Early Retirement Isn’t for Everyone
I had a great lunch with my old friend today. We used to work together and he was a couple of decades older than me, so today he actually sees retirement in the short term. He was interested in what my life was like as a self-employed person making a living by a combination of side appearances and contracts, and I shared some of my thoughts on this, but when we got to the real essence of the conversation, it seemed that he was mainly trying to figure out how it would be look like the next stage of his life.
This post was originally published on The Simple Dollar .
He has five to ten years left until his traditional pension. He seems to love his job. His main interest outside of work is attending live sporting events, especially high school and college sporting events near him (there are not many professional sport options in Iowa).
I asked him what his typical day was, and most of the time it was a cycle of going to work and returning home to do housework, go to work and then go to sports events, or fill up the weekend. days of household chores and sports. Events.
“But … what else are you doing ?” I asked him. I wasn’t going to sound rude. Rather, I was frank with an old friend. I tried to help him understand what he could do with a lot of extra hours that he would have retired.
The fact is that he abandoned this question. He talked about reading websites and maybe read a book from time to time and watched TV … and that’s about it.
My answer? I told him that if he is truly happy with his daily life right now, the combination of work responsibilities and the respect in the workplace that he has earned over the years and these workplace relationships, and his main hobby is watching live sports air – corresponds to this, then there is no reason whatsoever for him to retire until he is forced to.
The funniest thing? He thought about it for about a minute, and then slowly brightened.
For him, retirement did not seem like a blessing at all. It was like this empty hole in time and space, where he basically sat around for the last two or three decades of his life, doing nothing interesting, and then eventually died. He saw his workplace relationship, which he values a lot, withering away and dying. He saw himself moving away from a place where he was appreciated and had a great respect for life, where that respect did not exist.
I couldn’t help but remember the movie “About Schmidt,” starring Jack Nicholson, a recent retiree trying to retire. He spends the first part of the film walking through life, but feeling very devastated; the film captures this feeling very well.
It was really obvious that what Warren Schmidt cared most about was the respect and value he had in the workplace, the relationship he had there, and the job he did. It was a very important part of who he was and what he liked in life. Of course, like everyone else, he didn’t like every aspect of his job, but it gave him so much more than he thought.
It’s not bad at all. Every person needs to find a place and what makes them feel whole, makes them feel valuable, makes them feel involved. Many people find this in the workplace.
On the other hand, it’s me. I have more things that I would like to do in my life than I would ever have time to do in my entire life. Writing books. Reading of books. Hiking. Charity. Desktop game design. Gardening. Fishing. Political participation. Travel. Trying something new. So many, many things.
As for me, as much as I enjoy my job, I also really look forward to the moment in my life when I can wake up and know that my day will be made up of all these things and that I will have enough time to actually do it is with any degree of regularity.
My friend and I draw our personal joy and happiness from different places. Much of his joy comes from work and his main hobby / interest. If you take away one of these things, there will be a void in his life that will remain unfilled. Yes, he could look for ways to fill it, but why would he want to if he already has a life that he finds fulfilling? He has relationships that he values, people who value him, and deeds that bring him joy and satisfaction, but what else does a person want from life?
I enjoy a huge variety of interests and hobbies, much more than I have time right now. I am happy with what I am doing now with my time, but if any element is gone, I will quickly fill that void with other things.
Simply put, I have a much stronger motivation to save and, if possible, retire earlier than my friend to do the same. There is no compelling reason for my friend to retire early or even retire “on time.” It makes sense for him to work as long as possible and keep all aspects of his life that he values.
The purpose of retirement savings and retirement planning is not necessarily retirement. When you reach retirement age, there are many options available to you. Continuing your current career should be just one of many options. When this is the best option, as it seems to be with a friend of mine, then your retirement savings are just a backup plan. When this is just one option out of many, and some of the others seem to be very good, like mine, then your retirement savings are very, very important.
Where are you on this scale?
Are you the type of person who has built a great career with many great relationships? Have you found a place in your career where you have respect, personal satisfaction, and many good people? Are you wondering what you would actually do to fill your days after retirement? If this is you, it is still worth saving for retirement, but you can expect to work a little longer than the normal retirement age and you should consider this as more of a backup plan. In retirement, you won’t be saving that many years, and you will have more years to save. Retirement savings are not that important to you.
Or maybe you are the kind of person who is bursting at the seams trying new things and new ideas in retirement. You have a long, long list of things that you want to achieve when you reach the point where you no longer have to work to generate income. Your retirement days seem downright exciting because of what you’re about to do. You don’t necessarily hate your job, but you definitely work to live, not live to work. You, my friend, are the kind of person who should save as much as possible for retirement so that you can retire as early as possible with the resources you need to receive your full pension. Early retirement doesn’t mean four decades of hard work, it means four decades of wide-open opportunities .
These two different views point directly to different approaches to retirement. One includes aggressive savings, maxing out 401 (k) and IRA contributions, and looking for loopholes and corners to squeeze every last drop out of retirement savings. Another is more focused on using retirement as an alternative and more focused on a debt-free lifestyle to improve their financial flexibility while continuing to work.
None of them are absolutely right, and none of them are completely wrong. Instead, they are both examples of how different approaches to life can nudge people towards different approaches to their finances and retirement planning.
This is why it is called “personal” finance. Different people have different desires, goals, ambitions and views, and it doesn’t make sense for everyone to go the same way for a cookie cutter.
The best approach to personal finance for everyone is to start by identifying what you want out of life and making choices to maximize what you want. For some, this may indicate quick retirement savings. For others, it may be geared towards saving on the house. For others, complete freedom from debt may be the best path. There is no always right answer. The only principle I can point out, which is consistently strong for almost everyone, is to spend less than you earn because the future is always uncertain, and to do something worthwhile with the difference between what you bring and what you spend. Pay off debts, save for goals, whatever it is.
Good luck.
Which type of retirement is right for you? | Simple dollar