Early Retirement vs. A Boot In The Ass

I have to admit that, since the tanking of the stock market accelerated after our retirement, there have been moments where Ron and I have looked at each other wondering, “What have we done?”. But only moments. Perhaps more accurately, we have flashes of momentary panic.

But there are 3 reasons we consider ourselves fortunate now, in spite of financial losses:

The Blackstone Group bought our former employer, Hilton Hotels Corporation, at a 40% premium over the trading value at the time. They took the company private, and bought out all of our stock. If we still owned our Hilton stock today, the value would have dropped approximately 50% (an assumption based upon where Hilton’s competitors are trading today). Our retirement plans would have been postponed by at least 5 years, instead of accelerated by 2 years with the buyout.

When the sale of the company to Blackstone closed, Co-Chairmen Barron Hilton and Steve Bollenbach were officially out of the picture. Barron Hilton (founder Conrad Hilton’s son) is an honorable man who was proud of and cared about the hotels that carry his family name. He and Steve Bollenbach always did business in a manner that exhibited respect for the people that made Hilton Hotels Corporation one of the leading hotel companies of the world. Over the years, I had the honor to meet both men on several occasions. They were gracious gentlemen with class. With Blackstone and new CEO Chris Nassetta, the legacy of a corporate family immediately went by the wayside, for a colder more calculating view of the business – not a hospitality business. Merely a business. That was a transition I had no interest in witnessing firsthand. I am happy not to be a party to it.

Finally, there is the matter of the official “Corporate Transformation”. In the name of transformation, hundreds of people around the world are losing their jobs, and some work previously done in the U.S. by Hilton team members will be outsourced overseas. Won’t that be a popular decision to explain, with the U.S. in the midst of its deepest recession in over a quarter of a century? So… The irony of this is that if I had been more loyal to the company and had not retired early, most likely I would have lost my job anyway. Would you rather feel that you are in control of your own destiny, or wait for the reward for your years of service to be a boot in the ass? I feel fortunate that the decision that seemed right for us has turned out to be SO FREAKIN’ RIGHT, and JUST IN TIME!

Disquieting though, is the view in my rear view mirror. Years of hard work, dedication, and several relocations have resulted in most of my friends being Hilton people. Great people they are too. They aren’t prepared to be statistics – they are individuals with mortgages, children to feed and put through school, and lives that shouldn’t be interrupted. Help your friends in need when you can. Plans don’t always come to fruition as hoped. But we all have to start with a plan. What we may not always realize is the importance of having a fall back plan.

Planting the Seeds

We took specific steps that lead us to early retirement. Before getting serious about it, we had both been saving some early in our careers (IRA’s and 401K programs through work), but really started to focus financially after we were married in 1991. My husband, Ron, is very fiscally responsible – thank goodness. He even followed his marriage proposal with a caveat that I had to pay off my credit cards before we set the date. That was a lesson in motivation right there! I didn’t owe much (about $3K), but he held firm and I got them paid off pronto.

After starting our married life, the only long term debts we ever incurred were car payments (2 to 3 year terms only) and home mortgages. When we used credit cards, we paid them off right away. Mostly we used, and still use, American Express. Knowing that you have to pay the card off every month tends to curb your spending. In the mid-90’s, we started working with a financial advisor, adding investing to our portfolio. It was during this period that we started talking about when we might want to be in a position to retire, and the manner in which we wanted to be able to live after retiring. These decisions made it possible for us to set a goal for our savings and a timeline. We hoped to retire in our early 50’s. Our financial advisor assured us that this was an obtainable goal. Investments were tailored to our goals and our tolerance for risk.

Soul searching, detailed planning, and financial modeling was required on our part to convince ourselves of the viability of our plan. There was no room for a big “oops” twenty years down the road. Ron and I talked about retirement a lot. Where we might want to live, how we wanted to spend our time, and what other things were important us in our life together. My mother cautioned me, “Don’t wish your life away”. But with stressful careers (rewarding, but exhausting and intense), we found planning for our future freedom and leisure pleasing to ponder. Over time, a real plan emerged. More and more, we looked forward to making it real. We worked toward a common goal.

Some of my contemporaries have told me they don’t really think about their retirement. They don’t have a picture in their head about life after work, or a date to work toward. As a person who craves security in my life, I have trouble understanding that. I need a vision of where my life is headed. That gives me comfort.

If you haven’t really thought about retirement…consider the following discussion questions as a place to start. They could be a basis for some interesting conversations with your life partner – or work through them yourself if you are plotting your own course through life.

· How much money do you think you need to live comfortably for the rest of your life?
· Where do you want to live?
· What type of home do you want?
· Do you want to travel? How much?
· What types of leisure activities are important to you?
· How will your life change/not change after retirement?
· Do you have health problems that could affect your plans?
· What are you willing/anxious to give up in your new life, if anything?
· Would you be interested in continuing to do some sort of work to supplement your retirement income?
· Might you want to embark on any continuing education?
· Are you interested in volunteer work?
· What have you not been able to do while working that you look forward to doing in retirement?

Become comfortable with thinking and talking about these topics. The answers will be the foundation for your plan. Have fun!

Blogging with a Purpose

My name is Laurel Haropulos Bailey, and I am experiencing my first year of early retirement. I retired in May of 2008, at age 52. When I resigned from my Vice President position at a major international company (Hilton Hotels Corporation), my boss reacted with surprise. "But you're too young to retire! What will you DO?" The purpose of this blog is to share the reality of my early retirement, and more:

1. Deciding that retiring early from corporate life was the thing to do
2. Laying the groundwork for making this life change
3. Insuring that my husband and I were on the same page in our vision
4. Taking the leap
5. Getting settled into a new life
6. Recovering from our old life
7. The challenges and the solutions

As our new life unfolds, I will blog about issues as we face them. As yet, I don't even know what those will be. Some possibilities - the negative impact of the economy on our plans, finding purpose outside work, establishing a new non-professional persona, and how we occupy our time.

I'll also write about our newfound joys. There is life after work, and it is different, surprising, and amazing.

Today, many people who carefully planned retirement have had their plans temporarily derailed or postponed. We have many common issues, and I believe it's valuable to share experiences.

I hope you will enjoy what we have to share.