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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.
Retirement Basics
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?
Cindy @ Smart Family Money says
September 26, 2016 at 8:39 PMMy husband and I feel the same way. We have a lot of goals and early retirement is not the most important thing for us. We are focusing on raising our children and paying for their college first. We’re certainly preparing for retirement by saving, increasing our income, and not increasing our lifestyle.
Hero says
September 27, 2016 at 8:04 AMThanks for sharing your priorities, Cindy. Kids sure have a way of changing priorities!
MrFireStation says
September 26, 2016 at 10:39 PMMy approach was save for early retirement and decide when you get there. I pulled the trigger at age 49. It’s amazing. There’s no part of FREEDOM that gets old. You can find your own answer, but I’m encountering none of your worries.
Hero says
September 27, 2016 at 8:03 AMAlways great to hear from someone who has reached the finish line. Thanks for sharing your perspective, Mr. Fire Station! I tend to over-analyze and forecast worst-case scenarios to a fault. I’m sure that when the time comes I will find plenty of ways to remain engaged and happy in retirement.
Mrs. PIE says
September 27, 2016 at 4:39 AMInteresting thoughts, and thanks for bringing this stuff up.
I think you’ve hit some important points here: It’s a very personal decision, and you have to be ready and want it. Like your ‘should never retire’ friend we need to be aware of our natural predispositions and how we will react to unlimited freedom of time.
Some people will always be retiring ‘from’ something. Whether that is a desire to ‘just be done’ or remove ourselves for the madness of the rat race. Some will always be retiring ‘too’ something – those who have big plans and vision that could easily be applied inside or outside the workplace. T
As long as you know where you stand, it’s a personal decision – and the best part is you can change your mind at any point!
Hero says
September 27, 2016 at 8:01 AMThanks for the great reminder about being able to change our minds, Mrs. PIE. Heavy decisions like this one tend to have a certain weight of finality about them, but as you said, it isn’t permanent.
Vicki@Make Smarter Decisions says
September 27, 2016 at 5:43 AMWhat – no in-ground pool is on that list? Did Mrs. Superhero not check this post? 🙂 Having a family was incredibly important to me and it certainly slowed our progress toward FI – but that never mattered (and I didn’t know what FI even was!) It all comes down to your personal goals and satisfaction with life. We’ve lost a few friends in the last year due to illnesses and even sudden death. I don’t want to many “coulda’s” or “shoulda’s” in my life bank because I was only focused on money. As I approach turning 50 next spring, I’m pretty satisfied with everything about life. Don’t give up on what matters most to you to rush to the finish line!
Hero says
September 27, 2016 at 8:00 AMThanks for the words of wisdom, Vicki – very helpful as always.
And ahhh, the pool. . . I think it is still a possibility. However, I presented Mrs. Superhero with a cost breakdown of installing and maintaining a pool vs. taking annual vacations and maintaining a summer pool membership. I think that discussion cooled the pool talk for a while.
The Green Swan says
September 27, 2016 at 6:04 AMGood for you guys in thinking through your life plan and prioritizing goals. We’re no different, we have a couple goals we are still working on before we retire as well and once we have the flexibility we need we’ll for sure bee able to retire to something.
Hero says
September 27, 2016 at 7:58 AMThanks for the affirmation, JW. It’s good to know that others out there are in a similar place. After writing this post, I honestly felt a little lazy or less-than-intense in my pursuit of FI.
Matt @ Optimize Your Life says
September 27, 2016 at 7:04 AMPersonally I am shooting for financial independence and will make a decision on early retirement when I get there. I love my job right now, but things change. Bosses get replaced, coworkers come and go, and responsibilities increase or decrease as time goes by. I like the options that financial independence gives you.
That said, it’s important not to make yourself unhappy while getting there. Mad FIentist has been beating this drum for a while as he found that he sacrificed too much in the final years to try to get there as quickly as possible. It’s much better to take longer to get there but be happy throughout the journey.
Unrelated, but do you mind if I ask what your wife’s music side hustle is? I’m a big music person myself (although I’m not doing much with it these days) and am always interested in learning about what other people are working on.
Hero says
September 27, 2016 at 7:57 AMThat’s a sensible plan, Matt. It is an important distinction to make that FI doesn’t necessarily have to lead to early retirement.
My wife’s side hustle is providing piano, flute, and voice lessons in our home music studio. She currently has around 25 students and teaches for a few hours each afternoon following the regular school day. She has built up her studio slowly over time and now has a waiting list. You can read more about it here: 10 Tips for Self-Starter Entrepreneurs
Physician on FIRE says
September 27, 2016 at 7:06 AMIt’s not for everyone, but I think it’s best to put yourself in a position where you can afford an early retirement, i.e. financial independence.
