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A Cautionary Word on the Deferred Life Plan (stanford.edu)
103 points by ahalan on May 30, 2012 | hide | past | favorite | 55 comments

I have a client, nice old lady, a widow, in her 70's and while working on her computer she started talking about her life and times. She warned me about working too much and told me her tale of woe.

She and her husband worked all their lives, raised a family and saved their money. Their plan was to retire early at 55-60 and then travel the world once kids were grown. All was going according to plan and they both retired but then her husband got colon cancer and died 6 months after he retired before they took a single trip.

She wasn't bitter but clearly regretted deferring life for work, and she did not want me to make the same mistake. After her husband died she tried to travel but said it was just too difficult to carry on without her husband. Sad to see her living with a broken heart.

This is a very sad story, and something I caution my parents about as well. Unfortunately, the retirement age before you get any benefits keeps rising.

Yeah, but if you're smart and plan ahead you can do things like take breaks from work, and it doesn't even need to be the super-fancy live-it-up European vacation. Or even just retire before 65ish and live off your own savings before tapping government benefits. These are both options available to you...

Its not one or zero, Its not like suffer on the short run to enjoy on the longer or vice versa.

You need to plan both for the longer and shorter terms in life. I wouldn't be OK if I get a exotic vacation every now and then but a horrible time when I get old. Or the vice versa.

I think whats appropriate in life is to have short sprints of hectic work schedule where you can make you moderately big cash, then save and invest a part of it for retirement. Enjoy the rest to the fullest.

Heck, I've been on three international vacations in the last year, and I have plenty of friends who have done even more. If you're in the US it's easy (and not that expensive) to fly to some random European country for a week.

The deferred life plan isn't just about taking international holidays, of course. I have the freedom to jet off to random destinations at the drop of the hat because I don't have a wife or kids; I've deferred that aspect of my life in favor of another one.

You gotta defer something. You can defer the kids or you can defer the globetrotting lifestyle. You can defer the freedom and job satisfaction or you can defer the material wealth.

I took an investment banking job right out of college and spent the next few years working like crazy. It was good work experience - and a great chance to save money - but it was exhausting work that I wasn't passionate about. My close friends and family lived in different cities, and I saw them only a few times a year. Some of my colleagues planned on working 80-hour weeks for 15 years and retiring at 40, but I wasn't interested in that plan.

So after 2.5 years, I quit to start my own business. I'm pretty tech savvy, but have nowhere near the programming skills as many here on HN. I am, however, a good marketer so I started an eCommerce drop shipping business. Within a year, I was making an income that could support my family - within two years, a good income. And I also had the ability to work wherever - and whenever - I wanted. I'd work like crazy for a few months on a business project I was really interested in, get a ton done and then take a few months off to travel. It was the best of both worlds: I'd be super productive when I was interested and had the energy, and take time off when I needed it. Best of all, I saw the people I cared about much more frequently.

With the dawn of the internet, there's never been a better time in history to start your own business (low risk, high reward, global scope), especially if you're technically minded. We have the unique opportunity to do work we love while being able to maintain a health work/life balance. It's amazing.

If anyone's interested in the full story of how I made the leap from corporate workaholic to a more balanced life, I've written about it below:


Are you ever in the Bay Area? As a software engineer who lacks sales skills, I'd love to hear more of your story in person.

jim.jones1@gmail.com http://www.github.com/aantix

The most impressive part to me about the story was picking a niche, CB Radios, that doesn't appear to be a business you were already familiar with and building a successful company anyway.

Thanks Joshcrews!

That's one thing I try to advise people when they ask me about doing something similar: a research driven approach to picking a business usually works much better than trying to pick something at random, or something you're really passionate about. That's what brought me to CB radios. If you're interested in the process / criteria I used, I wrote a free eBook which I offer on my blog - just hit up the link above.

In most areas, especially for sales, if you spent just 2-3 weeks learning about a market you'll know more than 98% of your customers, so becoming an expert in an area doesn't take too long, which makes it easier to pick a niche, become an expert and then market your business.

It's very easy for a wealthy VC to sit on a stage and pontificate like this.

Not everyone has opportunities in front of them to work on a project they believe in and make enough money to pay the bills with it.

Most of us have to struggle through years of working at jobs that hopefully use our skills well, putting in time on nights and weekends pursuing something we do believe in and feel passionately about.

Our passion projects go through half-starts, frustrations, and down blind alleys; sometimes having to battle against our own pessimism, peer pressure, time demands, and the sense that everyone else is doing it better, and more easily. (The truth is it's not coming more easily to everyone else, but it's human nature to see things that way.)

