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How to Retire Early With SemiFIRE

May 10, 2018 by Cubert

semiFIRE

Had a bad Monday? You’ve come to the right place. Let’s dive into the mechanics of how to semi-retire and abandon your cubicle early. Now that we have FatFIRE, to go alongside LeanFIRE, we can add SemiFIRE to the lexicon.

A semi-retired friend of mine, Uncle Daryl, inspired today’s post. Daryl and I met over coffee last year, and he shared his career life story. He’s a pioneer in the Semi-Retirement (SemiFIRE) space. Tired of answering to unreasonable corporate management, Daryl set off with a friend and colleague to create a consulting firm.

It wasn’t easy at first. Clients had to be won and Daryl had a family to support. Eventually, his business became a sustainable success. Daryl became his own boss and thrived. Today, he and his wife Mary enjoy winters in Arizona, and beautiful summers in Minnesota (where he spent most of his professional career.)

 

How to Semifire with Uncle Daryl
Daryl and his wife, Mary. Semi-Retired, with the fully-stacked hat! (courtesy, Kate Gerke)

 

My First-World Struggle to Semi Retire

Readers of Abandoned Cubicle are familiar with my all-out-war with the cubicle. Every other post launches into a personal tug-of-war with my work-life and the dream of financial independence. You’d think my butt itched every time I sat in an office chair. With SemiFIRE, just about any uninspiring job could be tolerable with the hours cut in half.

Come February 2020 I could jump out of that corporate airplane. But what if I don’t have a landing zone defined by then? Unlike Daryl, I don’t know what I’d “jump to” yet. All this indecisiveness would go away if my current employer would let me work part-time.

I could look for part-time work elsewhere, and who knows, maybe even wind up with healthcare benefits? Consulting on a part-time basis would be nice. But I’d have to combine skills with tasks I enjoy enough.

I could see myself pursuing real estate investment consulting. Maybe fire up a “Coach Cubert” online course and give talks at conferences. I don’t know that that’s been done before but I should look into it. At least I would avoid retirement boredom.

A friend of mine who came from a corporate lifestyle recently made the transition to consulting. The problem is he’s now over-committed with THREE consulting gigs. Weekends and time with family have been compromised. Does he need to take on that much? I’d argue he doesn’t if he’s still driving a sharp Audi A4 Quattro and living in a ginormous house.

 

Should I Semi Retire Early and Move Too?

Here’s an intriguing idea: Say you get caught up in those HGTV House Hunters episodes where they focus on beachfront properties. You imagine being one of THOSE couples. You know, nitpicking your way through several “diamonds in the rough” until you find one you don’t have to lift a finger on.

If you think you want to be near a beach or live someplace warmer, you could certainly do your homework to assess where you might live for a lot less money. This is nothing new for traditional retirees, who have found wonderful low-tax states to retire in, like Nevada, Arizona, and Florida. We just have to figure out how to get more funding to schools in those states.

Another, increasingly popular option is to semi-retire in a foreign country. In this scenario, you work part-time and enjoy the tropical breezes with a super cheap mortgage and reliable medical care. Costa Rica, here we come! This is a bit of a tricky one though if you have commitments like kids and aging parents. Of course, you could move them all down there with you?

Retiring abroad is a growing trend, and SemiFIRE can be an option if you are willing to learn a new language and are open to different customs and norms. I don’t think we’d pursue this option ourselves, with all the real estate and business obligations to manage. But I could certainly see myself running up and down the beaches of Costa Rica, like snowbirds in our Medicare years.

 

Cloud Forest
No unicorns, but I did spot a rainbow in the cloud forest (Costa Rica, baby! c. 2009)

 

SemiFIRE Is Not LeanFIRE

There’s another type of early retirement known as “LeanFIRE”. That’s the Mr. Money Mustache approach to early retirement. Simply put, you save enough money early in your career, retire in your 30s or 40s, and live a very modest life on $40K or less, without having to collect another paycheck again ever.

Your stoicism and self-reliance are all you need to live a fulfilling life on $40K or less. Though let’s be fair: It doesn’t hurt to be a famous blogger, travels to exotic locations every year to hang with your cult followers, and quite simply have options.

SemiFIRE is different because you’re not limiting yourself to a certain annual spending limit. You can semi-retire early and live high on the hog with annual living expenses of $60K or $80K.

Let’s assume you saved up $2 million and you’ve reached age 55. You’re ready to retire but you want to keep working part-time to pay for the little luxuries in life (like a boat, perhaps?) Maybe you yearn for a bigger boat you can sail all summer long, Midwest style, and then sail it on down to Key West in wintertime.

There, you’ll work a few hours a day processing tax returns with a parrot on your shoulder, while listening to Jimmy Buffett’s Greatest Hits. There’s no right or wrong way to retire early. It’s simply a matter of how you prefer to spend your days after abandoning the cubicle.