When you get there, if you like every aspect of your current work situation, keep at it. If not, make changes, find a more satisfying job, or have none a all. It looks like you’re on a trajectory to be there a couple decades ahead of a typical retiree. Strong work!
I’m going to have to disagree with the first three of your cons. Number four is a given, but if you’re more stressed and less active when retired, resulting in poorer physical and mental health, you’re doing it wrong.
I plan to wrap up my doctor career sometime around 2020, give or take. I’m living like a normal person with a decent job, sacrificing nothing, but still saving like crazy.
Cheers!
-PoF
Hero says
September 27, 2016 at 7:53 AMThanks for the honest comment, PoF. I’ll follow-up with an equally honest response – I tend to overthink and over-complicate matters sometimes. I tend to be the kind of person who enjoys the journey far more than the destination. I think that predisposition is what worries me about early retirement. If you called me out of the blue and told me you were giving me a huge chunk of your nest egg, allowing me to retire tomorrow, I’m not sure if I would do it.
Financial Panther says
September 27, 2016 at 8:51 AMAgree with others who thought it’s best to just at least be in the position where you don’t have to work. If you still want to work, then by all means keep going. But at least you give yourself options. (That FU money that JLCollins talks about).
For ourselves, Ms. FP has no plans to call it quits. She loves dentistry and feels that she has an obligation to use those skills to help people. There’s talk of a dentist shortage after all, according to some sources. In contrast, I’m a lawyer, and really, does the world need another lawyer…
FinanciaLibre says
September 27, 2016 at 8:54 AMHmmm… Interesting perspective.
Philosophically, the question about whether it’s good or bad to retire early (or as early as possible) is kinda like the question about whether you oughta exercise. You could make an argument for simple preferences. But you also have to contemplate the way in which the activity is used. You can exercise too much. You can get mauled in a freak treadmill accident. Your gym could be decimated by a tsunami. And so you might get depressed or anorexic or body dysmorphic or drowned or whatever if you do it wrong.
Same with ER, I think. If ER means just parking on a stained recliner while ESPN highlights flicker across the big screen for the 14th time that day, then yeah, probably not real good. But if ER’s used as a gateway to valuable pursuits that don’t have to pay cash, then it can be incredibly un-depressing, physically and mentally stimulating, and stress-relieving. Plus, if you ER the right way, income doesn’t really have to be “fixed.” And utility from that income certainly can grow with time… Which means the cons you list melt away pretty fast.
Gotta rain down some serious elbows and knees on the analysis here, Hero… Your conclusion may well be right for you and others similarly situated. But there’s probably more thought to be done on how that conclusion is achieved.
A humbly submitted thought from your bro. And many thanks for the thought-provoking read.
Harmony@CreatingMyKaleidoscope says
September 27, 2016 at 2:02 PMTo each their own . . . It sounds like your plan is perfect for you. As for me, my job is really stressful, but pays well. We need the money to pay off student loans and credit card debt. Our plan is to use my income to facilitate semi-retirement in about five years. We will still do some work, but more flexible and less-stressful things. One of my favorite things about PERSONAL finance, is how we all have the ability to create our own path.
Millennial Moola says
September 27, 2016 at 6:34 PMor plan B, where finance super hero becomes as popular as financial samurai and you sell it to some digital bank or credit card factory company for $1 million and retire
Adam @ CrispyCabbage says
October 17, 2016 at 7:01 AMI think about this question a lot. Unless you’re a fiscally responsible lifestyle ninja like MMM from the gate and never really get used to the “normal” way to do things, it’s challenging to shift gears enough to really get all the way to early retirement without feeling deprived. I myself lost a decade on stupid decisions. For people like me that do have something in mind that they’d like to retire to, I think it’s good to think of saving up for at least a “mini” retirement… Enough runway to get the project up and running (3-5 years) without feeling overly stressed about it. And leave room at the end of that runway to rejoin the workplace if needed. I guess what I’m saying is it’s not all or nothing with me. Great article!
Divorced and On FIRE says
December 5, 2016 at 2:27 PMFin independence allows one the flexibility to work FT/PT as one chooses. I see value in choice and options as one ages.
Divorced and On FIRE says
December 5, 2016 at 2:29 PMAlso…FI means you are better financially prepared for the unexpected…care for lived ones, illness, divorce w/o ruin