If we're lucky, we get it right, and maybe that personal project gets a foothold (fuck "traction," it's hard enough to get a toehold at the beginning). For a few, there's a chance to even quit that job that's making you prematurely old and finally do just what you want. For many people, that doesn't happen for years and years, if it happens at all, and there ought to be a medal for anyone who can simply stay motivated and persistent for that long, whatever comes of it.

And in all of this, I'm still talking about a small subset of the American public, and an even smaller subset of the world. We're talking about some of the luckiest people on the planet—those of us who can even consider things like "life plans" because the circumstances of our lives have landed us so far up Maslow's pyramid. If you're working at a job that you don't care about, where your manager is a capricious idiot, the office is ugly and the coffee sucks, but you're at least using your skills, you're already in a position that 95% of the world would love to trade places with right now.

Don't let a billionaire with perfect 20/20 hindsight tell you you're doing it wrong. If you have to spend part of your life with your excitement and enthusiasm deferred because that's what it takes, don't pile on your own troubles by telling yourself that you're "deferring life." Life is one long journey of ups and downs, discovery, pain, joy, frustration, accomplishment, and every other damn thing. Take it as it comes, meet it with your head up, and when you have to slog through the bullshit, slog through it. Just because your passion might flag for a bit doesn't mean it's not going to rise again, and just because you have to "sell a product you don't believe in" doesn't mean you're doing it wrong.

Deferring life is a risk. And there are degrees of risk. If your plan is to work consistently at an average job and defer life until 65 there's the risk you die first, but at least you had your weekends free.

If your plan is to work double hard and smart on something that may pay off sooner, there's the risk you burn out and the opportunity costs of those additional working hours (not spending time with friends, family, hobbies, for instance).

I saw a show on TV once, and don't remember what it was, but they had a guy in the middle of nowhere working his butt off every day. He said something to effect of "I work like a horse so that my children can work like dogs, so that my grand children may work like humans some day". That stuck with me. I realised I could have it much worse, and the only reason I might not choose to work like a horse is because I earn more than enough to be pretty comfortable working my 8 hour day. But the rewards if I did work like a horse... And if somebody else can do it, then I can push through the half-starts and frustrations you mentioned.

What's the point of living to less than my full potential?

I think the key is to wait for a local maxima in savings and employability before you take off on your big "deferred life" trip.

The trade-off is always portrayed as between ending up an unemployable 22-year-old with $10,000 in credit card debt, or a 70 year old widower who tried to put it off until after kids but missed the window.

But there's a middle road.

I, for instance, saved like crazy until I was 27 before taking off on the first big trip. By then I'd established enough of a professional reputation that I could quickly find a job when I got back, and enough savings to not worry about going broke on the road. Over the next 13 years I averaged about six months off every year, getting more employable at every step and usually ending each year with more savings than the last.

I don't think there would have been any chance of pulling that off had I started off by maxing the credit card on a gap year trip straight out of school.

Do you have a wife and kids?

Yes. If you shop around, you'll find that wives come in a portable model that you can take with you around the world. In fact, they're much easier to find if you're already halfway around the world, as then they've at least demonstrated the capacity to get there and a predisposition towards traveling.

Kids are pretty portable for the first several years as well. We've only had this one for a little over a year now, but he's got a dozen flights and seven countries under his belt already.

(And heading off the inevitable 3rd piece of that question: Yes. I've found that houses can remain happily unoccupied for months on end, so long as you either bring along enough money to keep paying their mortgage or pay it off before you leave.)

I don't know why but it's always hard for me to accept that kind of advice from rich people. People for whom money is not an issue and can basically live a life of luxury without working.

I'm not saying the advice isn't sound advice. Just that doing more of what you love Or want to do is far easier for them therefore it's easier for them to say it

I've found that a good way to take advice is to mentally add "unless you're broke" to the end.

It works both ways. I think I'm more likely to take advice from someone who appears successful in their field.

Perhaps the choice to work on something they're truly passionate about helped them to be successful, while others who merely did what was expected did not have the drive to excel at it.

"I think I'm more likely to take advice from someone who appears successful in their field."

Problem is he's not giving you advice tailored to your specific situation. He is giving general advice. And with any general advice it's hard to account for all the nuances and judgement that might change with knowledge of specifics.

General advice might be "marry someone with a good education" or "marry a doctor". But a Kennedy might have good education but they also come with a host of other issues (and benefits) as a result of their fame and family name. With respect to the latter I'm sure Zuckerberg marrying a Physician is less important then it would be to someone else who could benefit from the stability and income that occupation brings.

If you have ever encountered "lifers" people who have worked their entire lives in a single job of little importance then you will realise this is great advice. I have personally made a commitment to never let comfort and fear prevent me from living life with passion.

