investments are bad ones, just that the standard level at which we’re advised to invest at will be nowhere near enough to let you opt out of the game.) What’s more, retirement accounts that lock away your savings until you’re old will be great to have when you reach that age (although I doubt there will be many people who can actually live on a 401K) but you won’t be able to use that money in the meantime.

Put more simply, the mainstream advice is this: put aside a small amount of money from your paycheck, let it grow in the market as you age and through the magic of compounding, you’ll have enough cash to live on in your golden years. And you know what? They’re absolutely right. It can work quite well, especially if you make a decent wage and start early enough. (Although even then, I have my doubts about whether a 401K will be enough, especially as Generation X gets screwed over yet again with cuts to social security and Medicare.)

But what if you don’t want to spend 45 years WORKING? I know I don’t. That’s where pretirement comes in. By making strategic adjustments as early as possible, it is possible to short-circuit the game and live the life you want to live. I’m not there yet, but I’m close enough that I think I can see how to get there. But, very worst case, I should have an even more comfortable situation when I’m older and will be able to look at my social security (if any) as a bonus, not as critical survival funds.

I may choose to work even after I reach pretirement. Perhaps I’ll want to feather my nest a little bit or maybe I’ll decide I need a little more breathing room on my monthly income/expense ratio. Or maybe not. I’ve never had trouble finding things to keep me busy so maybe I’ll never go back. Either way it’ll be up to me. And that’s why I’m pursuing pretirement.

Is pretirement just a fad?

YoungstersRollerSkatingatIzzy-Dorry'sRollerRinkatNewUlm,Minnesota..._id_4726928775_PDEvery era has its own fads. The ’60s had marijuana and hippies. The ’70s had bell bottoms and swinging. The ’80s was about cocaine and hair gel. Sometimes it’s hard to tell if something is just a fad until it’s in the rear-view mirror. And sometimes those fads remain as a part of the culture, even if they’re not a dominant force any longer. Witness the proliferation of health clubs and sushi.

So is pretirement just a fad destined to fade away or will it stick around and build into a part of our culture?

Only time will tell, of course, but certainly the movement is growing. The proliferation of “early retirement” blogs is quite significant and I personally know many people participating in the phenomenon, even though they don’t have a name for it. In fact, most of the folks I know just say they’re “taking some time off” or are simply looking for the right opportunity. The phrase “early retirement” doesn’t really capture the meaning, because it actually has a specific meaning related to taking social security and pensions. Plus the word retirement itself implies that you’re done.

I’m sure the data exists somewhere in the morass of government information about how many Americans are living off their investments, but I got tired of looking. Clearly the government is more interested in measuring poverty and worker productivity than in highlighting how many people are opting out of the system.

Aside from the dozens of pretirement blogs that have popped up on the internet, there has been a growth in interest in related topics, including tiny homes, renewable energy, home gardening and even doomsday prepping.

Obviously this is largely driven by the economic collapse, where people realized how insecure their lives had been and began searching for ways to protect themselves and their families. For others, it’s just about freedom and escaping the trap. And, it’s worth mentioning that other category: the folks who were canned by their employers and left out to dry by our uncaring society. Those who were able to construct a perpetual income source in excess of their monthly expenses have often found they found more fulfillment from doing what they want to do every day than by filling their houses with more stuff.

If the economy booms again, Americans will jump right back in to their endless pursuit of material fulfillment. They’ll bloat the economy with cheap crap from China and we’ll be well-positioned for another painful collapse.

But there will be many who will learn from the past, realize happiness doesn’t come from buying more stuff and will opt for a different lifestyle. How many? Hard to say. Will it be enough to grow into a recognized slice of American society or will it be another pass fancy? Only time will tell.

But one thing is for sure: Unlike most fads that come and go this one will actually benefit those who try it. I expect everyone who learns about this lifestyle to at least pick up a few concepts that will make their own lives better.

Pretired: What’s it all about?

What does it mean to be “pretired”? EgyptVerdantEuphantineIsland_id_2674974074_PD

In recent years, friends of mine, as well as many folks online, have struggled in search of a term to describe this concept.

Many terms have been tossed about: “early retirement”, “pre-retirement”, “semi-retired”, “working part-time”, etc. None have really captured the exact meaning as well as “pretired” has.

If retirement is doing nothing, then pretirement is doing what you want to do. Obviously the term comes from shortening “pre-retirement”, not from combining “pre” and “tired”, although it feels that ways sometimes.

In practical terms, pretirement is about financial independence. If you want to keep working for enjoyment or extra money, that is your choice. But the important point is that it is a CHOICE.

There are two ways to reach pretirement:

One is to go out and make and then invest a large sum of money to such an extent that your passive income covers your monthly bills.

The other path is certainly to make and invest money to cover your bills, but it also includes cutting your overhead to bring that goal much closer. A slight variation is to cover MOST of your bills and then work a small amount or at something you don’t hate for the remainder. That, in turn, forces you to think about what’s really important in life.

So the goal is simple: enough passive income to cover my monthly expenses.

Certainly you could cut your expenses down to zero and enjoy homelessness. While that certainly has an upside of lots of freedom, here at I live in the real world and realize I do need certain comforts. But I also have found jettisoning many of these “things” cluttering my life makes me happier and I feel more free.

I am not pretired today, but am working on reaching this milestone as soon as possible. I’ve created this blog to help me clarify my thinking, work through challenging issues and if a handful of people find any of my struggles helpful, that’s all for the better.

And with that, I begin.

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