 

What Are the Downsides and Trade-offs of Semi-Retirement?

The obvious attraction to SemiFIRE is not having to wait until you’ve saved up enough money to retire early and not work at all. Even with an option to punch out early, there could be some downsides to this approach.

First off, you’re making an income. If your calculations for health care plan premiums on the Affordable Care Act Healthcare Exchange were based on zero income, you better go back and run the numbers again. The difference in subsidies could be substantial. This wouldn’t apply of course, if you Semi Retire to an offshore location.

Also, the job you take may come with some of the same pain points as your full-time job. I tolerated some awful managers at part-time gigs during high school and college. They’re out there still, I’m sure of it. The good thing is you only have to tolerate it for 15-20 hours a week.

Depending on the type of part-time work you land, you could wind up planted in a cubicle again or doing some highly repetitive task that comes with physical consequences. Be mindful of the risks, and offset these risks with good exercise and diet habits. Better yet, find a part-time job that requires some level of physical work. Mail delivery might work until some rabid dog comes along and…

Regardless, your math could lead you to conclude that another few years of part-time work is all you need to finally reach 25x of annual expenses saved up. You’re never too old to make money. But you may not want to wind up greeting your cohort at Wal-Mart in your 90s either.

 

Wal-mart greeter
This fella made it to 88. Then along came a turkey…

 

Can I Semi Retire at 40, 45, 55?

The simple math behind SemiFIRE is this: If you know how much savings you need to support your ongoing annual living expenses (let’s say it’s $50,000 per year), but your 4% safe withdrawal from those savings is only giving you $35,000, then you need a job that pays $15,000 per year, post-tax. 

That job is probably going to pay you $15 per hour if it’s a typical part-time gig. Guess what? That’s roughly a 20 hour per week job.

Now, if you’re like Uncle Daryl, you might get crafty and fire up a consulting gig. In that case, you are your own boss. If your skills are in high demand, you can set your hours. The pay is bound to be significantly higher than your typical part-time job.

The trick here is to determine whether your skills are value-added enough to another firm, such that they’ll be compelled to hire you. Finally, a consulting gig minimizes your taxes by allowing your earnings to flow to you as a “pass-through income.” Thank you, LLC.

There’s a variation of SemiFIRE called SeasonalFIRE, where you work a portion of the year and enjoy the rest. Ideally, you’d find work to occupy your time during a cold winter, or during a very hot summer, depending on where you live. 

So what do you think? Is early semi-retirement via SemiFIRE something you’d consider? Are you ready to ditch the cubicle even earlier than originally planned?

Featured Photo by Oleg Larkin on Unsplash

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Comments

  1. Ashley says

    May 18, 2018 at 5:19 pm

    We’re totally in the semi-FIRE camp (thus my mini-retirement right now). We are on the lean side of LeanFIRE, so semi-FIRE is even more achievable. We started the shift this year with the hubby taking on a low paying job and me quitting mine. We’re not at FIRE, but there’s no rush to get there for now.

    Reply
    • Cubert says

      May 18, 2018 at 9:49 pm

      This will likely be us next year! Still FIRE, but more hip to be SemiFIRE methinks. ?

      Reply
  2. Tread Lightly, Retire Early says

    May 14, 2018 at 3:19 pm

    Yesssss so glad you are finally considering this!! You know my opinion on the matter 😉 If I were you, I’d go part time Right. Now. Oh wait. That’s what I did.

    Reply
    • Cubert says

      May 15, 2018 at 5:25 am

      I hear ya! I figure I can eek out another year of FT cubicle adventures though. Give myself a little more fodder for some as yet unwritten posts. 🙂

      Reply
  3. TheHardenedInvestor says

    May 12, 2018 at 10:34 am

    I have thought about this for a little while now. “SemiFIRE”, as you call it, makes sense to me on several fronts. 1) Never earning a single penny after “retiring” doesn’t seem logical. 2) Earning an extra $10k-$20k-$30k (or whatever), particularly for a married couple, doing something they love in retirement seems logical. 3) I suspect that I’m going to have saved far more than my wife and I will ever actually need. All of these things combined have been tugging on me to cut the cord sooner rather than later. For now, I continue to work and invest.

    Reply
    • Cubert says

      May 14, 2018 at 6:37 am

      Right on, THI! I think as long as the types of jobs/work for that extra cash is enjoyable and readily available, you should definitely consider the option. You just don’t want to find yourself in a situation where you’re having to work at McDonalds’ drive-thru for those 20 hours a week… Free food or not! 😉

      Reply
  4. BusyMom says

    May 12, 2018 at 1:24 am

    What we are planning is essentially that. Actually, it is somewhere between semi FIRE and lean FIRE. We will still live on as less as we can, but we may not have saved up all the money we need. So we plan to make just what we need for a few years. Not touching our savings will let that grow. And two people earning 40000 per year will be way easier than earning 300,000+.

