Optionality Leads To Resiliency
On their podcast this week, Josh Brown and Michael Batnick talked about registered investment advisors (RIAs) never retiring. This resonated. I replied with the bit my wife and I have had between us for many years;
Josh and Michael discussed some reasons why advisors don't retire including shifting the heavy lifting to younger advisors, the work not being physically demanding and the pay kind of being like an annuitized income stream. One thing that they left out (it was a short podcast though) is the work being fun. It may not be fun for every RIA, but it's got to be fun for some number in the field, I know it is for me. It provides the opportunity to learn about all sorts of things including investor behavior, market behavior and cycles, market history, individual companies, investment products (mostly ETFs for my interests) and a whole much of other things I know I'm not thinking of, all of which contributes to my love of the work.
If I retired tomorrow, my interest in those things would not go away which is the basis for the joke. We all know the cliche about people who love what they do not actually "working." If there was some sort of scenario where I had to retire now, I could probably make it work in terms of paying our bills but there would be some discretionary things that would probably need to give and replacing our cars (probably when I am around 60) would create some uncertainty.
The other day I wrote a post about optionality. It is important on multiple levels to cultivate it our optionality. We don't necessarily have to figure out what could cause us to be forced into retirement or into figuring out how to make a living after losing a career-job at 50 or older. Think about it, all you really need to protect against being out of work for some sort of professional reason (like a layoff) or due to some form/degree of incapacitation, the why doesn't really matter.
The extent to which you've invested time in your optionality determines your resiliency. A long time blog reader messaged me and asked about volunteer work leading to a paid gig of some sort, the idea of that being a path to optionality seemed to resonate with him. The point I made in that other post is the need to put in years of work to have a reasonable chance of monetizing your volunteer endeavor or a hobby. At the very least you can learn enough to know how to monetize your chosen volunteer endeavor or a hobby or if it is even possible. The basic idea is that if you love something enough to do it for free, then you're probably giving it your all and there is a good chance that you could excel in it enough that someone would want to hire you to do that which you are already doing for free.
Your physical well being is another form of optionality. If you're not taking prescriptions for chronic maladies then that is less money you're spending. If you exercise and eat right then you're enhancing your physical optionality. My Plan E or F would be working as an EMT. I'm aware of four possible ways to work as an EMT, a couple of them pay poorly, one might have decent pay and one (being a fireline EMT on a large wildland fire) pays very well. They all have physical requirements with fireline EMT, the one that pays the best (like $500/day) having the most difficult physical requirement.
Do any of your interests have physical requirements, if so are you still able to do them? When the answer is yes as a function of your effort, you're making an investment of time in your optionality and improving your resiliency.
If you feel that in the face of an unexpected job loss you must replace all of your income then seeking out optionality would require making sure you are not just current on trends in your industry but arguably, because of being over 50, you have the unfair burden of being ahead of current trends. Conceding it's probably unfair, you'd need to expect to have to bring more to the table than younger competitors for the same job who might be cheaper.
I would not want to be under the gun like that. That's avoided by living below your means, saving a lot of money, and creating the forms of optionality mentioned above. I don't doubt there are others too of course, doesn't matter, figure them out and you will improve your resiliency against some sort of adverse outcome.