Work from home is spurring some to retire early

(NYTIMES) – For Ms Mona Janochoski, a chemist who ran a laboratory, working from home during the coronavirus pandemic was the deciding factor.

It was the first time in her career that she had not gone to an office every day. And she found that she enjoyed being home with her husband, Tom, who had retired as the chief financial officer of a trust company in 2017. Her daughter, who was a graduate student, was living with them, too. That got her thinking about something she had not given much thought to before: quitting her job after 36 years and seeing what else life had in store.

“When I was home, my husband really liked it,” Ms Janochoski, 60, said. “He got used to the idea of me retiring. We kept going back to the adviser to make sure we could retire.”

Retirements in the pandemic by those at the top of the income ladder were often by choice.

And for that slice of corporate employees, working from home for some or all of the pandemic scrambled their thinking on work and life. They had been working for decades in an office, and suddenly at home with a spouse, they began to see the possibility of a different life.

“The vast majority of our clients have at least inquired about what their plan would look like if they retired earlier,” said Leverty Financial Group founder Mike Leverty, whose clients include many executives at large companies like 3M and Target.

“We haven’t seen people wanting to delay retirement. They’re getting a flavour of what retirement will look like in working from home. In the last year, we’ve been asked to redo a lot of plans.”

Deciding to retire early is about more than crunching the numbers, of course. It is also about psychologically preparing yourself to leave work and leave behind some part of your identity.

“You need a discipline to work from home and not go into the office,” said historian and author Rainer Zitelmann, whose books include The Wealth Elite and The Rich In Public Opinion. “No one is watching you. In the pandemic, people started thinking about what else they wanted to do.”

Mr Jesse Coffee, a wealth adviser at True Private Wealth Advisers, said that before the pandemic, it was generally clients around age 62 who were initiating pre-retirement talks with him. In the past year, that age has dropped to 54 or 55, he said.

“People have realised what’s really important,” he said. “If you want to just go out and hike, it doesn’t cost a lot of money. If my lifestyle isn’t going to need all that much money, maybe I can move to somewhere less expensive, have some low-cost hobbies and retire early.”

An adviser’s job is, of course, to do the maths on whether retirement is even possible and what it may look like.

But leaving a career, particularly for people who have risen up in a company doing work they enjoy, is not an easy decision to make. Working from home in the pandemic gave some people a taste of what retirement could be like, something they would not have experienced if they had kept going into the office or travelling for work.

“It’s allowed them to reset and take a step back,” Mr Leverty said.

He said there was no question that retiring early would reduce wealth, but that is a trade-off for what could be more time – to spend with family, explore activities like charitable work or pursue new interests.

A life-altering event four years ago got Mr Mark Nagel thinking about retiring as soon as possible. When he slipped on ice and pulled a muscle, what seemed like a minor injury would result in the amputation of one of his legs.

“Early retirement became a requirement at that point,” said Mr Nagel, 55. “You just never know when something is going to happen. So why wait until next year?

He worked for 31 years at Ecolab, a water and hygiene company, and said he had always told himself that when the stock topped US$200 a share, he would have enough to retire.

“The pandemic hits, we had already hit the US$200-a-share mark, but now the bottom is dropping out,” he said. “There were a few weeks when I said maybe this is not going to be the time. Or maybe this new lifestyle of 100 per cent working where I want to work is not so bad.

“At the same time, we had this goal and this plan. We knew what we had to do. As the stock started climbing, we decided to stick with the plan.”

Mr Nagel’s wife, Tammy, who will turn 55 this year, plans to work a few more years at Boston Scientific, he said.

Mr Coffee, the wealth adviser, said that for him, “it comes down to what you’re spending, especially in retirement, when you don’t have the big pay cheques coming in”.

People with large incomes are “used to being able to spend money on whatever they want”, he said. “They’re taking trips without thinking about the cost. In retirement, you have to put some thought behind it.”

The timing of Ms Janochoski’s retirement was particularly good this year. Her youngest child, a daughter, just finished graduate school; one son is getting married; and her other son and his wife are expecting a baby.

“I could have kept working from home, but I had a good run,” she said.

“With everything going on with the kids and the baby coming, and we’re financially OK, this was as good a time as any.”