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Are You Ready for Pretirement?

In our society, we tend to mythologize retirement.  We tell our kids – “Work hard for 40 years in a series of jobs that are barely tolerable and then you can spend the next 20 years living in your dream house overlooking the ocean and play golf every day.”  We preach this idea of deferring happiness like it’s the gospel.

I don’t believe for a second that it’s true.  If you’re clever, you can start living your retirement dream at the age of 40 …  or 30 … or, right now, regardless of how old you are.  Now, that doesn’t mean that you won’t have to work and continue to build wealth, but you can move to your dream geography and start being happy anytime you want to.

I like to think of it as “pretirement” – which I define as “where and how you live your life before you’ve accumulated enough wealth to retire”.

Here’s a simple test that you can take to determine whether you should consider pretirement.  Ask yourself these two questions “Is my family happy with where we’re living and what we’re doing to accumulate wealth?” If the answer is “no” to either of these, then pretirement might be right for you.

Now, if you think pretirement is worth considering, then you have to peel back the onion on those questions that you just asked yourself.

 

Where should we pretire?

This seems like it should be easy, but it’s a lot trickier than you would think.  Where do you want your home base to be for the rest of your life?  That’s a pretty momentous decision.

You might be thinking, “I love skiing, so I should pretire to Colorado or Idaho.”  But do you really love skiing enough to deal with winter weather for 5 months every single year?  Other people might want to pretire to a warmer climate – perhaps close to the beach.  But are you prepared to handle hurricanes or frequent flooding? Still others may want to pretire close their family.  Family is great, but will they be less great if they stop by unannounced, want you to spend a lot of your time helping them, or ask to borrow money from you? These are some things to consider, but there are many more.

  • What’s the cost of living? – Moving to a location with a  lower cost of living is a major advantage of pretiring.  Many pretirees move from high-cost cities like New York or Los Angeles to lower cost areas.  This can allow them to both save money & accumulate wealth more quickly and/or afford a larger, more comfortable house.
  • Are schools a factor?  – Do you have school-aged children?  If so, living in the woods of Maine may not be practical, for example, because your kids would have to be bussed an hour each way to a mediocre school that won’t prepare them for the college you hope they’ll attend.  The Great Schools website is a fantastic resource for this.  Once you identify a general of area of geographic interest, you can look up schools in specific towns to see if they’re any good.
  • What about state colleges? – This is sort of extension of the last one, but even if you find a great high school in a low cost of living state, what about colleges?  If the apple of your eye doesn’t get into Harvard, is there an amazing state school that they can go to with reduced, in-state tuition.
  • Close to a decent-sized city? – Now – you may choose to live out in the woods in a log cabin, but there are good reasons for being within an hour drive of a big city.  One is the ease of finding a new job.  For example, you move to the back woods of Vermont but continue working a virtual job.  What if you lose your virtual job and need to quickly be making $80,000 – $100,000 a year so as not to derail your lifestyle or other goals?  Another benefit of being close to a big city is cultural diversity.  Even if it’s only one day a month, maybe you want to go to a ballet or eat Vietnamese food – which are all easier to accomplish in a city with more than couple hundred thousand people.
  • Close to major airport? – Similarly, it’s great to be within a 60 – 90-minute drive from a major airport.  This opens up all kinds of remote job opportunities that require travel.  It’s also friendly to the common pretirement goal of traveling more frequently.  Think about the difference between living in a quaint 2000 person farming town in Iowa versus a similarly quaint farming town in North Carolina.  In Iowa, you might be 3 – 4 hours from a major international airport.  In North Carolina, you might 60 mins away from Charlotte – the 8th busiest airport in the US – which happens to have frequent flight and cheap fares.
  • Is it conducive to seasonal or other types of businesses you might want to start? – Maybe not immediately, but at some time in your pretirement you may want to start a business.  For example, you may want to start a business that caters to tourists, so it would make sense that you pretire to an area where lots of tourists visit.  Or, you may want to buy apartments and rent them out, so it may make sense to pretire in a college town, where there’s a booming rental market.   Or you may want to start an ecommerce empire (where you actually hold inventory), so it would make sense to pretire where you can inexpensively rent warehouse space or even buy a house in a rural area with a barn that could be converted into a storage area.

