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You Know What's Overrated? Retirement.

It was late 2010, and after years of teaching in Washington, D.C. schools, my wife and I were nearing the burnout phase. We loved our students, but the situation simply wasn't sustainable. With students at my school in class for over nine hours per day, we'd never have time for a family.

The same question was repeatedly entering our minds: "Why are we killing ourselves?" We needed to make money, but other than meeting our basic needs, we didn't have too many expenses.

"I guess we're just saving for retirement," was our most common response... until we came upon a book that changed our mind.

Retirement as worst-case-scenario insurance
Though far from perfect, Timothy Ferriss' The 4-Hour Workweek makes some thought-provoking assertions about retirement.

In the book, Ferriss finds three major flaws in the "retirement as a goal" scenario:

  1. It is based on the assumption that you're doing something you don't like during your most physically able years. "Nothing can justify that sacrifice," Ferriss says.
  2. The great majority of people haven't saved up nearly enough to maintain their same standard of living post-retirement.
  3. You'll likely gouge your eyes out due to boredom once you retire... or start your own enterprise. Which of course begs the question: Why not start that new life now?

If you are lucky enough to have avoided major debt and have an education that allows you to ponder such questions, they can really turn your world on its head.

If you're serious about changing things -- like my wife and I were -- the next question becomes: What do we do now?

Ferriss suggests mini-retirements as a way to downshift and (re)discover your passions. Think of them as three-to-six-month stints where you have a blank slate. It may involve traveling somewhere for those months, or just staying put. The goal is to have nothing that you must do.

Because we didn't own our condo, and because the cost of living was so high in Washington, D.C., my wife and I chose Costa Rica for our mini-retirement. We lived in a tiny village for six months -- I volunteered on a coffee farm, she at a community center. And I discovered my passion: investing, which led me to The Motley Fool.

Enough about me, where's the investing takeaway?
If starting over or trying a mini-retirement is something you'd like to do, being careful about finances is a must. Just because Ferriss pushes back against our common conception of what retirement is doesn't mean we shouldn't maximize the tax advantages that our system offers, through IRAs and Roth IRAs.

Indeed, saving and living below your means is the best way to build up a nest egg, whether you throw caution to the wind, or you're perfectly fine staying exactly where you are. And if spending hours researching stocks isn't your thing, you have a couple options.

You could focus on exchange-traded funds -- which offer you focused bets on entire sectors or geographic regions. Our analysts recently came out with their best ETFs for 2012.

Or if you like investing in individual stocks, you could focus on solid, dividend-paying stocks that would require minimal upkeep on your part to ensure your investment thesis is intact. Here are five of my favorites:

  1. Intel (Nasdaq: INTC  ) -- Though this chip maker was late to the game in providing chips that run mobile devices, it's finally entering the realm and already dominates the laptop market. It offers a hefty 3.5% dividend yield and only uses 32% of its earnings to pay it.
  2. Johnson & Johnson (NYSE: JNJ  ) -- This company gives you exposure to both medical devices and staple consumer products like Tylenol. Johnson & Johnson also gives investors a 3.5% dividend yield, which accounts for just 54% of its earnings.
  3. Coca-Cola (NYSE: KO  ) -- One of the strongest brands in the world, Coke is expanding to the Middle East and other parts of the developing world. The company also gives investors a safe 2.7% dividend, which has a payout ratio of just 34%.
  4. Abbott Labs (NYSE: ABT  ) -- This medical company will be splitting into two parts: one to focus on medical devices, the other to focus on pharmaceuticals. Get in now, and you'll have a hand in both, as well as its 3.4% dividend yield.
  5. General Electric (NYSE: GE  ) -- Though it certainly hasn't recovered to the heights it stood at before the Great Recession, GE is actually an interesting play on alternative energy -- as well as several other industries. Its 3.8% dividend yield doesn't hurt either.

Ready to take the leap?
Writing off retirement and starting your dream life might not be the approach for everyone, but it's worth exploring. Whether you're happy where you are, or you're dying for a change, maximizing your retirement accounts is crucial to giving you the freedom to direct your future.

The Motley Fool has prepared a special free report to help you accomplish your savings goals, titled "The Shocking Can't-Miss Truth About Your Retirement." Inside, our experts fill you in on some simple steps most people miss to maximize their benefits. Get your copy of the report today -- it's absolutely free!

Fool contributor Brian Stoffel is infinitely thankful for his mini-retirement. He does not own shares in any of the companies mentioned. You can follow him on Twitter at @TMFStoffel.

The Motley Fool owns shares of Abbott Laboratories, Coca-Cola, and Johnson & Johnson. The Fool also owns shares of and has bought calls on Intel. Motley Fool newsletter services have recommended buying shares of Intel, Johnson & Johnson, Coca-Cola, and Abbott Labs, as well as creating a bull call spread position in Intel and a diagonal call position in Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (5) | Recommend This Article (19)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 03, 2012, at 5:10 PM, Brent2223 wrote:

    Not so sure on flaw #2 - retirement doesn't work because people don't save for retirement? If people can't save enough that's one thing, but if they don't save enough that's their choice. None the less, interesting points to ponder.

    Recently we've seen the question of whether promoting across the board home ownership is good for the broader economy, and now retirement is being questioned. These 2 components make up the vast majority of middle class savings, and define the 'american dream' for most people (work hard, own a house, and retire in comfort). What is capitalism all about, if we're now saying the accumulation of capital doesn't make sense for most of the population?

  • Report this Comment On January 04, 2012, at 2:12 PM, TMFCheesehead wrote:


    I don't necessarily think we're questioning the accumulation of capital, but rather the things on which we choose to spend that capital. Yes, a house and retirement are the "American Dream" to many, but there's no reason to believe capitalism would crumble should our desires point us in different directions.

    Brian Stoffel

  • Report this Comment On January 04, 2012, at 2:47 PM, godutchrealtycr wrote:

    Now that your are in Costa Rica, you might as well think about investing in a property in Costa Rica. A well located 2-bedroom apartment anywhere in the Central Valley can give you a 6 - 8% ROI, much better than stocks.

    Ivo Henfling

    GoDutch Realty

    phones (506) 2289-5125/8834-4515

  • Report this Comment On January 04, 2012, at 3:26 PM, DJDynamicNC wrote:

    Putting off everything I enjoy until retirement always struck me as strange when I was a kid and it's no different now. Excellent to see this article.

    Life is for living your passions.

  • Report this Comment On January 04, 2012, at 6:01 PM, promommyfool wrote:

    Kind of agree about not counting on retirement for the good life. My grandfather died of a heart attack a year before that magic age. My father in-law reached retirement, but found that those retiring ahead of him were dropping dead within 2 years. He has put a lot of effort into staying as healthy as possible to keep that from happening.

    I fully agree on making sure you enjoying the life you are living on the way to retirement. Just doing whatever in order to save for something you might not live to do doesn't sound like good advice.

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