Retiring in your forties, thirties, or even twenties definitely seems like a worthy goal.
It is a more common aspiration nowadays. Maybe that is because seven in ten Americans are disengaged from their jobs – so just dragging their sorry bums to and from the office every day. Anecdotally, the figure seems much higher.
Extreme retirees claim to have the solution and it is pretty attractive. Just quit! Anyone can do it. It takes saving most of your money, and rethinking your core values.
The basic framework of early retirement is this: cut way down on your spending, then invest your savings.
This post attempts to look at the goal from the good and dark sides.
When early retirement is the right goal
Here’s a scenario where I would envisage early retirement working (sort of):
You duly assume the ranks of those doing jobs they despise to pay off student debt, as per your cultural inheritance. You begin to seriously redesign your life so that you pocket a sizable percentage of your savings (something between 50-70%).
High savings rates can lead to surprisingly fast retirements. For example, if you save half your income, you’ll be ready to retire in around 17 years. This is financial freedom 101. It is nub of Rich Dad’s philosophy.
Admittedly, you just spent arguably your most energetic and virile years lining the pockets of a giant car manufacturer (or whatever). If you’re a man or a woman who doesn’t desire a family, it’s still not a terrible solution to your dilemma. 50 is the new 30.
When early retirement doesn’t work
There’s just one teeny problem with early retirement being your foremost goal:
You just spent 17 years of your life spending every day doing something you don’t give a shit about. I would doubt that any amount of recreational drugs, promiscuous sex or adventurous holidays can compensate for it.
Plus, assuming you care about this sort of thing… unless you were lucky enough to meet someone that shares your extreme goals and whom you actually like, or you were willing to make serious compromises in your other values of life partner, you’ll be middle aged and alone. Again, there are worse things.
Early retirement versus financial freedom
Does financial freedom need to be so punishing? And might a more straightforward and enjoyable route be to find something we like doing a bit more, and pursue financial freedom alongside that, even if it’s at a slower pace? Given that these are leading questions, my views on it are probably clear.
Something important gets compromised along the way of chasing early retirement at all costs. We may end up with deathbed style regrets.
Love of frugality verses fear of financial insecurity
Some people definitely get off on needing little. They’d do it even if they didn’t have to. That’s how we know. We’d know if we would do it even if we didn’t have to.
If buying all your clothes from thrift stores and cycling 20 miles to work fans your flames, then who can argue? If saving money gives you all the feels, then there’s something like love in there. Take this guy:
“While many of my coworkers were maybe leasing a new BMW SUV, I sold my car and started riding my bike. And when one of my coworkers was spending $50,000 remodeling his kitchen, we moved into a small apartment that was in a very walkable neighborhood”. You can hear his glee.
A drive to financial freedom can be love or fear motivated. If it’s to do with fear, consider exploring your ideas and beliefs around money, instead of obsessing about early retirement and spending your days abating your insecurities.
Jobs that impoverish our souls – false economy
Doing bad (or just really boring) things for money and thinking that the money will console you later on seems to be a plan that fails. By the time we come to enjoying the fruits of our soul’s impoverishment, we can’t relax. We gave up so much along the way.Doing bad (or just really boring) things for money probably won't console us later on Click To Tweet
How can we restore our equilibrium? How can we ensure we aren’t so attached to our money when the cost of financial freedom was so high? It’s a hole.
(This whole thing assumes your job-apathy happened through trial, error and disappointment. In other words: you gave liking it your best shot. And you’re not just being self-entitled.)
Money and happiness
‘Money doesn’t buy happiness’. It does buy some happiness. Refer to Maslow’s hierarchy of needs. Unless we have the bases covered, money worries are a source of discontent.
But after that, money is money. You can’t buy your time back with money. After a certain point, it is diminishing returns.
‘I don’t need much money’
Being financially out of control, or telling ourselves that money and other materialistic concerns are insignificant or redundant for a spiritual life, are forms of self-deception. Often, it’s an excuse for not wanting to do the work.
I say: if we want to be lazy and unproductive, then we need not tell ourselves such stories about money. Society is less tolerant and compassionate for underachievers. We can’t change society, but we can stop judging ourselves for our own lack of productivity, and just be at peace with it instead.
If we are content – even happy – to survive on pittance, we still need financial freedom. And that still means saving more than we earn.
For the unusual soul, having dollops of cash, even if it took until you were old to get there, is the very definition of a good life. I’d question if that’s the case for a lot of us though.
For most of us, better than the extreme early retirement life goal might be, do something that doesn’t involve wanting to crawl out of your own skin, and prioritise financial freedom alongside other good stuff goal.
Not quite as catchy, but maybe a bit more sane.