Wednesday, May 30, 2012

Want Positive Change? - Recognize Reality

"Everyone thinks of changing the world, but no one thinks of changing himself." ~ Leo Tolstoy

Positive change requires a good recognition of reality.  Once reality is understood, necessary changes to correct the situation can be made.   Here are two realities I've learned from early retirement during the great recession.:

  • Doing what I love doesn't pay much.  The youthful wisdom is to do what one loves and the money will come.   Unfortunately, this is a fantasy perpetuated by the higher education system to encourage students to attend post secondary education.  My reality is to work at jobs that have high pay and the money will come.  The best I 've been able to achieve doing what I love is 1/3 of my pre-retirement job.

  • Sustainable good investing is not easy.  Everyone is a great investor in a bull market.   It's during times like the past 10 years that the great investors standout for making money during these tough times.   The past 10 years have taught me that I'm not a great investor. 

  • Based on these realities, I'll need to rethink our income opportunities in retirement.    My fantasies of doing part time jobs I love and investing in the stock market to support retirement are definitely not realistic.  By the end of 2012, I will likely put a significant amount of our retirement savings back into a managed account with professional investors, which should help us maximize our return from stock investments.  in addition, I will cut back my part time retirement jobs significantly since the earnings are only a small percentage of our expenses.

    For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

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

    Copyright © 2012 Achievement Catalyst, LLC


    Grace. said...

    Since you retired fairly early, and apparently had a very high income during the years you did work, this strategy works for you. But given the realities of retirement these days, I remain glad I chose work that I truly love even if it doesn't pay as well as other work in my field. I've worked a long time, and I still have a ways to go. It would be too sad and too frustrating to get up every day and go to a job I only tolerated for the money. (OTOH, it would have been even better if the pay for what I do do were higher!)

    Anonymous said...

    I agree with you that post-retirement jobs are not the blissful experience that some "encore career" people claim them to be. I just finished a full-time 5 month job that was in a field I am deeply interested in but I was paid 1/5th of what I was paid in my pre-retirement career. Yes there were moments of interesting work but ya know what? It was still work. And I also found that the respect and job duties you get are highly correlated to what you're paid. If you get paid like an intern then you get the duties of an intern.

    Think long and hard about using a professional investor. In my many years of investing I have found that no one cares about my money as much as I do. Whether it is a financial planner, accountant, or tax professional, I have been disappointed in the 1st order suggestions they have. By doing a little bit of book reading and internet digging I find within a week or two my knowledge about my situation is usually far greater then these "professionals". I know my specific situation intimately whereas these professionals need a much broader knowledge.

    Super Saver said...


    While working, I convinced myself that I loved my job. After retiring, I realized that I worked at a career that enabled me to use skills that I liked to use to achieve something of importance to me. I didn't really love my work, but no regrets. Not saying that is the case for you ... especially since I only know you through your blog postings.

    You and I both grew up at a time when people worked to make money to support themselves. I think young adults are being sold a fantasy about working at something they love. Right now, I think the reality is to work at something that pays ...

    Super Saver said...


    I agree, work is still work, even if one loves it.

    I share your concerns about financial professionals. I agree no one watches out for my money as much as I do. Also, I agree there are many that I feel don't match my level of understanding. So I have sampled some professionals with a part of our investments to get an understanding if there is a match to my expectations of a finacial professional. I know I'm considered high maintenance since I asked lots of questions :-)

    My main concern is for my family, which won't be managing the money as closely as I am. For my parents and in-laws, the husband handled the investments, taxes, etc. When the husband passed away, the wife wasn't interested or able to manage the financial matters with the same level of depty. I'm getting prepared for the time when I'm gone, and the financial assets need to be managed by others.

    However, until then, I plan to still manage a part of my investments just to make sure professional management does better than me :-)