The way I see it, you've got three chunks of time in any work day. 8 hours of work, 8 hours of sleep, and 8 hours of whatever you like.

Now, other things do eat into the last block, like travel and washing the dishes. But you still wind up with a healthy chunk of time every day, and that is where Life happens. So, make of it what you will.

I know what you mean, but I find that so brutally sad. The best, most alert, most productive hours we have, we trade away for enough money to live. That third block of 8 you mention are the scraps left over. You're lucky if you have enough energy left to do anything worthwhile with those last 8 hours :(

We have always traded our time for survival. That is why the species is intelligent. If anything, celebrate that you only spend 40 hours a week on surviving. Celebrate that the alert, productive, valuable time you invest is slowly building even better futures.

Besides, work is demonstrably good for our mental health. I'd go insane if I didn't have responsibilities, just like a sheepdog will.

Current hunter-gatherers populations that can be observed in the world nowadays "work" only 20 hours a week. So 40, or even 50 for some, is way out of what would be "natural". Of course we now live longer, etc. I'm just countering the argument that 40 h is little to survive.

I would have to agree with you. When agriculture was invented, so was "work", that is, something that is separate from your real life. There's a reason agriculture didn't properly take off for hundreds of years, even though people knew that planting stuff makes it grow. Tending the earth was a shitty business, hard work that took most of the day without proper tools. Gathering stuff was a lot easier.

Work is in no way "natural". Having to eat is quite natural but for most of humanity's history you could just eat stuff from your immediate surroundings, with little time spent on gathering food. These days we spend 10 hours a day to a acquire the means to eat. I'd say people we're a lot smarter thousands of years ago.

I'd say people were a lot fewer thousands of years ago.

Yep, and that was mostly before some fool introduced agriculture, which led to 1000-fold increase in the human population... not to mention the introduction of diseases because we're not meant to digest agricultural products. Doh!

And what diseases are these? If you are thinking of the classic diseases of civilization, that isn't a problem with agricultural crops.

autoimmune diseases? grains?

Wow, that was specific.

so you think the advent of agriculture was a godsend to humanity?

I am not interested in playing this game.

It's not even about agriculture. In medieval europe peasants had a lot of leisure. Of course harvest season was brutal, but much of the rest of the year was easy.

Asian rice agriculture was endless back breaking work. But that wasn't the case in Europe.

Last thought- many people actually spend only a part of that 40 hours a week generating money for survival needs. The remaining discretionary bits should also be celebrated- even a minimum wage worker can save up enough to fly across America in a month or three. I'd say that is an improvement over wagon trains, wouldn't you? The same goes for so many other things you can spend that money on. The time you traded empowers you to do many things you could never do all on your own. Seize that opportunity. Go skiing in the Alps. Scuba dive the Great Barrier Reef. Be happy.

Every successful person I know has made their 8+ hours of work a part of their Life.

Sure, that is the ideal, but not everyone will get that opportunity, and even those that do often work crappy jobs at some point or another. So, the point is, even if work sucks, you can still live a life worth living.

I read The Millionaire Fastlane recently, and it was fantastic. The author talks at length about the potential folly of saving your whole life in order to have fun at the end. Who knows how long you will be around or what your health will be like when you finally "retire"? The book has lots of great insights and strategies for the startup crowd. There's a Mixergy interview with the author available here: http://mixergy.com/mj-demarco-limos-interview/

Book link: http://www.amazon.com/The-Millionaire-Fastlane-Wealth-Lifeti...

I completely agree with this. Once you get over the cheesy metaphor, the book really is packed with a ton of information on starting a business and actually achieving wealth at a young age. Also, the author (MJ Demarco) has made himself accessible for anyone that wants to contact him and ask questions.

I can't recommend this book enough.

Lately I've been thinking on traveling around the world for a year after college (so late this year). I haven't thought it out yet, but it seems possible to have enough savings for about two months of life (for contingency) and then freelancing remotely two or three days a week to support myself for the year.

At least I think it should be possible for a 25 year old to travel the world on 2k euro a month ...

Anyone ever done something like that?

I spent 7 months traveling last year, and think you could definitely pull something like this off. As far as maintaining your budget, the two biggest things you'd need to consider would be how frequently you travel and where you're traveling to.

A lot of people tend to sprint from place to place when traveling, which is both exhausting and expensive. If possible, I prefer to pick one spot and spend between 1 to 4 weeks there to really get a feel for it. This would be much more conducive to freelancing (staying put) and to your budget as transportation eats up funds quickly. It also lets you travel for longer periods of time as you don't tire nearly as quickly.

