When people think about retirement the question is usually when? The default model is to work until your skills are obsolete and your energy levels are low. Then start collecting social security, medicare, and start spending down your investments. When the stock market drops that day may seem to have jumped years later. When your portfolio is growing quickly that day may be sooner.
But do we need to work 100% for decades, then 0% for decades? What if we worked 100%, then 50%?
There are several benefits to this strategy.
1. You can drop to 50% years sooner because you will still have income, which lowers how much you need from investments.
2. You can keep your identity. When people you meet ask what you do, you can keep saying whatever you say now.
3. By having 50% more free time you can pursue travel, hobbies, interesting side businesses, or whatever you want. This is while you still have more energy.
4. You have a better chance of enjoying your investments. About 20% of people die between 25 and 65. For those people (possibly me or you) there is a chance all that money invested will never pay off.
5. If you miscalculated, or the markets do far worse than expected, you can go back to full time work. Since you never completely left your skills and contacts are still current.
6. Once you are open to thinking outside of 100% or 0%, black or white work, you are not limited to 50%. Perhaps 1 hour a day every day is optimal for you(7/40 = 18%), or you may love your main job but like every weekend be 3 days with a 32/40 (80%) schedule. Perhaps go from 80% and work your way to less and less over several years until you find a sweet spot.
Speculations have a similar tendency for all or nothing, black or white, thinking.
For example lets say your friend knows of an empty commercial lot adjacent to a new freeway planned. Within a few years this is projected to be very desirable for big retailers like Walmart or Home Depot. This deal needs 20% down and a loan with payments every month, and property taxes, and modest insurance. The bank requires you to personally guarantee the loan. As presented this is a black or white decision. If it pays off as hoped you may make a huge amount and have a significant improvement in your net worth. If the road is redirected, or the entire real estate market drops, you may be stuck making payments far longer than expected at best, and possibly will owe the bank more than the down payment and have a major setback in net worth. If you are prudent you will wisely say no to this for the risk of ruin being too great.
However that is the black and white default mindset of all in or no deal. Perhaps you and your friend could start an LLC that buys the property and does not require you to personally guarantee the loan? Perhaps you could get more people involved for smaller stakes each so no one person is wiped out if it goes poorly. Perhaps there are other, smaller properties in the area that might do as well with less commitment.
Can you think of other examples where thinking in shades of grey may offer better options than an extreme all or nothing?