Happy holidays! Only two weeks left in 2017! Can you believe it? It’s time to wrap up 2017 and get ready for another New Year. This is an easy time of the year for personal finance bloggers because there are so many topics to write about. I’m going to tally up my 2017 New Year goals, net worth, cash flow, passive income, blog income and summarize the result in a couple of blog posts. One of my major goals is to see if my wife can early retire soon. (That’s Mrs. RB40 for our new readers.) First, I’ll go over a little background. Then we’ll see if it makes sense financially and follow up with other parts of the equation.
Here is a quick recap of our current situation. Actually, it’s probably easier to look at our earnings and follow along.
- I started working full time as a computer hardware engineer in 1996. Mrs. RB40 went off to Peace Corps and started working full time in 1999.
- Mrs. RB40 went back to college and got her Master’s degree in 2007.
- I was an engineer for 16 years and early retired in 2012.
- Mrs. RB40 is still working full time.
It’s been 5 years since I early retired and life has been fantastic. Some readers, aka the internet retirement police, said I’m not really early retired because my wife is still working. However, I disagree. Why does it matter if Mrs. RB40 is still working or not? This wouldn’t be an issue if I was 65. Most couples do not synchronize their retirement. Mrs. RB40 could have early retired with me in 2012, but our finances would have been tighter. It would have been fine because the stock market did very well over the last 5 years, but we wouldn’t have been able to invest and doubled our net worth like we did. Anyway, let’s fast forward to 2017 and see if she could retire now.
Can we maintain our lifestyle if my wife retires?
Okay, it’s the moment of truth. If you’ve been following my monthly cash flow reports, then you’d already know the answer. 2017 has been great and Mrs. RB40 could have early retired without any money problems. First, let’s see how we funded our modest lifestyle this year.
- Mrs. RB40 works full-time.
- I blog part time and generate some online income.
- We have passive income from the stock market, rental properties, and other investments.
We have very good cash flow with this model, but it’d be different if Mrs. RB40 wasn’t working full time. First, we’d lose her earned income. Then, we’d need to purchase healthcare for the family. Let’s crunch the numbers.
If my wife was retired in 2017…
First of all, we’d have less income.
- Online income: about $63,000
- Passive Income: about $50,000
- Total income =~$113,000
Second, we’d spend more money because of health insurance.
- Annual expense: about $50,000
- Healthcare: estimated $12,000
- Taxes: about $12,000 (total guess here)
- Total Expense =~$74,000
Simple math shows that income is higher than expense so the financial side looks good. Of course, it was a banner year here at Retire by 40. In previous years, I made closer to $30,000 to $40,000. Even with less online income, we’d still be fine. In that case, we’d pay much less taxes as well. The numbers still work out with $30,000. All in all, I wouldn’t lose any sleep if Mrs. RB40 wasn’t working this year.
She doesn’t want to retire yet
Unfortunately (or fortunately?), Mrs. RB40 doesn’t want to retire yet. It doesn’t look good for me because this site is focused on early retirement, but life isn’t all about me. If she wants to work, then why should she retire? Early retirement is a great fit for me, but it really isn’t for everyone. Most people are mentally conditioned to like working and that’s not easy to overcome. Work is central to most people’s lives and Mrs. RB40 is no exception. Here are some reasons why my wife doesn’t want to retire yet.
- Mrs. RB40 likes work. She changed job functions in 2016 and she is having a great time at work. She is learning new things, meeting new people, does an excellent job, and she gets good annual reviews. Work is going very well for her. Nobody wants to quit when they’re a star.
- Mrs. RB40 loves her healthcare. Her employer sponsored healthcare is awesome. We all have some minor health issues and we really appreciate the solid health insurance policy. I’m not looking forward to purchasing health insurance on HealthCare.gov at all.
- Mrs. RB40 likes being busy. I like relaxing. My perfect day would be hanging out at home, reading, playing games, and chilling out. Mrs. RB40, on the other hand, seems to find something to do whenever she has a day off. She’d garden, bake cookies, fold origami, visit the museum, volunteer, or do various things on her list. Look, she rearranged our living room during the Thanksgiving holidays. I think she’d be bored if she doesn’t go to work. (Not to mention, she’d drive me nuts if she was home all day every day.)
- Mrs. RB40 likes being a productive member of society. She has a social conscience. I don’t mind doing my own thing and I don’t care what other people say. She cares about other people’s opinions.
- Mrs. RB40 does not have a post early retirement plan. Currently, she doesn’t know what she would do if she early retire. She has too many interests, but she doesn’t have a passion project. Also, she’s not sure what to do with an unstructured schedule. I suggested that she work for Retire by 40, but she doesn’t seem overly enthused about it. It’s not her passion. It would just be another job for her.
- Mrs. RB40 likes being social. She has friends at work. Adjusting to a smaller social circle is one of the most difficult things about early retirement. I did fine because I’m an introvert. Mrs. RB40 is an introvert, too, but she’s also figured out how to work with it. I also have online friends though blogging. It’s not the same as in real life, but the online social interaction is adequate for me.
- Mrs. RB40 enjoys making money. She loves seeing her retirement account grow every year. She also likes buying nice work clothes. Now that she brings home the bacon, she feels like she can afford nicer stuff. Don’t misunderstand — she doesn’t like spending money on random stuff. She’s very careful where the money goes. If she didn’t have any income, she probably wouldn’t spend any money.
These are some of the reasons why she isn’t quite ready to retire yet. That’s perfectly fine with me because she’d doing very well at work. She’s not stressed out all the time like her previous job and she rarely brings work home. Her job is actually quite good. If I had a job that I enjoyed and paid well, I probably wouldn’t have retired either.
We are in an ideal situation right now. Our income is good and our investments are growing. Mrs. RB40 enjoys work and I like being home. This SAHD/blogger lifestyle is a much better fit for me. Mrs. RB40 wouldn’t be happy in this environment just as I wasn’t happy at my old job. Life is good for both of us so why change? Let’s keep it going like this as long as possible.
Early retirement is an option for Mrs. RB40, but the timing just isn’t right yet. She’s happy at work so she should enjoy it while she can. Her job is great now, but it probably won’t be this nice forever. She might get a new boss or maybe she’d get transferred into a position she doesn’t like. You never know what the future will bring. We’ll keep evaluating her options every year to see if she’s ready to retire at some point. She might feel differently when she’s a bit older.
Alright, that’s it for today. I hope you’re ready for Christmas. We are all looking forward to spending a few days at home and enjoying quiet family time. Let’s hope Mrs. RB40 doesn’t rearrange any more rooms this time…
For 2018, Joe plans to diversify his passive income by investing in US heartland real estate through RealtyShares. He has 3 rental units in Portland and he believes the local market is getting overpriced.
Joe highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help every investor analyze their portfolio and plan for retirement.