Early Retirement Can Be A Mistake… If It's For The Wrong Reasons
- Unlock the real reason behind your motivation to retire early (it may not be what you think!).
- Why it's critically important to have realistic expectations about what life after retirement looks like.
- The dilemma early retirees face and the two choices they must make.
It's a seductive facade.
It's supposed to be about freedom and success, but my experience shows it's usually an avoidance mechanism that cleverly hides a more important issue.
It's self-deception at a deep level.
Consider Bill and Janet's situation. They're in their 30s with an aggressive retirement goal – they want to be financially independent in just 5 years.
As we designed their wealth plan, it became obvious their goal was unrealistic given their values, lifestyle, and competing goals.
Early retirement forced impossible savings objectives and required investment strategies that were too risky. Something had to give.
Once we began to rework their plan so reality matched their goals, new questions emerged revealing underlying issues:
- How long would they have to remain in jobs they didn't like to reach their goal?
- What about the dream business they wanted to build? They didn't want to wait years to pursue it, but couldn't take the leap without financial security first.
- Should both work full-time to accelerate the process even though it would require other family sacrifices?
- What other dreams would be put on hold and sacrifices made while they focused on early retirement?
- Was it worth it? Did it even make sense?
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The Real Issue Behind Early Retirement…
For most people, an aggressive early retirement goal is an escapist fantasy that masks a much more important issue.
Consider the following questions…
- What's motivating your desire to rush toward financial freedom in the first place?
- What does financial freedom mean to you and why do you need it now?
- What will you do with your life after you achieve financial freedom?
For most people, the answer is they dislike their careers and just want to end the pain so they can do something they really want.
They're prostituting their time for money and want to change life paths ASAP. It's not satisfying. It's a means to an end, and the only end they see is retirement – the faster, the better.
Unfortunately, this is all an illusion. The goal isn't to retire. It's a lie. Bill and Janet have no intention of “retiring” in the true sense of the word.
Their real goal is to have sufficient financial security so they can give themselves permission to do what they really want with their lives.
They're in a rush to retire because they want to end their current careers and get a new life. They have entrepreneurial dreams and goals they're ready to pursue.
Unfortunately, they labor under the myth they need financial freedom to do it, and that myth will cost them dearly.
What Are You Going To Do After You Retire?
Think about the above question for a moment because it's critical.
Retirement implies the cessation of productive work, but that's not what most early retirees seek.
Instead, they're motivated to retire by what they're trying to escape from – work drudgery and obligations.
Few people are motivated by what they're retiring toward – a better life, entrepreneurial dreams, encore career, hobbies, etc.
Is your financial freedom goal driven by what you're “moving toward” or by what you're “running away” from?
This is a critical distinction because “going away” goals lead to momentary satisfaction – a honeymoon period – before dismay and discontent set in. “Going toward” goals are what lead to happiness and fulfillment.
Early Retirement Done Right
Here's a simple but powerful idea…
Rather than retire early from a career you don't like, why not build an incredibly satisfying life that includes work you never want to retire from instead?
There's no need to put a formidable obstacle like achieving financial freedom between you and your life goals. If you have other dreams that conflict with your current career path, then live them now and skip the whole retirement thing.
Live happily, enjoy your life's work, and save enough to cover the few years very late in life when you're infirm, out of energy, and suffer from diminished health so that savings is necessary.
This may sound idealistic, and I'm not claiming you won't pay a serious price to follow this path. You may have to reduce lifestyle, or maybe one spouse will need to work in a dissatisfying career temporarily until you can make ends meet.
It's not necessarily any easier, but is this alternative (and all its consequences) any worse than spending your days doing something you don't like?
Instead of trying to climb the financial freedom mountain, why not transform your retirement dream into a lifestyle business that provides you with the flexibility to live life on your own terms while providing enough income to support expenses?
You may be able to achieve the lifestyle business a lot faster and with more joy than the early retirement dream. It's at least worth considering…
The Financial Problem With Early Retirement…
The savings required defies intuition because you must build a perpetual income stream in excess of expenses and inflation.
You can't spend principal when your retirement time horizon exceeds 30 years. This makes the savings burden surprisingly large.
When you add in the problem of long-term inflation eating away at the value of your assets, it becomes a challenging financial goal.
Is it achievable? Yes!
Will you pay a price in terms of lifestyle choices and self-imposed limitations to reach the goal? Yes, and that's the problem.
The relevant question is, “Why bother?”
