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FIRE! Should You Retire Early If You Can?


"The trouble with retirement is that you never get a day off."

-Abe Lemons


I'm at my desk, crunching some numbers. It turns out my wife and I can retire in about eight years - putting us in our early 40s.

I get excited. I'm working at a job that I hate, working for someone with whom I have no values in common. If I can just suck it up for almost a decade I can call it quits.

Then, it dawns on me that I don’t want to have a miserable life for eight years. My wife doesn’t want to have to listen to me complain about my boss for 416 more weeks. Plus, I don’t want to live for 40 years with nothing to do.

I know there’s a trend for people who have high-paying jobs to hurry up and retire, but I don’t think it’s for me. I don't think it's for you, either.

Financial Independence Retired Early FIRE


If you haven’t heard of the FIRE movement, FIRE stands for Financial Independence, Retired Early. It’s a movement that aims to have people retire as early as their 30s and 40s. Some of what contributes to this is frugality and minimalism, but some of it is keeping an eye on lifestyle creep and maintaining a comfortable lifestyle and saving what’s leftover.

There are two sides to this movement - FI, or financial independence, and RE, or retire early (sometimes you’ll see the movement spelled FI/RE to make the distinction).

I strongly agree with half of the movement and disagree with the other. Financial independence is something we can all strive for. Retiring early is something you need to be careful with.

Financial Independence

Financial independence is what it sounds like, not being dependent on anyone else for your money. The objective of financial independence is to make sure you have enough money saved (and/or in the form of guaranteed income) to cover your living expenses without having to work.

There are essentially two ways to do this; make more money or spend less money. For most of us, it’s easier to focus on the expense side. The lower your lifestyle costs, the more money you’ll be able to save, and the longer your money will last.

For example, if you have a million dollars and spend $100,000 per year, you can expect your money to last 10 years (I’m not including growth - which is very simplistic but makes the point). If you spend $25,000 per year with the same pot of money, it will last 40 years.

I’m not advocating either of these being right - everyone has different values and interests. The point is that by focusing on keeping expenses low you can make your money last longer.

benefit of frugal lifestyle

Case for Financial Independence

If you are financially independent, work is optional. It gives you the flexibility to do what you want, when you want. The earlier you can hit this point the better. It gives you options to leave a job you don’t like, pursue nonprofit work, or the ability to volunteer for an organization that fits your values.

financial independence offers flexibility

It follows that with financial freedom comes less worry about money. Of course, it will still be there because money issues are not related to the amount of money you have, but having flexibility relieves financial stress.

financial independence reduces stress

The Case Against Retiring Early

Now for the second half of FIRE; retiring early. For the longest time, there was not a lot of research on the downsides of retiring early. Retirement started as a necessity because we were no longer able to work anymore. From there we left the workforce to spend our remaining years enjoying our lives. These are the days when we would retire at age 62 and die at age 65 - retirement lasted a few years.

However, since we are now living longer and longer, trying to retire at the same age - or sooner - means we will be retired for 30, 40, or 50+ years!

Unlimited Leisure

Part of the problem is having unlimited leisure time. I know that sounds like a great “problem” to have, especially if you have a job that is really demanding or if you really hate your job.

When all you have is unstructured free time, problems can result. Hobbies that used to be an escape from work become your new “job.” You lose the area of your life that required you to use your abilities to solve unique problems. Watching television is the number one activity retirees partake in.

too much unstructured free time leads to boredom

Lastly, you have to spend more time with your spouse.

More Spouse Time

I know you’re thinking this sounds bad. Think about it, though, most couples have not spent more than a two-week vacation together full time. This is a radical change if you haven’t prepared for it. Some retirement advisors suggest couples counseling before both partners are retired, even if they have a great relationship. It’s a change.

In addition, women tend to have better social lives than men.

woman have more friends

What does that idea that women have more friends than men have to do with retirement? Easy, if you are in a heterosexual relationship, it means that the woman has a good social network, but men rely more on their wives for socializing. That may be fine at first, but if you ask around to your retired friends, you might not have to go far to find a wife that can’t seem to get any alone time.

husbands join wives at social gatherings

Focus on Financial Independence

Financial independence is good. Retiring early is challenging. In order to keep using your brain to solve problems and keep socializing (two key elements to fight Alzheimer's and dementia), you have to do something meaningful to fill your time. Do some consulting in your field. Work part-time somewhere. Volunteer. Start a business. Do something. Living for three or four decades with nothing to do will drive you crazy.

losing social connections and problem solving in retirement

You only have one life - live intentionally.

organize your financial mess

Read Next:


Michael Finke: Presentation at CFA Institute Wealth Management Conference; New Orleans


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About the Author

Derek Hagen, CFA, CFP, FBS, CFT-I, CIPM is a speaker, writer, and coach specializing in financial psychology, meaning and valued living, resilience, and mindfulness.


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