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EARLY RETIREMENT? NOT SO FAST

EARLY RETIREMENT? NOT SO FAST

EARLY RETIREMENT? NOT SO FAST

For many people, the idea of an early retirement is the holy grail of career success. Everyone has heard the stories of people who made their fortune early and then retired. And how many times have you day dreamt about having the freedom to do what you want to do, instead of what you have to do. But is retiring at an early age all that it is made out to be? There are a number of serious considerations that must be thought through before giving up your job or your career for the sake of freedom. Financial independence is just one.

The above-mentioned freedom is such a pervasive goal in our society that there is even an entire movement dedicated to early retirement. It is called F.I.R.E. – Financial Independence, Retire Early. In a nutshell, the movement has to do with living modestly for a number of years, saving aggressively, and calculating one’s retirement year based on projected savings. The movement has gained steam with people primarily in their 30s, most of whom aim to retire somewhere in their 40s, or at the outside, their 50s. If there is a philosophy behind the movement, it could probably be summed up as “frugality = freedom.”

But before you get excited about the concept, here are a few considerations that must be addressed:

  • What is your life plan, once the work-a-day world is far behind you? First, are you willing to continue living frugally for the rest of your life, in order to make your savings stretch? Further, what is going to occupy your time, talents and skills? How will you continue to contribute to the society? Early retirees must think beyond the immediate freedom in order to have a meaningful life.
  • You may have saved a great deal of money, but have you learned how to make the money grow? The cost of living will continue to rise, as will the cost of consumer goods. Early retirees need a smart investment strategy as much as they need money saved.
  • Early retirees must think through all of the possible roadblocks they may encounter. These may include, but are not limited to possible catastrophic illness, unexpected major expenses such as a loved one who suddenly needs your financial support, or even loss of some of your savings or investments due to economic downturns.
  • If an early retiree has a significant other, what if one of them retires in his or her 30s or 40s, but the other is heavily enmeshed in career? Will the relationship falter due to extreme differences in lifestyle and priorities? Will the working partner be jealous of the other person’s freedom? Will the early retiree find frustration in the couple not being able to enjoy the freedom together? There are a number of issues that may come into play due to the imbalance in the relationship.

The F.I.R.E. movement has come under some intense criticism from those who say that in order to retire in mid-career or even early career, one might have to save as much as 75 percent of his or her earnings, which in today’s America is nearly impossible. Others, however, have tipped their hats to the millennials who are determined to buy their freedom while they can still fully use and enjoy it. Wherever you stand on the issue of early retirement, a measured, heavily strategized approach is probably critical to managing an premature career exit.

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