After all, the goal is perpetual income in excess of expenses. This might be achieved more easily through a lifestyle business that provides you with social connection, contribution to others, life meaning, and still leaves plenty of time for recreation and personal interests. What more do you need?
Why not just skip the whole retirement thing, pass go, and get on with living your dreams?
The Fundamental Problem With Early Retirement
The pro-leisure circuit, endless travel, and umbrella drinks on the beach seem like paradise when you're unhappily slaving away.
But why is every early retiree I've met less happy living this lifestyle than the goal-oriented life that preceded retirement?
The “Catch-22” reality is when you're intelligent, driven and goal-oriented enough to achieve the early retirement dream, there's almost no chance a leisurely lifestyle will result in happiness or fulfillment.
That's why you see so many early retirees launch new ventures and get back to work in one way or another (myself included).
The prospect of endless years of permanent leisure doesn't equal happiness at a deep level. It's a short-term panacea best saved for vacations where it can be appropriately enjoyed.
It begs the question, “Why bother with early retirement at all?” Why not just skip the whole thing and move straight to the new venture that's motivating you in the first place?
It may be cliche, but happiness is about the journey – not the destination. It doesn't wait for you when you end this slavish career and retire.
It results from creatively living your dreams by pursuing goals that honor your values – today, tomorrow, and every day thereafter.
Notice there's nothing in that definition of happiness that's premised on financial freedom, money, retirement, time freedom, lack of work, leisure, or anything else implied by “retirement”.
I've been miserable with total freedom and I've been blissfully happy working very long hours. There's no correlation between the two.
The goal is happiness – not money, leisure, or anything else that's supposed to “lead to happiness”.
Happiness isn't a second-order event premised on something else occurring first. It's a first order event that happens when you live your truth.
And the problem with so many peoples early retirement dream is it masks your truth. It deceives you by putting an obstacle that appears real between you and what you truly want.
It becomes a mirage you chase only to realize it was never able to quench your thirst.
I retired at age 35, and it ushered me into one of the most difficult periods of my life. I was living the lie when I thought I was living the dream. I've worked with clients doing the exact same thing.
It's a common error I'm trying to help you avoid.
You Pay The Price Either Way
It's really just a choice. You'll pay a price no matter which path you choose.
Neither path in life is easy. This isn't about less work or more work. It's about getting what you want out of life – sooner rather than later.
If you don't love your work already, then you face two choices.
- Your first choice is to stay where you are long enough to build sufficient wealth so you never have to work again. Save as much as you can, learn everything you can about investing, and pursue your goal with abandon. There's absolutely nothing wrong with this path if that's truly what you want out of life.
- The second choice is to decide life is too short to spend years stuck in meaningless work and to start doing something you're passionate about that's congruent with your values and interests.
My experience is most people pursuing early retirement aren't consciously choosing a leisurely life. They have other goals or ambitions more akin to an encore career or lifestyle business, but aren't willing to take the leap.
If that's your goal, then don't put a formidable obstacle like financial freedom between you and living your dream. Get started now instead.
Why I Coach You To Live Your Dream
No matter how bad (or good) it works out, you'll move your life forward and experience your next level of growth.
There's no guarantee you'll reach your goal, but you're guaranteed to move past stagnation and take the next step in your personal evolution.
This is usually good enough to justify the price of admission.
Life is an adventure to be lived fully, so go for it! Anything less is a toleration which is unacceptable.
I'm often struck by Martin Luther King's speech “I have dream”. Besides the fact King was a brilliant orator, I believe what made that speech so compelling was we could all identify with what he said – we all have dreams. He moved us by the strength of his conviction and the power of his message.
The difference between us and King was he had the guts to live his dream despite unimaginable difficulties and obstacles to overcome – way more difficulties than you'll likely ever experience.
Yet, he had the courage to stand at the podium and claim his dream for all to see. He led an incredibly courageous life built upon his deepest values and integrity, and we honor him to this day because of it.
We respect leaders who courageously live their truth. There isn't enough of them in the world today.
Do you have the guts to honor your truth and live your dream?
When you can answer “yes”, then you've taken the first step toward living a life so satisfying you never want to retire from it.
Early retirement?? Bahhh! It's a waste of life.
Anybody can learn to build a secure retirement -- and you don't need a financial advisor.
My course, Expectancy Wealth Planning, has been called "the best financial education on the internet" and provides all the knowledge you'll ever need to build the life -- and retirement -- of your dreams.