The Wall Street Journal had a rough article about the recent surge in price inflation pushing retirees back to the work force. We all heard about the so called great resignation whereby people, buoyed by gains in the stock market and concerned about catching Covid, retired or they thought they were retiring. I wrote a post about regrets/mistakes of the great resignation a few weeks ago. The wrinkle being added in this latest WSJ article is price inflation.
It seems relevant to mention the book Multiple Streams Of Income by Robert Allen. I read this book almost 20 years and it had a big influence on my thinking about many subjects. Having multiple streams of income is a form of hedging against the unexpected. It's a form of resilience, optionality and it's a path to setting your own schedule which are all huge life priorities for me.
Creating multiple streams of income avoids being overly reliant on everything going just right. Last summer I mentioned taking on a new gig as a "research volunteer" for an endowment that gives money through grants to non-profit organizations. You know how in life, you have plans or at least a framework for a particular outcome and then something comes up? I was having a conversation with the President of the endowment and in the conversation he said to the effect, you don't want to be in a situation where something can't come up meaning that the potential something at the wrong time could be ruinous.
If I wanted to retire and did so, and was forced back to work I didn't love because my retirement planned failed in less that two years despite the stock market being up a lot, well I might call that ruinous. Ruinous in terms of my happiness anyway. The context of my conversation was far less dramatic, I was busy with a big project that I was getting done very early so that I wouldn't be time crunched into 16 hour days, sweating getting it completed, a week before the deadline and then in that last week, we have a serious wildland fire here which would place huge demands on my time.
The basic blueprint these days for retiring is two streams of income; Social Security and portfolio income. That blueprint might be on shaky ground for society at large given all the data on how dismal saving rates are and have been for quite a while. Harsh comment comment coming but the reality is that at some level of being undersaved for retirement, you have a pretty good emergency fund, not a retirement fund. Having $100,000 would hopefully cover many years worth of emergencies but assuming the 4% rule, that amount of money kicking off $4000/yr doesn't seem that robust.
For years, I've been writing about things like monetizing hobbies, part time work at places like National Parks, state parks or other recreational areas or even seasonal work like many years ago I wrote about seasonal work for Amazon in distribution centers around Christmas time. As I recall that post, the work is grueling but only two months of the year and I seem to recall it paying pretty well. I don't know if that opportunity still exists or not but being able to do that brings in our past conversations here about health span and optionality. Two months of tough physical work and 10 months of not having to work might be appealing to some people's situations. I'd prefer to have to choice of saying yes or no as opposed to having terms dictated to me as a result of consequences from not having stayed fit when I was younger. That too is harsh but so is the reality of not having enough money when you thought you did and having to scramble to figure something out.
The time to start solving a problem is before you have the problem. You can't always see around the corner of course but you know you're going to get older and at some point you're primary source of income will change as your career will eventually end. I've said countless time that I don't want to retire but I'm not counting on a thriving advisory practice when I'm 90.
Solving a problem that for now is merely a threat provides the opportunity of being able to play a long game. If something you'd love to do as a fall back or Plan A for post retirement calls for many years of paying dues, well at 50 you probably have plenty of time to pay those dues. If you're desperate to retire at 50 then maybe you have a little less time. I will say that 50 and healthy can be very young, if you're desperate to retire at 50 but it takes two or three more years than you'd have hoped to line up all your ducks, that's ok. I can tell you first hand 56 and healthy (knock on wood) is very young.
Examples of long term ideas for income streams that I've been cultivating include fire related work, I've made money writing before so maybe I can again, our Airbnb is already a viable income stream, there's a path to a small income stream unrelated to portfolio management at the endowment where I'm currently a research volunteer, income from my photography seems like a low probability but not impossible I suppose, I don't know whether there's a potential income stream to be had related to fitness and exercise as some sort of coach. I know I'm putting in a lot of time to learn and that's an important early step to creating an income stream
Having a long list of interests makes life more interesting as well and while I don't take the Malcom Gladwell idea of 10,000 hours to pertain to every person and every endeavor they might pursue, there's something to it. Immersing yourself into something you love is rewarding all by itself and if it turns into something you can monetize, all the better.
A couple of weeks ago I joined James Altucher's new social media platform called NotePD. It's based on something James has been talking about for years, writing down 10 ideas everyday. The way I post is more like 10 points about one idea. My posts there relate to my blog posts here but are not pure duplication. Go to NotePD.com and search for @randomroger and let me know what you think. I think it's a great platform so far because it skews to development and productivity. Hope you'll join and engage.
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