What’s the best way for us to continue accumulating wealth during our pretirement?

Of course, this depends on how much farther you have to go before you reach your financial goals.  If you are pretiring at 30 and have aways to go before you reach your goals, there are certain options you might want to lean towards.  But, if you are 50 and are already 85% towards your financial goals, then you might want to lean towards some other options.

Regardless of whether you’ve just getting started accumulating wealth or you are already quite wealthy, you may want to consider doing a couple of things simultaneously.  Not only will you spread out your risk, but you’re also less likely to get bored.  Here are some options that we recommend considering – especially for those folks that may have chosen to pretire in a low cost of living area without a lot of big companies to supply jobs.

The other thing to bear in mind is that you can always change pretirement jobs.  You might pretire at 35 and have 5 jobs that meet different life experience goals before you reach your wealth goals.

We’ll list the pretirement careers in order of the flexibility that they offer (from least to most)

  • Get a job that requires lots of travel. – These types of jobs are particularly friendly to pretirement, because it frequently doesn’t matter where you live as long as you’re close to a major airport.  Some jobs that fall into this category are consultants, airline pilots / flight crew, sales people, trainers, or tradeshow managers. One tip to consider here is that you may want to get one of these jobs while still living in a major urban area.  Then, when you pull the trigger and pretire, your employer may trust you enough to let you work away from the headquarters on an exception basis.  And, even if your current employer, you will have experience in a discipline that lends itself to working remotely.
  • Start/Buy an offline business. – There so many types of business that you could run, that it’s impossible to name them all.  But you do have to consider whether you want it to be a seasonal business or a year-round business and whether you want it to be a people intensive business (like a restaurant) or a capital intensive business (like a manufacturer).  You also should consider whether you want to start the business from scratch or buy and existing business (or maybe even a franchise).
  • Get a job that can be done remotely. – If you have to (or want to) work for someone else, this is the ideal job for pretirement.  As long as you have an internet connection and a reliable phone, you can do your job.  Some employers want you to be in the same country where the company, but some may be flexible enough to allow you to work anywhere on the globe.  Some jobs that fall into this category are computer programmer, writer / content creator,  graphic artist / designer, customer service rep, recruiter, and accounting / finance.  Honestly, just about any job can be done remotely – you just have a find a company that is remote-work friendly or maybe an employer that loves you so much that they would rather have you work remotely than lose you.
  • Become a freelancer.  – This kind of like working remotely, but you are usually a 1099 employee instead of a w2 employee.  The upside is that freelance can work for multiple companies.  The downside is that freelancers rarely get medical benefits. Some jobs that fall into this category are programmer, IT administrator, writer, graphic artist, and marketers.  Any job that requires deep knowledge of narrow topic lends itself to freelancing.  For example, a company might want to hire an email marketing guru, but they only need someone 10 hours a week.
  • Start / Buy an online business. –  Of all the pretirement career choices, running an online business offers the most flexibility.  Even if your business requires inventory, you can always house the inventory with a drop shipper.  Some choices here include blogger, ecommerce store, affiliate marketer, podcaster or video producer.  The great thing about many online businesses is that you can do them from literally anywhere – from the ski chalet – from the beach – from an airport lounge to your next destination.

 

Just to reiterate, being pretired doesn’t mean you can stop working and be worry free.  What it can mean, though, is that you can start living 50%, 60%, maybe even 90% of your retirement lifestyle right away.

If any of you are pretired, I would love to hear how it’s working out for you and whether you’re happier now than you were before.  Please let me know in the comments.

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