What does retirement mean? Lots of people don’t think I’m retired because I’m a stay-at-home dad and I blog part-time. It doesn’t bother me much. I love my life right now. Life is much better than when I was working full-time as an engineer. Still, this question occasionally pops up. If I was 65 instead of 45, I don’t think people would question my retirement. Many retirees that age still work part-time and take on various projects. However, people seem to think retirement means relaxing and goofing off all day.
People are entitled to their opinion, but that kind of retirement is not for me. It’s much better to keep busy and have various projects on the burners. You need to keep your mind active and occupied. It’s really dangerous to pull back completely and have no stress at all. I learned that from dealing with my mom’s dementia. The brain needs constant exercise to ward off that dreaded disease. It’s a huge problem now that people live longer. Anyway, I was at the gym and a blog topic came to me. Retirement is when you pull back the offense to focus on defense. Yes, I’m making a sports analogy today. I hope you stick with me a bit longer.
Starting the game
Think of your adult life as a long basketball game. Actually, football, rugby, baseball or any competitive team sport would work too. At the start of the game, you have to go on the offense. You’re trying to score as many points as possible. That’s the start of your career. You’re trying to get promotions and increase your active income. It’s all about scoring at the start of the game. Of course, playing defense is important too, but you can’t win if you don’t score. Having a high power offense will give your team a huge boost. That’s why there are so many FIRE bloggers are engineers, doctors, and other white-collar professionals. They got ahead by scoring lots of points at the beginning of the game.
The good thing about this analogy is that the opposing team is largely under your control. The other team isn’t other people. It’s just your expense. If you play some defense, you can limit your spending and keep lifestyle inflation under control. At the beginning of the game, it’s really difficult to focus completely on defense. That’s living like a college students for years on end. Most of us can’t do that. Instead, play adequate defense and limit lifestyle inflation as much as you can.
Offense – score and make money.
Defense – Being frugal and defend your money.
Half time
When is half time? I think 40 is the perfect age to take stock and go over the game plan. Let’s simplify life into several scenarios.
You’re behind
If your net worth is negative and/or you have a lot of debt, then your team is losing. This is a bad situation to be in, but it’s a reality for many families. Most likely, the team has a slow offense (low income) and bad defense (spend too much.) At 40, you really should have a positive net worth and minimal debt. To turn it around, you’ll need to improve both offense and defense. This is much harder to do at 40 than 20, but you’ll have to try. The team will lose if you don’t change.
Close game
This is where the average US household is. It’s a close game if you have some positive net worth. The median net worth of the average U.S. household is around $100,000. If your net worth is near that amount, then it’s a close game. It could go either way in the 2nd half. The problem is that your game is missing something. Either you don’t make much money (offense) or you spend too much (defense.) There is a hole somewhere. You’ll need to do much better in the 2nd half, but you can still pull off a win.
A little ahead
If you played solid offense and defense, then you should be ahead at half time. This is equivalent to saving 15-20% diligently over the years. Your net worth should be much higher than the median $100,000. However, you can’t slack off. You’re not far ahead enough to stop playing offense. The team needs to keep playing hard to stay ahead. Saving 15% means you will have to keep working until the regular retirement age, around 65 years old.
A blowout game
Aha! Occasionally, we have a blowout game by half time. The team was firing on all cylinders. The offense ran up the scores and the defense kept the other team from the hoop. Both offense and defense were stellar and your team is far ahead of the opponent. At this point, you can sub out the stars and let the bench finish off the game. If you played the first half flawlessly, you can focus on defense and don’t have to score much. You’ll still win if you’re ahead enough.
This is the magic spot where FIRE becomes reality. If you achieve financial independence by the time you’re 40, you can coast the rest of the way if you’d like. You’ll still need some offense, but passive income can fill that role. Passive income is a solid bench player. It can score, but not as effective as the star (a job.)
Retirement is …
Here is the crux of my argument. Retirement is when you pull back the offense to focus on defense. You can only do this when you have a comfortable lead. That’s why I see myself as retired. I could have found a different job and continue working as an engineer. From what I hear on the news, anyone can get a job these days. However, I took a step back and became a stay-at-home dad/blogger. That’s a big change in mentality. I focused on the defense instead.
