Pinyo‘ s Twitter account pointed me to a great essay by Philip Greenspun about early retirement.
In it, Philip breaks some myths about early retirement, particularly the one where people think that they will do everything in retirement, but end up “waking up at 9:30 am, surfing the Web, sorting out the cable TV bill, watching DVDs, talking about going to the gym, eating Doritos, and maybe accomplishing one of their stated goals.”
Having said that, it’s pretty much my ideal of the early retirement 🙂
But, it was actually this paragraph that caught me, as it’s something that I had experienced but just below the level of conscious thought – maybe it’s something you will one day experience, too:
Tattoo Your Net Worth on Your Forehead … otherwise folks will greatly overestimate your wealth. If someone at a party asks you what you do and you answer “retired”, if you appear to be under the age of 50, almost always they will greatly overestimate your wealth.
The magazine Elite Traveler, depicts the lifestyle to which Americans aspire. A watch costs $30,000, a survey of hotel accommodations in Mexico or New Orleans shows suites ranging in price from $3,000 to $20,000, getting from point A to point B costs $5,000 per hour in a private jet, partying for a week involves chartering a yacht for $200,000. When you say “I’m retired” the other person at the party hears “Even without working anymore, I can afford to live the Elite Traveler lifestyle.”
I have retired with a few million (the title of my blog underestimates my wealth), yet I cannot live the “Elite Traveler lifestyle”, at least not in good fiscal conscience.
I usually travel business class, but sometimes fly coach (I always fly coach domestically); I could afford a Ferrari but drive a BMW (OK, I’m not exactly slumming it: it’s a current model M3 convertible); we travel overseas twice a year (this year we’re ‘saving money’ and only traveling o/s once); and, I live in what can only be described as a mansion (with a ‘spare’ one in Chicago).
But, I certainly don’t consider myself in the Elite Traveler league.
What I did notice – retrospectively, after reading Philip’s essay – is that my friends do make comments indirectly about my wealth (“oh, you don’t have to worry about that” when talking about spending $x on $y), kind of assuming that I’m Oprah.
I’m not. And, I still budget …
… kind of: sometimes, I count millions (“oh yeah, the business is worth $1m; the house in Chicago $1m; the house in Australia $5m; the two development lots are worth another couple …” and, so on); I do this when I get nervous about money … when you live in a ridiculously expensive house, with another you can’t get rid of, and don’t really have anything (yet) that brings in an income, even millionaires worry about money. Hopefully, totally unnecessarily … but, they still worry.
I remember the survey conducted a while back by The Spectrem Group who analyze America’s wealthiest families; when asked how much the average millionaire or multimillionaire thought they would need to feel truly wealthy, they overwhelmingly answered: “about double”.
That’s how I feel … but, don’t feel too badly, I’m sure I can learn to live with it 😉
The post is missing a title I think…
Anyway – so where is the center of gravity of your life these days – US or AUS (i.e. in which economy are you an entrepreneur – playing in both is pretty hard because of time difference)?
Which of the mansions are you trying to sell?
I am always amazed by the adds in magazines. For example, I used to smoke cigars (I still like to, but don’t for health reasons). So occasionally, I would pick up a copy of Cigar Aficionado(mainly for the ratings of cigars etc). But the ads in that magazine are for way over the top luxury products similar to what you mention. I always aks myself who buys that stuff. Are all readers of that magazine target consumers for private jets? You have to look hard to find cigars that cost >$100 a pop. Most good cigars are in the $10-$50 range. Plus, unless you are some kind of tobacco maniac, you can’t handle much more than 2-3 of those per week. So even if you have an expensive cigar habit, you are talking small potatoes in terms of $s. So why are such magazines littered with ads for insanely expensive products? I guess it works, otherwise the magazine would go out of business, but I don’t get it.
@ Jake – Headlines are overrated, but I fixed it anyway 😉 Thanks for letting me know!
“and don’t really have anything (yet) that brings in an income, ”
This reminds me of a conversation I had with a friend after we sold our first business. (he made lots of money. I didn’t :-))
His comment then was, that having a pile of money, is not useful, because expenses continue to be a regular occurence. So we realized that one can only really “retire” when you have enough secure, passive income. Many people make the mistake to think you can retire on a pile of money.
Until you’ve figured out how to turn the pile of money into secure, long term passive income, you’re going to have to keep “working” – even if that “work” is the process of moving that money into income generating, secure, instruments.
@ Ashton – All too true 🙁
I suppose that post retirement, motivation has to come from within – you no longer have the discipline of needing to go to the office and respond to the demands of a structured job. Paradoxically, if this is correct then in one repsect, people who have started their own businesses may be better placed to get the most out of early retirement but lesss likely to actually want genuine early retirement than us wage slaves.
As to high cost lifesytles, I couldn’t agree more. If you can afford a fraction of the luxury lifestyle being advertised, you need to be wealthy well beyond the ranks of the common millionaire or even the common multi-millionaire to afford a fraction of that stuff.
For my part, my two main vices are business class travel on long haul routes (we go economy for short haul) and seriously overpriced french wine.
Cheers
traineeinvestor
@ TraineeInvestor – agree on the business class long-haul travel. But, I reckon I can save you a few bucks on wine if you switch to buying the Aussie stuff 😉
Adrian
I’m sure you can, but you’ll need to provide me with some samples before I make any decisions. 🙂
I´m part of the “myth” this guy Philip tries to break. Sorry…
@ Esperanza – Don’t be sorry! If you’re ‘early retired’ and happy/active (I know I am), more power to you!
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