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Retire Now, Work Later is not For Everyone

Shortly after Leslie Yee share with readers that permanent renting may not be so bad, the group CEO of a medical device company shared this “dangerous idea” that for some of us, retire now, work later may be a very viable life path.

This might be a little small for you to read so let me try my best and summarize for you.

This article in Straits Times was written by Abel Ang. Abel is an Adjunct Associate Professor at the Nanyang Business School in Singapore and Waseda University in Japan (see the similarity with Leslie, SPH is bringing on some interesting thought leaders) but his main gig is Group Chief Executive Officer of Advanced MedTech Holdings, a US$200M global player in Urology devices and services.

Why do we consider anything other than Work Now, Retire Later (WNRL)

Abel identified that there is a very common life problem many families with working members faced:

  • We carry out two jobs (work and parenting) together, and that can be very tiring
  • It feels like there are no alternatives for us but to run these two scope of work in parallel
  • Living this way feels like going through an infinite loop of work, homework, cleaning, putting food on the table and repeat
  • However, tectonic shifts in the workplace such as offshoring, business process streamlining and technology disruption have made job security an ephemeral dream. This may mean that we cannot passively grind through our careers as average performers
  • NTUC found that PMEs especially those with school-going children are worried about their job security and have a lot of anxieties and fears

How do Retire Now, Work Later Work (RNWL) work?

Abel’s solution is to change the sequence of how we do things.

Here are the characteristics of RNWL:

  • Encouraged to take active breaks from employment
  • You will need to work out the math and accumulate enough savings that will allow your family to sustain its expenses for a period
  • The amount that you have accumulated will indicate how long you can be away from work and when you need to go back to work
  • Use the time to fulfil your “mission” such as taking care of children, parents or matters of importance
  • You will have a clear intent to return to the workforce when the “mission” is done
  • Continue to maintain your network and in some cases take on more part-time roles

Long time readers will ponder about what Abel suggested.

What kind of lifestyle scheme is this?

  1. It is not Lean FIRE. The goal is not to accumulate so that you can have an early frugal retirement.
  2. It is not Coasting FIRE but the amount might be equivalent. The objective is to have enough to complete the mission. Not so much to prepay your traditional retirement. However, if you have accumulated close to 15-16 years of your traditional retirement expenses, I suspect you might have enough for Coast FIRE. But that is useless because the goal is to spend the money now. (Read more about Coast FIRE or Barista FIRE here)

Abel uses the word retire quite loosely (as you will discover later) in that it represents a life phase where we chose to work much less and fulfil our life goals more.

Abel’s Personal Retire Now, Work Later Experience

It will be a bit tough to envision what retiring now, working later will be like.

So Abel shared his experience of what led him to make that tough decision to stop work in Hill-Rom Inc to be with his family more:

I took the path of RNWL 10 years ago. I had returned to Singapore after several years of extreme commuting, with my family based in Singapore and my job-based in the United States.

At the time, I was suffering symptoms of burnout from constantly changing time zones between Asia and the US every two weeks, and juggling work with family.

I had saved enough to allow me to sustain the living expenses of the family for several years, even if my wife chose not to work. <u plan was to stay home to take care of the kids (my elder son R was nine at the time and younger son S was just six) and repair the relationship with my wife that had frayed due to the stress of extreme commuting.

Stepping back from being the Asia-Pacific president of a brand-name medical device company was not easy. At the time, I did not know if I would ever get a similarly good job in the medical devices industry again.

When I made my RNWL decision, I actively engaged my network to inform people of my “retirement”. At a regular catch-up with a long-time mentor. he said he needed my help in a real estate start-up, even though I had no real estate experience.

He said: “You are too young to fully retire. If you don’t stay active, you will end up having an affair.”

To stay engaged with the medical devices industry, I continued advising several local start-ups working on such devices and teaching MBA students about the healthcare industry at a local university.

Through another industry contact, I was fortunate to land an assignment as a part-time adviser to a chief executive of an NYSE listed medical device company that was looking to strengthen its international business and innovation capability.

R is now 19 and S is 16. While I treasure the 2.5 years when I was able to step back and be with them, I am glad I ha maintained my employability during the “retirement” phase. It allowed me to stay engaged in an industry I am passionate about until I returned to medical devices in 2014.

RNWL is not for everyone. But for some, it might work and could be a better option than the prevailing WNRL approach that most people default to unthinkingly.

Retire Now, Work Later is really not for everyone

Abel is right.

Many of you would wonder how many of us can do this. I think this is doable for people in a unique situation:

  1. Have good income for the first 5 to 7 years in their working career such that they can save 50-80% of their take-home income.
  2. Someone who builds enough relationships over time, and is able to do that even when they are not working.
  3. In a vocation, at a level that even after the break, your skillset can be readily translated into similar roles in all industries.
  4. We do not need both to retire. You can have one spouse tanking part of the expenses.

Abel made it work because he had a breadth of experience not just in his medical devices field but also because as a C-suite executive, the skillset is translatable into other domains.

To some extent, some of you may shit on Abel because his income from all these sorts of stuff may render him to be officially working and not retired!

We may not have to climb as high as Abel, but being a manager and having a strong network of relationships may make us more confident to take this route.

About 3 to 4 years after I started working in my former company, a newly hired project manager took over our team.

My ex-project manager had taken a rather long break to take care of her two children until they are of a certain age.

I got a feeling she started a rung or a couple of rungs below where she was (which is a government-affiliated role).

Her husband was still working so maybe it doesn’t make her qualify for this RNWL category.

But I think no one questions her long break from work because if you are good, that break is a non-factor. Today, she is the second in charge of the IT business unit.

A Few Money Models to Consider for Retire Now, Work Later

Ok now for the math part.

Retiring now does not mean you can retire any time you want.

You would need to ensure that you have adequate financial resources. If you have rich parents, you can make it work immediately.

But for most, it will entail you saving up for it.

How much you need can be based on your current expenses, plus possible child expenses.

Your savings rate will give you a good indication of how long of a runway you can create and how long it takes you to create it:

  1. If your savings rate is 50%, if you work 1 year, you can take 1 year off.
  2. If your savings rate is 80% if you work 1 year, you take 4 years off.
  3. If your savings rate is 35% if you work 2 years, you take 1 year off.

Some missions take 1 year, some will take longer.

This is a rule of thumb at best, but this rule of thumb will be quite helpful to quickly determine if retire now, work later will suit your needs.

There are consequences to taking a break:

  1. When you work, you don’t spend down your money, you save up your money
  2. When you don’t work, you spend down the money, and you failed to save up money

The impact on your net wealth is double.

This is why when you delay your retirement by 3-5 years, it makes a lot of difference to your retirement income.

The laws of compounding show that if you have more time to compound your wealth, you need less money.

So if you do a double whammy at an early stage of your life, you go against the laws of compounding.

This means that when you come back from “retirement”, you got to work harder to accumulate for your retirement.

In general, Coast FI mathematically feels like the opposite of RNWL.

Conclusion

No matter how absurd this sounds, I am glad we see this out there in a national paper.

I think Abel is not speaking to everyone. But some of his more high-flying peers may have faced the same predicament and would wonder if their finances would allow it.

Some may be in an enviable position in that you are rather sensible with your money up to this point in your life.

If you get someone to do a cash flow projection, you will be able to see if the math will work out, how long can you take a break. What is left to think about is not the money stuff, but the mental challenge.

The disappointing thing is that this is a paywalled article so many would not be shocked by it.

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