4th quarter
For most people, retirement will come in the 4th quarter. If it’s still a close game, they’ll have to play hard until the end of the game. On the other hand, many people would have built a comfortable lead by the last quarter. The 4th quarter is actually a bit easier. The offense gets a boost from Social Security and maybe a pension. If it all works out then maybe the star player can take a break and sit out for a while.
Okay, what do you think of my sports analogy? Is it legit to think of retirement as backing off on the offense and focusing on the defense?
PS. This is a bit morbid, but the end of the game is when you die. Hopefully, you’ll enjoy some retirement before the final buzzer.
Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!
Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.
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I’m sorry for what you and your mom went through, my mom had dementia also and I will never forget the first time she no longer knew who I was. But the science and research on various forms of dementia have so far failed to prove that physical and mental activity delays or prevents the onset of mental decline. It may do that but at this point it is mostly supported by anecdotal evidence rather than peer reviewed science. One of my friends has Alzheimer’s, in the latter stages. He had run over 100 marathons, traveled to every country in the world, stayed in the most expensive hotel room in the world and one made of ice. He dog sledded in Greenland on pack ice and only turned back when it started to crack under his sled. He had been to Everest base camp and climbed Kilimanjaro. He cycled, lifted and read voraciously. He ate healthy food. Yet he had heart disease first and then dementia. Some things are just in your individual DNA.
Thank you for your comment. I’m sorry to hear about your mom as well. It’s a really tough disease.
My dad is having a hard time now. We’ll probably need to find a different option for my mom soon.
I read many books and they said it’s best to keep your mind active.
But you’re right. It’s hard to research prevention. How do you know if you prevented it? It might just be something else.
Hopefully, the science will improve soon. I heard there are new medications in Japan, but I don’t know much about it.
This is an excellent analogy, Joe!
Building off of your adversity score and privilege I’m going to build on your analogy and say that if you had very little adversity and more privilege than others then you have home court advantage with friendly refs 🙂
That’s a great point! The teams aren’t created equal, but everyone has a chance to win the game.
I love analogies!! That’s a great one.
That’s funny that people don’t think you’re retired. I think the definition of retirement is being able to do whatever you want with your time (in that case it was working out and thinking up analogies during a weekday- an enviable position!!).
That’s a good one. It is quite a luxury to work out at 9am. 🙂 Thanks!
RB40 –
Being a HUGE basketball fan with my beloved Cavs, I LOVE This article. Easy to relate, creative and fun.
I couldn’t agree more with your conclusion about FIRE. Halftime for those that can, truly need to play defense, primarily, and show a little offense when needed, as they are in blow-out territory.
Thanks for sharing this, as said earlier, very fun.
-Lanny
I’m glad you like it. I haven’t paid much attention to the NBA for years. Our team’s destiny is playoff disappointment. 🙁
Joe – I’m a big fan of your analogy equating retirement to sports! In fact, I can equate a lot of personal finance concepts to sports (making money, running a balance, negotiating, etc).
Joe, I suggest that you could prepare for overtime in the game of life and money. You will never know what could happen if you only play defence in the last quarter. Defence also means sitting back on your ‘rocking chair’ and waiting for things to happen. Colonel Harland Sanders (KFC) in reality was contemplating his next move (play) at the age of 65. if you want more excitement in the last chapters of your life keep playing good on offence (productive longevity) at the same time as preserving a solid defence.
Joe,
Great timing thinking about the NBA Finals…
Well done! Spot on. Love passive income as a bench player.
Beyond the financial side, staying fit and having a strong sense of purpose can send it to overtime…
https://www.telegraph.co.uk/science/2019/05/24/sense-purpose-doubles-chances-enjoying-long-retirement/
Thanks, Joe C
Thanks! My team is out, but I didn’t expect much from them anyway. Like I told RB40Jr, the Trailblazers will disappoint you. 🙂
nice analogy, joe. i’m glad to see from the photo that jr. is learning with a full size ball too. even though i’m still working a w2 job i see as mostly on defense at this point. we’re gliding in and saving less on the way to calling it quits.
That’s actually a junior size ball. The big ball is too heavy for him right now.
Your W2 job is a step back too, right? You took a less stressful job. That’s the beginning of cutting back on offense.
