CFI Blog

How Do You Value Your Time When You’re Retired?

The less one has to do, the less time one finds to do it in.
–Lord Chesterfield

I’m writing this article about a month after we semi-retired. I say semi-retired because I’m still on boards, which require some amount of time commitment and travel, for which I am compensated at a standard rate.

However, that standard rate does set somewhat of a value of the time that I have to spend on the boards.

I know that I’ll have calls, usually around monthly, with board updates. I’ll have to respond to some e-mails and occasionally pitch into other activities. There are quarterly board meetings, which usually take 2 full days once travel is included.

So, all-in, each board I participate in winds up taking about 4 full days of work a quarter.

I’m, therefore, working the equivalent of 128 hours a year, for which I receive compensation.

It’s possible to extrapolate that and say that if I were to receive, for example, a consulting opportunity which would offer compensation, that I know my rate: (the present value of future equity + current reimbursement) / 128.

The problem is that such a formula does not account for the marginal value of the next hour I’m working versus spending it as I see fit, given our FIRE (financially independent, retired early) state.

I knew when I left the private equity fund I founded that I’d serve on some boards. I’d mentally accounted for those hours and that work and we agreed to a rate accordingly.

I also knew that the time commitment of those boards was somewhat limited, so there was a somewhat fluctuating upper bound to the number of hours that I’d have to commit to those companies, and the rest of my time was mine to do as I saw fit.

Therefore, for each additional, unplanned hour that I might work, if a consulting opportunity presented itself, I’d have to further reduce the amount of free time (which I highly value) that I have.

In my mind, each hour taken away from my personal freedom and choice has a higher and higher cost.

After all, our time on this planet is limited, and we can never get it back.

So, while a 10 hour engagement might be priced at X, a 100 hour engagement would not be 10X, and a 1,000 hour engagement would not be 100X.

There would be an exponential pricing to increasing levels of commitment.

The reason for this is that, when I was actively involved in a career, I planned on working 1,920 hours a year. (you can insert your own image of someone rolling on the floor laughing at that paltry number) It made sense to apply a linear rate to all of that time, since I was going to work it anyway. However, when that 1,920 hours (or many more than 1,920 hours a year if you’re an entrepreneur) is no longer already mentally spoken for, the rate for the first hour can be much different than the rate for the 1,920th hour.

That mentality doesn’t just apply to trades of money for your time.

It also applies to how you choose to spend your time.

After all, many of your choices will not involve money at all. That’s why you retired, right? You retired so that you no longer had to make that trade of money for your time.

The calculation, though, is one of active choice. It is choosing what to do with your time to get the most joy out of that time.

We know that retirees do not have all the time in the world, so they should value that time.

On our dog walk this morning, my wife and I were discussing the passing of the first month of retirement. She had originally thought to herself “a month has passed, and I haven’t gotten anything done.”

To which I answered, “Why does that matter?”

For the most part, the first month of retirement has been one of detoxification and destressing. Generally, our days involve no alarms, 2 hour dog walks, gym sessions, and then reading, hikes, and cooking. We’ve had friends over and spent a lot of time with them, alleviating a concern I had about friendships drawing apart when we were no longer working and they were. I’ve written a bunch of the articles that were piling up in my brain when I was still working in my private equity fund. I’ve had work to break the habit of checking e-mail all of the time, and doing the “internet loop,” though, admittedly, I’m not there yet. I still have the knee jerk reaction of checking my phone as soon as a text comes in. Generally, though, my wife and I have become better at setting boundaries and sticking to them.

So, while other retirees have sought to find meaning in retirement, we haven’t gotten there yet. As the author in the aforementioned article says, he took 6 months of detoxification before he even thought about trying to find meaning in his retirement.

That said, we still try, where we can, to spend our time meaningfully. If we choose to do the “Internet loop,” it should be from a position of choice and intentionality, not default.

If a nap is going to bring me the most happiness and value, then I’m going to take a nap. If I want to watch a show on Netflix, then I’ll do so. If I want to try to find a rental property to invest in, then I’ll do that instead.

The key is choice. The valuation exercise that we go through with our time, aside from income-generating opportunities, is not one of pure price. However, it is one that looks at opportunity costs and asks “what else could I be doing with my time?” It’s not one that involves some complicated spreadsheet and trying to calculate eudaimonia to the nth decimal point. After all, going through that depth of exercise would take up so much time that we’d never actually do anything!

Instead, it’s a quick question of whether or not whatever we’re doing with our time is what we want to do. If it is, then we’ve valued our time correctly. If we haven’t done that quick mental check, then we might not be making the most of it.

Retirement is not an optimization exercise for every second of every waking hour. However, it can be very easy to slip into a thoughtless pattern without intentionality, and it is the lack of purpose and intentionality, leading to a sedentary lifestyle, which will shorten your retirement. Be the person who goes skidding into the last second saying “what a ride!” rather than the one who wonders where all of the time went because you didn’t value your time in the first place.

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John Davis
John Davis is a nationally recognized expert on credit reporting, credit scoring, and identity theft. He has written four books about his expertise in the field and has been featured extensively in numerous media outlets such as The Wall Street Journal, The Washington Post, CNN, CBS News, CNBC, Fox Business, and many more. With over 20 years of experience helping consumers understand their credit and identity protection rights, John is passionate about empowering people to take control of their finances. He works with financial institutions to develop consumer-friendly policies that promote financial literacy and responsible borrowing habits.

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