This is a guest post (1 of 5) from a member of the retirejapan community. You can find northSaver on the forum.
What is Early Retirement?
Imagine you were in your 30s or 40s and were given two choices. You could either work hard for the next 12 years and then never have to work again as long as you lived. Or you could work hard for the next 4 years and only have to work part-time after that, say two days a week, until normal retirement age. Which one would you choose?
If you are new to the concept of early retirement then you’re probably thinking that both options are pure fantasy. How can anyone retire before they become a pensioner? And why would you even want to? If, however, you’ve already embraced the idea and are well on the way to early retirement, these are real choices that you’ll have to face at some point. Not that that’s a bad thing. Decisions like these are among the most pleasurable you’ll ever have to make!
There’s no right answer of course. Different people will prefer different lifestyles. But for me, the better choice is the second one. Why? Well, for one thing, I don’t want to stop working entirely. Like many of us in Japan, I’m the owner and full-time teacher of a small English school, and I enjoy teaching too much to drop it entirely. What I don’t enjoy is teaching full-time, five and a half days a week. And that’s just the teaching. If you include preparation time and all the other jobs that must be done to run your own business, you soon find yourself working almost non-stop, and only truly relaxing during the winter and summer holidays. It’s a bit too much.
Also, as well as teaching, I have a host of other interests and minor business ideas that are constantly on the back burner due to lack of time and energy. Teaching is the third major career change of my life so far, and I’m surprised it’s lasting so long. It’s obvious that I’m not the kind of person who can do the same job all his life, and I crave additional challenges and stimulation.
So for me the choice is simple – I’ll work hard until I can comfortably reduce my teaching hours, then semi-retire and blaze new trails. But how will I reduce my teaching hours? Well, that’s another pleasant problem to think about! One thing I will never do is suddenly announce to half of my students one February that they won’t have a lesson from April. That would be bad for everyone. So that leaves natural attrition, hiring a teacher, or selling/giving them to another school. My wife also mentioned the possibility of her taking over some classes, which would be better still. But at the moment, natural attrition sounds like the best option. The students who leave every year to go to higher education or another city wouldn’t be replaced. This means that my free time would come gradually rather than suddenly, which would boost our savings and strengthen the safety net even more.
So how am I managing to do this? How can a middle-aged man, with a family, on a modest income, living in an expensive country, possibly reach early retirement? To be honest, we didn’t start thinking about early retirement until fairly recently, so in the next article I’ll write about what we did to prepare ourselves for normal retirement.
If you are new to the concept of early retirement then you’re probably thinking that both options are pure fantasy. How can anyone retire before they become a pensioner? And why would you even want to? If, however, you’ve already embraced the idea and are well on the way to early retirement, these are real choices that you’ll have to face at some point. Not that that’s a bad thing. Decisions like these are among the most pleasurable you’ll ever have to make!
There’s no right answer of course. Different people will prefer different lifestyles. But for me, the better choice is the second one. Why? Well, for one thing, I don’t want to stop working entirely. Like many of us in Japan, I’m the owner and full-time teacher of a small English school, and I enjoy teaching too much to drop it entirely. What I don’t enjoy is teaching full-time, five and a half days a week. And that’s just the teaching. If you include preparation time and all the other jobs that must be done to run your own business, you soon find yourself working almost non-stop, and only truly relaxing during the winter and summer holidays. It’s a bit too much.
Also, as well as teaching, I have a host of other interests and minor business ideas that are constantly on the back burner due to lack of time and energy. Teaching is the third major career change of my life so far, and I’m surprised it’s lasting so long. It’s obvious that I’m not the kind of person who can do the same job all his life, and I crave additional challenges and stimulation.
So for me the choice is simple – I’ll work hard until I can comfortably reduce my teaching hours, then semi-retire and blaze new trails. But how will I reduce my teaching hours? Well, that’s another pleasant problem to think about! One thing I will never do is suddenly announce to half of my students one February that they won’t have a lesson from April. That would be bad for everyone. So that leaves natural attrition, hiring a teacher, or selling/giving them to another school. My wife also mentioned the possibility of her taking over some classes, which would be better still. But at the moment, natural attrition sounds like the best option. The students who leave every year to go to higher education or another city wouldn’t be replaced. This means that my free time would come gradually rather than suddenly, which would boost our savings and strengthen the safety net even more.
So how am I managing to do this? How can a middle-aged man, with a family, on a modest income, living in an expensive country, possibly reach early retirement? To be honest, we didn’t start thinking about early retirement until fairly recently, so in the next article I’ll write about what we did to prepare ourselves for normal retirement.
Why would you go for natural attrition rather than look to see if someone could take over your school–or at least the students you would normally be coming in?
Good question Ryan. I guess you are referring to hiring a teacher, rather than selling the whole school? We wouldn’t want to sell the school after all the hard work we’ve put into it.
To be honest I’ve never hired a teacher and it sounds like a lot of trouble, not only finding the right one but also managing them and keeping everyone happy. I’m not sure I’d want to take on that kind of commitment in semi-retirement. I’d probably be too busy doing more enjoyable things! But is in option, I agree, and we aren’t dismissing it completely.
It might simply be a difference in perspective, but it seems to me that natural attrition would be wasting the hard work you’ve put into your school more than selling it would–especially if you found the right buyer that would continue in a similar style. (We’re currently purchasing a school from another owner in a similar situation.)
As for hiring a teacher, that would get you out of the daily classroom but would also entail many other responsibilities that might make it more difficult to step away in the long run without significant growth.
Thanks Ryan. It’s worth thinking about, for sure. But another point against selling the school is that I’d still have to teach two or three days a week to fund my “retirement”, so I’d still need a school to do that. I don’t mind referring new enquiries to other schools in the area, but selling existing students to other schools doesn’t appeal to me at the moment. Still, there’s plenty of time to think about it so thanks for your thoughts.
early retirement …sounds great for those who commute long hours and work 9-5. I think we are blessed to have our schools and have free time in the morning to concentrate on investing.. I won’t stop teaching as long as the as I have students. I will take a month off during summertime to see my family in the US…just my two cents’ worth.
Hi Jojo
Thanks for stopping by! I agree a pleasant work environment makes things much more bearable.
For me financial independence is safety (insurance against bad luck or unexpected developments) and freedom to do what I want.
I too will continue working as long as I can, but it will be work I enjoy and I’ll do it because I want to, not because I need to 🙂
Feel free to join us in the forums -I’d love to hear about your situation.
Investing is one of many things I try to do. I have been investing since 2007 through Nomura Securuties. they have many bond funds that have monthly dividends that can be re invested. They used to just take 10% from the divedend before it’s automatically reinvested. This year with Abenomics ( I don’t understand what he’s doing). They are taking 20% . This is a non NISA account.
May I please start a discussion on how to make the best of using NISA? I think I understand how it works but I’m skeptic about it. I think we have no control of our investment for 5 years. Thanks.
Hi Jojo
Great idea. I will start a thread in the investing in Japan board in the forum. See you there!