Interesting analogy. If a person has done it right, hopefully, they do not have to overly focus on defense and are able to at least maintain pre-retirement spending habits. Maybe even live it up a little with more leisure travel. Here’s another thought Joe. Instead of the end of the game being the end of life, I think we need a post-game recap show. So the media can come in and interview the stars of the game and ask some tough questions about the coaches decisions. Tom
You’re right. If you’re far ahead enough, you can just coast to the finish line. Enjoy the 4th quarter.
Post game recap is a good idea, but the analogy breaks down. What’s the equivalent of post game?
I love the analogy. I thought you were going to go with individual sports players when they retire and go to their second act. For example, Tony Romo is a retired football play, but he’s not “retired” (by some definitions) since he’s doing football broadcasts now.
Using this barometer, I guess I retired at age 31 when I left software engineering for blogging. I have always felt that I straddled the line between self-employed and retired.
Part-time self employment is a huge throttle back from an engineering career. I think it’s a much bigger step than going from blogging to full retirement.
This is a really refreshing perspective — and timely! I was just thinking over the long weekend about how nice it was to spend my time walking around my city and being among friends rather than stuck behind a desk getting frustrated at screens.
Once our investments and cash on hand crack $600k-$650k I may have a chat with my wife about throttling back. A walkable low-stress part-time job would still allow me to contribute 50% of normal annual expenses as our investments snowball, especially if she still enjoys her higher-paying work.
Part-time work is the best option, IMO. It keeps you engaged and gives you something to do. Stop working completely is not a good choice for me. 50% is quite good. That would work.
Touchdown! Fun post, Joe!
What if you’re my home team (the Browns) in this game? That’s the only football team I watch every week during football season. Do you think you’re predisposed to not being able to retire… like ever? 😉
— Jim
I dunno, man, sounds like the Browns just got a huge promotion and moved from the cube to an office this offseason. OBJ and Vernon off that Giants trade alone probably earned your squad 2 wins over last season.
As a Steelers fan, I’m nervous you guys might actually beat us this year 😉
I don’t know much about the Browns. I guess they’re not doing too well from your comment. 🙂
Joe! You’re so creative! This is funny and entertaining and right on! The retirement phase is a much trickier game than the accumulation part. Thanks for the fun today. Think I’ll have a hot dog.
Thanks! I appreciate your encouragement. I was hoping this comparison would work.
At half time we had nothing and we got married in out 40s. We quickly got strong at both offense and defense in the third quarter and retired comfortably in our late 50s. Now we’re still playing defense by rebalancing our portfolio and tracking our expenses. I’m still getting used to the spending part, but I’m getting the hang of it!
Interesting analysis Joe!
Really? I thought you guys were okay at 40. Good job turning it around in the 3rd quarter.
Enjoy Australia!
We got married at ages 40 and 42 and didn’t have a pot to pee in! We’re back from Australia but you must check out the photo in tomorrow’s short post!
Love the analogy of Passive Income coming off the bench to sub for the star.
My passive income will never get to the level of my W2 gig but in reality it doesn’t have to. I would say at halftime I was actually losing because that was right when my divorce was going through and knocked off 7 figures from my net worth which was barely above water anyway at the time. But I definitely had an incredible 3rd quarter and I’m hoping that the rest of the way the bench will get a chance to shine.
Thanks! Passive income is a solid bench player, but it usually can’t compete with the star until much later.
You had an incredible 3rd quarter. Although, you had a huge advantage with your profession. Great job turning it around.
Interesting analogy Joe! I never really thought of my savings rate as the “score” in a game, but now that you mention it sometimes building my net worth did seem kind of like a game.
Now, I’m in the 2nd half with a clear lead, so I can kick back and focus on defense. It’s been a pretty good life the last couple of years since I “retired”.
I know you don’t really like the word “retired.” I just think of it as throttling back on the offense.
Great job building up a good lead.
I’m winning and running up the score, and I don’t feel bad about it 🙂
I’ll have to borrow from Jonathan above. Bravo! Keep at it.
Bravo! That was a pretty excellent analogy. I was wondering where it was going but it eventually made sense. I think with the whole FIRE movement, the definition of “retirement” is definitely hazy right now. It means different things to different people (esp depending if you’re in FIRE community or not). I don’t know if I’ve settled on my definition of retirement yet, but I think as of now it is if I have the ability to do what I want without worrying about money, whether that is doing working or not.
Thanks! I was hoping it would work. Retirement really is up to you. It’s mostly psychological once you leave full-time work.