This week marks the start of a new chapter in our life journey. As I mentioned in From Aggressive Saving To Living Paycheck To Paycheck in January, we are taking a voluntary cut of our income this year relative to last year. It started this week.
As the more timid one, I sent my wife Linda to the front line of this new adventure. I said “You try it first.” She bravely accepted the task. She gave notice to her employer two weeks ago. Last Friday was her last day.
Because she still worked half a year, our income in 2015 will be only 25% less than last year. By 2016, our income will be cut in half.
Linda is the smarter one between the two of us. She has a good degree from a top university. Her skills and experience are in great demand. She is also more driven by her passion for her interest outside work. She has a long list of things she wants to do. Her schedule is already filling up.
Although it’s a new territory for us, one-income couples are fairly common. Government statistics show that they make up 1/4 of the married couples. So many people did it at much younger ages on much less income.
Still, it’s going to be a big change for Linda to go from contributing half of the household income to being a “dependent.” Her specialized knowledge and skills for which employers are willing to pay good money will now go to waste. To someone who refuses to buy a new iPhone because it’s too expensive, the cost of a new iPhone pales in comparison to the income she’s giving up.
I told her that she should not feel obliged to take on more household chores just because she’s no longer working. She’s not quitting to become a housekeeper; that would be way too expensive. I also told her she doesn’t need my permission to spend money. If necessary we will set her up with a separate bank account and a separate credit card so that she will be able to spend without guilt.
The financial aspects of this change are relatively easy to see and deal with. I have The Bogleheads’ Guide to Retirement Planning (I wrote a chapter in it). We will have to figure out the non-financial aspects as we go.
If you have experience and wisdom on the non-financial aspects of going from two incomes to one, please enlighten me. Thank you.
Say No To Management Fees
If you are paying an advisor a percentage of your assets, you are paying 5-10x too much. Learn how to find an independent advisor, pay for advice, and only the advice.
David C says
We went through this transition, actually, three times. Once due to children, twice due to getting caught in the M&A blender.
I think it is inevitable that your wife will end up with more of the household chores. She will almost certainly have more time, or more flexibility. If she’s like my wife, taking care of something right now will be more attractive than waiting for you to get home from work.
We never had any issues about reluctance to spend money. We’ve never had a “his money” or “her money” ethic in our family, its always been “our money” from top to bottom. I agree that, if it does turn out to be a problem, setting up separate accounts might be helpful.
For us, the biggest challenge was the difference in time flexibility. I was pretty much locked into a regular work schedule, and my wife had loads of options about how to arrange her time. I guess it was better than when we were BOTH tied to the millstone, but the difference in planning approaches put us out of sync at the beginning.
Now we’re both in retirement, and I can tell you that its pretty great!
Anyway, best wishes for a successful transition!
I am 38 and my wife is 29. She was a retail pharmacy manager and, frankly it took up more of her time than we felt it was worth. She did make a decent salary, but all of her salary was savings anyway and we already save about half of my salary. She had to work multiple nights per week and at least one day on each weekend. My work schedule was very busy as well so we almost never ended up with a day off together.
We are much happier now that we can actually spend time together even though we have less income. We are careful to make sure that our savings goals are the priority before any extra consumer spending is done. Her transition was slow from full time to part time and then to no time as we are traveling for my work over the next year. Overall she does do the majority of the housework because I have relatively long hours. However it wasn’t that long ago that her work hours were more than mine for less income and I did the majority of the housework.
I’m sure you’ll find your groove.
Congratulations! This is indeed very exciting. I hope Linda stays in touch with her work community. It is very likely that a few months down the line she will find an opportunity that would be extremely flexible and pays nearly the same as before for much fewer hours. I have seen this happen many times for people who quit at the top of their game. It is a classic hedge fund type move. Leave the market hungry for you and entice them with your availability. In addition, the break would do great things to recharge her batteries if she would want that.
Harry Sit says
Thank you KD. Right now we are treating it as permanent, but who knows what will come up. She will consider it only if it doesn’t interfere with her schedule.
The only advice I can give is to use a cash “mad money” budget allocation as opposed to using joint or even separate accounts. It is easy to understand by all parties involved and (from experience) there’s no guilt associated with each party managing cash.
Good luck to both of you. Let me humbly add my thoughts to the non-financial aspects of this. For somebody who has worked all their adult life to suddenly stop and become a “dependent” will be very hard because we tend to tie our self-worth to what we do and we feel better when we are contributing to a cause bigger than our selves. Since Linda is smarter than you, I am sure that she is cognizant of this and her outside of work passions will keep those feelings at bay.
Even though we’ve replicated my wife’s salary via SSA and cash-flowing investments, I am feeling some pressure as the sole bread winner in our family now. It’s odd that I would feel this way and I was hoping, based on the title, that the article would help me with this. I also feel a little envious. I’m 56 and we’re doing well, but it’s still too early for me to consider retiring. Anyone else in the boat with me?
Let’s not use the word “dependent”, especially as a noun, even in quotes. Someone naive (like me) may get the idea that a spouse can be claimed as a dependant for tax purposes, and (also like me) needlessly spend several minutes parsing through IRS verbiage to find out that it can’t. Personal exemption is, of course still there and is the same amount, but a slightly different notion.
Thanks for sharing — sorry for nitpicking, and good luck on your journey!
Work always gets a place at (or near) the front of the line when we prioritize our daily lives. But when it goes away, it’s easy to have “tasks” become dominant–to look up after a few months go by and realize that not much of consequence has transpired. Not that life must be all about doing something consequential, but doing nothing consequential weighs upon one after a while. So pick some goal or goals that will require time and effort and achieve a worthwhile result–degrees of worth being left up to the doer. A worthwhile result in my mind can be a well-planned vacation that produces only memories and jpg’s.
A thought I try to keep in mind (with varying degrees of success) is that these are the best days of the rest of my life–I will not become healthier, or better able to do anything, than I am now, so I’d better not waste my one chance!
A comment on work after “retirement”: It’s not always bad; it depends on the work. I work 0 to 20 hours a week, working on things I find (or make) interesting. I used to be a full-time manager of technical projects, but now I’m a lab rat, and a pretty good one–it’s like being back in grad school. I’m in the same buildings I used to work in, but the difference in enjoyment factor is amazing! It’s great to have a hobby that uses one’s technical expertise, while providing positive social interaction. So, instead of spending time sharpening my golf game, or becoming semi-competent at some other new-found pursuit, I spend it sharpening a skill related to my career as a scientist/engineer. If you fundamentally enjoyed your work, see if you can do it as a part-time hobby. But beware if it keeps you from pursuing other goals you may have.
Stephen L Nelson CPA says
Good thoughts, thanks Harry.
This isn’t exactly the perspective you shared… and you and Linda surely have your finances more “together” than most people… but I will say this: If there’s one thing being a CPA has taught me, one can be ‘financially stressed’ at almost any income level.
Corollary: One can be happily satiated at any reasonable income level.
Cherry Sit says
Wow goodness my family name is also “Sit”， what a coincedence：）
I am a self-employed working and living in Hong Kong. Thanks for your great articles and I will continue reading more, let’s keep getting better! Wish you and your wife a wonderful new life!