I have been thinking about early retirement a lot lately. Upon first glance, you might read that sentence as an indication that I am looking for an escape from my current day-to-day grind. On the contrary, I feel that Mrs. Superhero and I are in a good place at the moment. We enjoy our full-time careers in the classroom, and we feel invigorated by our side businesses in real estate and the music studio, respectively.
My thoughts on early retirement are admittedly impacted by a variety of influences. First and foremost, everyone in our family trees has opted for traditional retirements. On the other hand, nearly everything I read on a regular basis, from books and magazines to blog articles, touts the benefits of early retirement and financial independence.
What are my current thoughts about early retirement? I’m seriously pondering whether I am even interested at this point.
Any discussion of the pros and cons of early retirement should begin with a look at the purposes behind retirement at a basic level. Quite obviously, the cultural phenomenon of retirement exists because humans are not physically and mentally equipped to work forever. As a result, we work and save for four to five decades, on average, in order to survive when we are no longer able to support our basic needs through earned income.
To recap, the most basic life plan is as follows:
WORK 40-50 YEARS + SAVE MONEY = BASIC SURVIVAL AT AGE 65-70
The above plan is a reality for an alarming cluster of the population. Yes, you can and probably should aim higher with your retirement goals. For example, you could save and invest more than is required to meet your basic retirement needs, allowing yourself to live a little in retirement. However, tomorrow is promised to nobody. Or you could save more and retire a bit earlier, say in your late 50s or early 60s.
So, we might describe the intermediate plan as follows:
WORK 30-40 YEARS + SAVE MORE MONEY = COMFORTABLE RETIREMENT AT 55-60
For a small number of renegades with their hearts and minds set on early retirement, even this sensible plan is insufficient. Thanks to mathematical breakdowns by Mr. Money Mustache and countless other bloggers, waves of people are targeting a much earlier retirement. How? They are aiming to increase their savings rate, as a percentage of net income, to figures which exceed 40 percent and approach 85 or even 90 percent!
In order to reduce this table to a formula, we might proceed as follows:
WORK 3-20 YEARS + SAVE LIKE THE DICKENS = RETIRE EARLIER THAN EVERYONE ELSE
The most beautiful thing about the chart above is that it is not income sensitive in any way, shape or form. It applies to you whether you earn $40,000 per year or $4 million per year. Of course, it should be much easier to save when you have an inflated income. Yet, that pesky thing called “lifestyle” tends to get in the way.
In essence, we might say that early retirement is a largely a choice.
Early Retirement Pros and Cons
Now that it is apparent that early retirement is mathematically accessible for virtually everyone, let us examine the merits of such a plan.
Among many pros of early retirement, the following stand out:
*Opportunity to spend increased time with family and friends
*Freedom to travel
*Reduced stress and improved health
*More time to pursue other interests or even a new career
Obviously, early retirement is not without its cons, which include:
*Possible negative impact upon health (possible loss of health benefits, decreased physical activity)
*Possible boredom and/or depression
*Increased stress (more time to worry; constant fear that your nest egg may be insufficient)
*Limitations due to fixed income
As with virtually all matters of personal finance, the pros and cons are largely situation-dependent. For example, my Grandpa retired only a few years early and came out ahead in nearly every manner possible: he increased his earnings and kept busy by working side jobs, gained the freedom to spend time with his children and grandchildren, and took several vacations each year with my Grandma.
On the other hand, I know a person (who shall remain nameless) who would quite likely suffer an early death if he were to retire early. He would spend his days and nights wasting away in a recliner watching television, despite being of able mind and body. Quite likely, early retirement would be an early death sentence for this person.
Our Current Plan
Back in June, I established 30 goals as I approached my 30th birthday. Goal 5 stated, “Set a target date for early retirement and formulate a plan to get there.” I have been dragging my feet on this one ever since; as I said, I’m just not sure what I want to do at this point.
Strictly based upon Money Mustache’s chart above, Mrs. Superhero and I could likely retire somewhere in the neighborhood of 15-17 years, or 2031, given our current assets and savings rate. Since I am a proponent of stealth wealth, that’s about as specific as I’d like to get at this point in time. However, we could make some changes in current spending and investing plans and possibly retire in approximately 10 years. This would not be achievable without significant sacrifice and postponement of other significant goals.
All of which has led me to an important conclusion: I simply desire to achieve other goals more than I desire early retirement at this point in time. Among other goals that I feel will bring me and Mrs. Superhero greater joy than early retirement, starting a family ranks at the top of the list. Additional goals include:
*Fund college for our future children
*Travel with moderate frequency
*Give and support missionary work beyond our current ability to do so
*Finish our basement (which is currently unfinished)
*Possibly own a second home
If our pursuit of these goals brings us increased happiness and slightly slows our pursuit of early retirement by 5-10 years, I feel I am OK with that. I would rather retire slightly later than mathematically possible and achieve more in life rather than retire with unfinished business.
In closing, let us consider one of the oldest retirement clichés, which says, it is better to retire to something than to retire from something.
What are your current retirement plans? Do you aspire to retire early? If so, how do you hope to achieve early retirement?