Spend little, save a lot, achieve financial independence and retire early. It’s dream of many to be able to exit the traditional nine to five workforce and spend the rest of their days living a life of leisure. Early retirement is certainly a popular goal, but it’s one I quite honestly do not share.
There are several reasons why I wouldn’t retire early even if I thought I had the funds saved up to do so:
My Job Rocks
I wake up each and every day excited to go to work. I could count on one hand the number of companies in the world at which I could do the kind of work I do as a software engineer. It’s exciting, I get to work with rapidly changing, leading edge technology, and it’s always mentally challenging.
I don’t live within the structure of the traditional nine to five workday. Because much of my team resides in India, working at least part of my day overlapping my teammate’s work day is actually encouraged. I have flexibility to work from home and I am free to come and go from my office as I wish (within reason). I can leave to attend my kids’ school events, go to the gym, or even run errands. As long as I get my work done, my employer is absolutely OK with it.
Continue To Build Wealth
My job pays me very well. The longer I work, the more wealth I build. By continuing to earn a great income doing something I enjoy I can afford more life experiences now, and have a bigger nest egg for when I do want to retire.
Retirement Is An Unknown
There are many things that need to be considered when you are trying to determine how much to have saved up before you retire. Among the most common are:
- Type of lifestyle you want to live in retirement or yearly rate of spending
- Length of time the funds need to last
- Rate of growth of remaining investment funds
Unfortunately, much of the information used in these calculations are approximated. We don’t know any of the following information:
- How long we will live
- The rate of growth of investments
- The rate of inflation, or cost of living increase
- Whether we will incur major medical expenses
A person that retires early increases the difficulty in determining how much they need to support through retirement because they need to live off their savings for a much longer time. Think of it this way: We’re told to start saving for retirement early in life because time is our greatest asset when it comes to maximizing the growth of our funds. But time is your enemy in retirement. All of the unknowns listed above could increase the amount of money you need through retirement.
The last thing I want to do is try to get a job when I’m elderly and have no relevant skills.
Many people feel trapped by their day job, and set a goal to live frugal lives to allow them to retire early and do what they really want to do. I’m lucky enough to have a career where I’m doing exactly what I want to do. By getting paid well for my services, I can continue to build wealth for several more decades and greatly increase my standard of living in retirement, while at the same time decrease the uncertainty of whether I’ve saved enough.
What are your thoughts on early retirement?
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They developed this pretty nifty 401K Fee Analyzer that will show you whether you are paying too much in fees, as well as an Investment Checkup tool to help determine whether your asset allocation fits your risk profile. The platform literally takes a few minutes to sign up and it's free to use by following this link here. For those trying to build wealth, Personal Capital is worth a look.