Why Early Retirement Isn’t As Good As It Looks
Most people generally have a hard time imagining retirement, let alone early retirement. Despite this, many workers managed to quit their jobs and achieve financial independence by the age of 40 or even younger. Sipping drinks on the beach all day at the ripe old age of 30 sounds unbelievable, but it also has a downside.
I first read about the concept of early retirement on the financial blog Mr. Money Mustache. Blogger-turned-personal finance guru Peter Adney managed to retire by age 30, fueled by his enormous savings and extreme frugality. He argues that most of us can afford to do the same , but we cannot take control of our situation and blame outside forces too much. As someone writing about both personal finance and economics, I think this is a simplistic point of view, but it hasn’t stopped many others from pursuing the same dream, including the semi-anonymous blogger Brian of Done By Forty .
By documenting his goal of retirement by age 40, Brian explores the complete picture of what early retirement looks like. He told us:
“We bloggers writing about early retirement and financial independence are pretty good at describing the benefits of these goals: extra time with friends and family, the freedom to pursue activities without the pressure of pay, and the safety of the nest egg that can keep you alive indefinitely. costs. But we’re doing a lousy job trying to understand the risks associated with major life changes like early retirement. ”
In a recent post, he discusses one of these risks: early retirement can dull your brain.
The link between retirement and cognitive decline
In fact, there are several studies, most notably the Health and Retirement Study , that find a link between cognitive decline and overall retirement. Researchers call this mental retirement , and it may have a greater impact on younger retirees.
Citing research published in the Journal of Economic Perspectives, The New York Times reports (emphasis mine):
Researchers have found a direct relationship between the percentage of people in the country who work between the ages of 60 and 64 and their results on memory tests. The longer people in a country continue to work, the better in a group they take tests when they are over 60.
The study used a memory test in which subjects were asked to memorize a series of words and then tested people from different countries, some of which encouraged citizens to retire earlier. They found that early retirees performed significantly worse than subjects from countries that retired later.
“I think the memory test is the tip of the iceberg: a small sign of more serious mental decline,” writes Brian in his post. Of course, correlation isn’t necessarily causal, and memory tests are just one way to measure cognition. This has been pointed out by other scientists as well. As one researcher told the Times :
“It’s pretty compelling, but it’s not the full story. This is the first shot. But this needs to be watched. “
However, the authors of the Mental Retirement study seem to be quite convinced that there is indeed a causal relationship. They point to several reasons why early retirement can dull our knowledge.
How does “mental retirement” work
It could be a use-or-lose question. The sooner you give up mental stimulation, the worse your cognition becomes by the time you are, say, 60 years old. We find it easier to learn when we are younger, so by giving up learning, we are missing out on the chance to improve our cognitive abilities in the future. They say that if you want to maintain your cognitive abilities, such as memory, you need to stay active .
“The very prospect of early retirement can undermine employee motivation,” Brian told us. “Why take on challenging projects and learn new skills when you’re in your fifties, but after five years you’re leaving your staff?” In other words, the effects of psychological retirement can be felt even before you quit your job.
If these studies suggest that if you retire at age 30 or 40, your cognitive decline may start even earlier .
“Ever since I wrote this post , I’ve thought about my early retirement in a different way,” Brian said. “Research seems to indicate that your early retirement plans should leave some job, which is ironic and maybe a little sad. But the risks of cognitive decline are too great. Without really conclusive research on how these risks can be effectively mitigated, the best approach I can think of is to leave some form of work in my life. ”
As much as we complain about work, it seems that it also has a positive side: it can keep us on our toes. Of course, the answer isn’t all that black and white either. For example, not all work stimulates mental development. And working until you die just to stay sharp sounds like a pretty depressing decision.
What can we do about it
The fact is that this is a problem not only for early retirees. It could be something that affects all of us. Rachel Wu, professor of psychology at the University of California, Riverside, argues that we all suffer from cognitive decline in adulthood because of the way we learn.
When we are children, we are encouraged to learn broadly: we acquire several skills at once, we are allowed to make mistakes, and we learn without prejudice. As adults, we switch to specialized training: we have to choose one career, one position, and if we make a mistake, it will lead to serious consequences, such as losing our job.
“When you look at life expectancy from infancy, it seems likely that declines in general learning play a causal role in cognitive aging. But if adults were involved in broad learning … similar to early childhood, aging adults could expand cognitive functions beyond currently known limits, ”Wu said in a statement .
In other words, she argues that whether retired or not, we can stay in the loop by learning a few skills, getting out of our comfort zone, and accepting mistakes.
“When I started blogging, my plan was to add more variety to my life: just spread my twenty-four hours more evenly on what I enjoy doing. I love board games. Or take a nap, ”Brian said. “But the more I think about it, the more it seems to me that this is a rudderless existence, too focused on leisure and recreation. Our plan today is to put a lot of work into my retirement, damn it, irony. “
The solution, it seems, is not so much to work before retirement as to make sure that you are engaging in stimulating activities after retirement.
If they want to stay toned, early retirees need to think about more than the traditional “sipping drinks on the beach” approach to retirement. This is why many early retirees, including Mr. Money Usat, use the term “financially independent” instead.
“To be honest, I’m not quite sure what this life will be like yet,” Brian said. “It turns out that knowing you don’t want to work in a traditional job until you are 65 is not the same as knowing what you would rather be doing.”