Secondly, as you already know, your location will determine if your 2K / month budget is realistic. Planning on spending lots of time in Zurich? You "might" be able to swing it at 2K Euro a month, but you'll have to be really, really careful. On the other hand, you can live like a king in South America on that every month. In Ecuador, I spent $10 dollars / day for a beachfront hotel room with two daily meals. It wasn't 5 star, but it was beautiful, authentic and amazingly affordable.

Best of luck! You can definitely make it happen...

A friend from high school (who I've since lost touch with) has been doing that for about 4 years. He travels the world working at ski resorts.

I'd love to hear more information about how to pick a decent niche. There's always some vague mention of "research" but really, what is this - what's involved. Surely you need an idea of what to do BEFORE you research it?!

Watch later: http://bit.ly/LTsuUY

I took 18 months off work to follow my dreams. I tried to strike it rich, but I got experience instead. It was quite the roller coaster ride. In America, if you are not working a job and receiving a salary, you are seen as a leech, a useless appendage and worthless drain on society. Women don't want to date you, parents always asking when are you getting a job, you have to put up with the revulsion at parties when you have to admit you are not drawing a salary... And you have to take it easy on the expenses. But it was a great decision, and I'll do it again soon when I get another nest egg saved up. You gotta have nerves of steel and be able to tell the others to keep following your dreams of the deferred life plan, and call me in 2060 when that pans out.

If I don't spend the money I earn on myself, then the government will just take it away from me in the next 10 years through 10%-20% annual inflation as it tries to pay down umpteen trillion dollars in socialism. You can't plunder the value behind my bank account dollars if I don't have any to take! When the new currency comes down the pike, I'll work my butt off at age 65 and 75 to earn a 350 thousand dollar/year salary working food service.

In America, if you are not working a job and receiving a salary, you are seen as a leech, a useless appendage and worthless drain on society. Women don't want to date you, parents always asking when are you getting a job, you have to put up with the revulsion at parties when you have to admit you are not drawing a salary...

I think you might be hanging around the wrong people...

> "I think you might be hanging around the wrong people..."

Or the wrong areas.

There's a reason why startups have taken off in a huge way in the Bay Area where it hasn't elsewhere, despite the massive amount of capital flowing into aspiring startup hubs like NYC and Boston.

In SF you're one of the cool kids for doing your own startup (to a detrimental extent, actually), in many other places you can expect to run into a lot of the GP's experiences...

Agreed. I've never seen this kind of reaction from strangers or friends.

I also don't understand the tax reference. Yes, there are taxes on company income. There are not taxes on money sitting in the bank from the previous year. This is no different than a job.

If I earn $50k this year the gov takes say $20k and I have $30k left over. If I do absolutely nothing the next year the government doesn't take money from that $30k.

Similarly if I run a company and have gross income of $100k and expenses of $50k leaving $50k the in the bank the gov will take a percentage. The next year the gov will only tax NEW INCOME.

At least that's my understanding. I'm not a tax expert nor a lawyer and I can only go from my experience in California. Other places might be different.

He was referring to the inflation rate. What he was saying was (as far as I understood it), if you safe e.g. $10k now, in e.g. 10years you could not buy as much with it as you could at the time you earned the money. Therefore, you "lose" money (or rather purchasing power) by not using it.

And that's why no one should be sitting on their money...invest it! Keep enough for emergencies (6-12 months of rent/food is the general mantra) in your bank account and put the rest in your IRA/401k and/or non-tax advantaged index funds.

I suspect it depends a lot on where you live. In Los Angeles no one blinks an eye at the no-salary-and-following-your-dream life. I highly suspect Silicon Valley is much the same.

Yeah, unfortunately most of the United States isn't Los Angeles or Silicon Valley.

The parent's reference to taxation has no basis in reality; your understanding of taxation is correct.

You are only taxed on income. If you have money in the bank, and you receive more money, that new money gets taxed. If you own a company, and it increases in value from $1M to $2M over a year (but you don't sell it), you are not taxed, because you haven't received any actual income.

> as it tries to pay down umpteen trillion dollars in socialism

Are you suggesting the worst value healthcare model in the world is better?

Revulsion at parties? Is that a bit too strong a word, or have you had some bad experiences?

Also, have you considered getting into stocks? There are realistic hedges against inflation available.

A broad stock index fund is a great inflation hedge, but a lot of people don't like the volatility. The most conservative hedge against inflation is probably TIPS.


You're guaranteed not to lose any money to inflation. But, you probably won't make any money either.

When a lot of loans go bust you get deflation. The Fed's approach would seem like it's going to cause rapid inflation but in reality it's countering significant deflationary pressure the net result has vary close to zero inflation for the last few years.

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