Rethinking Retirement, Efficiencer Style

Today, I offer post number 7 for Developer Hegemony week.  I had every intention of doing 9 days of posts in a row leading up to launch, but I wound up spending yesterday relaxing and recuperating (not a lot of Sunday traffic anyway).  I just finished up an engagement and had been on the road for weeks straight, finally getting home Friday night.  So I took a day off.

The good news is that even with me taking it easy yesterday, the internet did not.  The Thunderclap campaign reached its goal!  This means that I will now definitely give away 3 free copies of my book.  So signing up now gives you better odds than ever.  

A post about rethinking retirement might seem odd, but I have a method to this madness.  As you contemplate your working career, retirement may not come immediately to mind.  But it certainly looms large over decisions you make during your career, in much the same way that the college admissions process tends to loom large over high school.  You contribute to 401Ks, look at the compound effect of salary negotiations and the like, all with an eye toward retirement.

So let’s dive into the mechanics of normal wage work and retirement a bit today.  But first, I’ll lead in with a quick rationale for what brought this to mind.

Hourly Wage for Book Writing

Because I have some varied business interests, I tend to get politely restrained questions from people with salaried jobs as an exclusive source of income.  People regard direct questions about income quantity as gauche, so they kind of ask how things work in the abstract.  They beat around the bush a bit.

For this reason, I find myself speaking at times to a conceptual hourly wage for, say, writing a book or making a Pluralsight course.  I find this understandable, since wage employees tend to reason about earning income as if all income were wage income.  Understandable, yes.  But it misses the point.  And my explanation for why ties in with retirement and the idea of building what I’ll call “business properties.”

Retirement from Wage Earning, Simply Explained

Okay, so back to retirement.  I’ll start with an oversimplified version of how that works.  Specifically, let’s forget for the moment about any concept of social security, pensions, or investing in markets.  A wage earner spends most of his adult life collecting a paycheck.  He uses some percentage of that paycheck and sets some percentage aside, stuffing it into his mattress.  He continues to do this until he has more stuffed into his mattress than he’ll need before he dies.  At this point, he retires.

For the sake of easy math, let’s assume that this hypothetical person averages $100K per year as a salary throughout his career.  Let’s say that he decides he can live on $50K per year in retirement and that he saves 10% of his salary throughout his life.  If he starts working at 20 and retires at 70, he will have set aside a total of $500K.  This will allow him to live from 70 to 80 before he runs out of money.  So in a strange case of somewhat perverse incentives, he should hope not to live longer than 80 (or he should continue working).

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