Sunday, June 13, 2010

Over Delivered and Over Committed

One element of our plan to extend our retirement savings is to work part-time and earn at least 20% of our retirement income needs. We achieved 27% in 2008 due to deferred compensation payments and 16% in 2009 due to expenses being reduced through paying off our mortgage. In 2010, we've been able earn 21% of our yearly retirement income needs through May 31, 2010. At this pace, we are on track to earn between 47 - 51% of our retirement income needs, which is over delivering versus the goal of 20-40%.

While the results are encouraging, I feel over committed by my part-time jobs. In my analysis, the feeling of over commitment is primarily due to one temporary job which I accepted for a six week term. It requires a minimum of 30 hours per week, but can be spread out over 7 days between 8 AM and midnight. I also have the flexibility to work part of a shift. Currently, I have three other part time jobs that average 1-5 hours a week and a fourth job that averages 10-12 hours per week. Overall, I work about 15-2o hours per week in these other jobs.

My dilemma is the temporary job is steady, pays well and is likely to be extended another 4 weeks, with potential for longer. Since I started in mid May, it has not yet contributed much to our income. Going forward, I expect to earn about 40% of our income each month from the temporary job.

It's the classic trade off of time versus money. The money is good but the time expended is not :-) Here's how I plan to address the issue:

  • Work for six weeks. I believe in meeting my commitments. I agreed to work for six weeks and will complete the term. I am already into the sixth week.
  • Keep options open. If offered an extension, I will accept. In addition, I will take time off for at least a week.
  • Avoid future part time jobs with significant time commitments. The temporary job has been a good learning experience. Constantly working over thirty hours per week in one job is not what I want to do in retirement, even if the pay is good.
  • For now, I plan to continue my other four seasonal part time jobs. They continue to be very flexible, interesting and have employee perks I can use.

    For more on New Beginnings, check back every Sunday for a new segment.

    This is not financial advice or retirement advice. Please consult a professional advisor.

    Copyright © 2010 Achievement Catalyst, LLC


    pfstock said...

    Let me get this straight. You have 5 part-time jobs. One of these requires 30 hours per week, and the other 4 jobs require 15-20 hours...

    Are you sure that you're retired?

    Super Saver said...


    A real good question :-)

    I attribute my predicament to poor forecasting. First, I estimated that my two teaching jobs would have zero hours per week, due to it being summer. Second, I thought the 30 hour per week job would end in 3 weeks. Instead, the teaching jobs are about 5 hours a week and the 30 hour per week job is going into the sixth week.

    While 4 part time jobs at 20 hours a week may not sound like retirement, I feel like it is since the work is fun and I have flexibility to choose my work times. In addition, 20 hours doesn't take away from family time and I can take extended breaks at any time.

    Anonymous said...

    I'm confused too. Are you calling yourself retired just because your work is fun with flexible hours? What is your definition of retired?

    Super Saver said...

    @ Anonymous,

    A great question. I don't think there is one definition of retirement anymore. So mine may not apply to everyone.

    For me, having retiree benefits (e.g. health care, access to retirement accounts or pension) and expecting to live primarily on savings/retirement distributions for an extended period (20 or more years) are two important criteria of being retired.

    For me, working a few part time jobs does not end "retirement." To me, my part time jobs are not that different from doing volunteer work for 20 hours a week. However, if I started working a full time job, I would definitely consider myself not retired anymore.

    Perhaps, I'm rationalizing:-) I will give your question more thought in a future post.

    Anonymous said...

    Super Saver,

    You are playing loose with definitions and I think you are misleading your readers. When most people think of someone being retired, they assume that person is financially independent and not having to work to cover their present or future expenses.

    The retiree benefits you mention (e.g. health care, access to retirement accounts or pension) and expecting to live primarily on savings/retirement distributions for an extended period (20 or more years) describe the same benefits and expections of a non-retired (working) person with insurance and a 401K/pension. Think about it.

    You contradict yourself. You say that your definition of "retirement" is the benefits you mention. Yet, you then say you wouldn't be "retired" if you went to work full time. Wouldn't you still have the benefits that, in your definition, make you "retired"? Aren't you working full-time now, with 40+ hours of work? I guess you have yet another definition of "full time" than everyone else, Mr. Clinton?

    Working 40-50 hours is considered full time! It doesn't matter if the jobs are labeled part time, seasonal, etc... There is a big difference with someone legitimately retired (not having to work) and doing 20 hours of volunteer work and someone working BECAUSE THEY HAVE TO WORK to sustain themselves financially.

    You are not going to build affinity with anyone on your blog by misleading people.

    I suggest you either stop using the word "retired" or clearly spell-out your definition of "retired" front and center on your blog's front page.

    Super Saver said...

    @ Anonymous,

    Some very good points. Thanks for the discussion.

    The only point I will dispute completely is the claim that I have been misleading my readers. I feel that I have been very upfront with what is happening, especially with our choice and reasons to take on part time work. For example, my posts have enabled you to question whether I am really retired.

    Perhaps, my definition of retirement would be better stated as having the "capability," instead of the "expectation" to live on primarily on savings/pension for 20+ years. That would be the differentiation from non-retired people that have the expectation, but not the capability to live primarily on their 401K for 20+ years.

    Finally, I am going to give some thought as to whether I have "unretired" and am in denial, per your President Clinton comment.

    Anonymous said...

    I don't think you've intentionally mislead readers. I think you've taken liberties with some basic principles and without further claririfcation, a reader could assume that you are financially free.

    Regarding capability, I think you are making my point. Are you indeed capable of retiring right now? It seems as if you are not. Rather, you have to rely on income from part-time jobs. Maybe you did have the capability at one time, tied to your expectations of how the stock markets would perform.
    If you are not capable of retiring right now, you are not retired.

    Super Saver said...

    @ Anonymous,

    I will answer your comment in three parts and hopefully, it will provide some insight into why I still consider myself retired.

    First, do we have the capability to retire today, i.e. live entirely on our savings/retirement accounts? According to the latest retirement analysis by our financial advisor, the answer is still yes. The projection is that we will have sufficient funds until our nineties with an 86% confidence limit. Since 80% confidence is considered good, our financial advisor thinks it's unnecessary for me to work at all for income.

    Second, are we less well off than October, 2007, when I retired? The answer is yes. Our savings and retirement accounts have declined about 33% and the original analysis showed we had a 92% confidence of reaching our nineties at a higher target annual income. Fortunately, our expenses are now lower since we've paid off our mortgage.

    Third, am I confident that our financial situation will stay the same or improve in the future? The answer is a big NO. With the current market volatility, another 33% decline in our savings is a possibility, which might create a failure in being able to live entirely off savings until our nineties. In that case, I would be looking for work to cover 100+ % of our living expenses.

    Since I want to be prepared, I've been considering a worst case scenario -- we don't need earned income now, but do in the future. For me, the part time jobs have been a test whether they could cover 100% of our living expenses. Unfortunately, it looks like the answer is at best 50% and a permanent full time job may still be the only solution.

    Again, thanks for the discussion and questions. They have helped me clarify my thinking on some next steps to do.