    Reply
    • Cubert says

      May 12, 2018 at 5:56 am

      Hi Busy Mom! I couldn’t agree more with you on your last statement. We’re not quite at 300K+ but the amount of effort that goes into a substantial income is a LOT. You never quite leave work at the end of the day – you ruminate on things, and even sometimes dream about work. Crazy.

      Reply
  5. Joe says

    May 11, 2018 at 11:50 am

    That’s what I’m doing now with blogging. We have more than 25x annual expense, but working a bit after ER is good. It gives you something to do. I’d be a lot more lazy if I don’t blog. Probably watch TV and read most of the day. The income is great too. It allows us to put off withdrawal and improve our retirement finance. SemiFIRE is the only way to go. Although, I don’t think it will catch on. Semi anything doesn’t sound good. That’s why my site isn’t called Semi-retire by 40….

    Reply
    • Cubert says

      May 11, 2018 at 12:51 pm

      LOL! You call it like it is, Joe. Love it! Yeah I tend to agree that “semi” doesn’t really have a ring to it. Part of this was a snarky reaction to the gravity around classifying everything we do when simple “financial independence” works just fine.

      Reply
  6. Accidental FIRE says

    May 10, 2018 at 5:27 pm

    I’m semi-fired now for 7 months and it’s been great so far. I work 20 hours a week, and still make enough to max out my 401K plus live on the rest. So I’m not touching my stash at all. I’m waiting until I’m more “detoxed” from full-time work to see what my next move might be.

    Also, I got the book – THANKS!

    Reply
    • Cubert says

      May 10, 2018 at 6:30 pm

      That is awesome!! Detox is right. At every turn there’s some BS waiting for us hamsters.
      Let me know what you think of the book!

      Reply
  7. Uncle Daryl says

    May 10, 2018 at 11:34 am

    Thanks for the shout out! And glad to know there is now a name for what I did 30 years ago. Scary at times, but would do it again in a heartbeat.

    The secret for me was to have enough stashed to last six months (with not income) or a year (with some income.) Full FI came later. In the meantime, I enjoyed my freedom from the cubicle along with the fun of building a small business.

    How about coffee again after I migrate back to MN in a few weeks? I understand the snow is finally gone, and it is getting HOT here in AZ.

    Reply
    • Cubert says

      May 10, 2018 at 3:06 pm

      You bet, good sir! Freedom from the cubicle is what we’re all about here!
      Let’s definitely connect when you’re back in town.

      Reply
  8. Mr Defined Sight says

    May 10, 2018 at 10:37 am

    Hell yeah, it’s a great idea. Once a person achieves a little FI, doing a 40 isn’t mandatory anymore. Especially if the spouse is still bringing in income!

    Reply
    • Cubert says

      May 10, 2018 at 11:38 am

      THAT is another form of FIRE, my friend! “SpouseStillSlavesFIRE” ?

      Reply
      • BusyMom says

        May 12, 2018 at 1:26 am

        Now that there is a name, I only have one thing left to do. Convince the spouse 🙂

        Reply
        • Cubert says

          May 12, 2018 at 5:57 am

          Ha! Is your spouse willing to take some time to read our guru’s scriptures over at Mr. Money Mustache dot com? 😉

          Reply
  9. Jason@WinningPersonalFinance says

    May 10, 2018 at 9:18 am

    I love this approach. Working 20 hours a week sounds like a great balanced life. The truth is almost everybody I read about that has FIRE’d works a little bit anyway.

    Reply
    • Cubert says

      May 10, 2018 at 10:10 am

      Agree! I think our friend Accidental FIRE does this. The balance makes life a bit more rewarding- I can only imagine…

      Reply
  10. Tom @ Dividends Diversify says

    May 10, 2018 at 7:36 am

    Hey Cubert, I have chosen the semi FIRE route as a part time university teacher. It is mainly for something interesting to do, but I’m not to proud to accept the extra money they offer. Tom

    Reply
    • Cubert says

      May 10, 2018 at 10:08 am

      Hey Tom! Can’t argue with your approach. Besides, I’m pretty sure part time college instruction makes more per hour than a typical PTJ.

      Reply

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CubertTired of the cubicle grind? Does retirement seem so elusive that you feel trapped? If so, let’s talk! Grab some popcorn, and follow Cubert’s journey. Serving up juicy anecdotes and more since September, 2016.

Check out the full post archive spanning early retirement, personal finance, real estate investing, Airbnb hosting, and cubicle survival.

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