Why Early Retirement Is a Dilemma?

Have you ever thought about early retirement? How does it feel even at the thought of it? There is an entire financial industry to service you in navigating through the retirement process financially. That is more of a math thing. But what goes into the math is also assumptions. How do you know your assumptions would hold true in the future? What if you don’t know what you don’t know? Then there is the entire emotional and psychological aspect of early retirement. Especially if you have worked in a corporate structure for decades. Moreso the bigger question is, what do you plan to do after quitting your regular day job. Will it be a new work chapter? As I move towards my early retirement at 51, I thought I’ll share in this post why early retirement is a dilemma?

“Don’t simply retire from something; have something to retire to.”

~ Harry Emerson Fosdick

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What Does Retirement Mean?

So before we delve into why early retirement is a dilemma, let’s understand what retirement is all about. Moreso retirement is a very personal topic and means different things to different people. According to Wikipedia, retirement is the withdrawal from one’s position or occupation or from one’s active working life. So, the question is, what do we mean by active working? Does active working mean that has a consistent paycheck or a salary? Is freelancing considered active work? If someone transitions from a full-time corporate job to passion projects, which take a lot of work but don’t really pay much or anything at all, would we call it retirement?

In a nutshell, retirement is an interesting word and has many connotations, some positive and some negative. Suppose someone retires from active work at 60 or 65 years, people would congratulate them, but if someone retires early, many times people are in a dilemma about how to respond.

What It Means to Me?

So, the pertinent question here is what retirement means to me? For me, it means transitioning from a structured corporate work to work that I love to do irrespective of whether it pays me. Work for the love of the work. And continue working for as long as I live, given physically and mentally I can do it. This is an interesting concept and may need some elaboration on what I mean by work for the love of the work.

In a corporate job, even if we love it, would we still do it without compensation? Even if we don’t need the money, would we still continue doing it? Again, after a point in time around what is retirement age, there is often an expectation that one retires. Even if the person loves the work, and is still not emotionally ready to retire. There are many who are financially independent but continue working their corporate jobs not because they love the work but just because they don’t know what else to do with their time if they choose to retire.

Why Early Retirement Is a Dilemma?

So this is a good segue to why early retirement is a dilemma. On one had sounds fascinating because it brings in the freedom to own your time and do what you truly love to do irrespective of whether it pays you. It is scary for many because they do not know how to own their time. Since for decades their employers have owned their time, they don’t know what to do with their time if the structure, the external drive and validation is missing. The question is also, can we intrinsically motivate ourselves to work, or do we always need extrinsic motivation to work?

Does the Financial Math Work?

Let’s first deal with the financial math part. But this is also not that straightforward as it may sound. Because the financial math has assumptions built into it. Now, these assumptions are driven by emotions, which may change with time. What feel we need or want today may change. Moreso there are always unknown not only external ones but also internal ones. Do we really understand what we really need or want?

The math is a function of how much is enough, which depends on what our needs and wants are? Wants could be unlimited if we let our desires go wild. Many times what we think our needs are today may change tomorrow.

So, this uncertainty or lack of self-awareness brings in the anxiety about whether to retire early. It’s hard for both spouses to agree on all the assumptions that go into the math. Also here, self-awareness of two individuals is on the table.

Why Retire Early?

So the question is, why retire early? Why do so many people want to retire, and many as early as possible? The general feeling is that you get out of your day job and spend your time doing what you wanted to do all these years. Like you have been delaying your gratification for decades and it’s time you get to enjoy doing those.

To me, it’s been like saving money for retirement and then owning my time. I have had many start-up ideas to create value for others and still do that I want to explore. I don’t have a clear plan or a path identified. But at least want to take the time to explore them first and later pursue at some point.

Why Not Retire Early?

Not retiring early from a job helps continue the work that we are good at for many more years as long as possible. That helps maintain the identity a job provides. The structure and concomitant social connections. Certainly, it provides the stimulation, validation and recognition that the job provides. It also helps boost individual morale and motivation, which the job organization provides. Moreso it provides a purpose to keep ticking as long as we can. These are the biggest benefits of continuing to work in our jobs as long as possible. Now, these external stimulations are truer for employees working in organizations.

Are they still true for owners or entrepreneurs? Yes, the only difference being the owners are more motivated intrinsically versus extrinsically. Because it’s their own business, they are running it. For them, probably they can keep on working as long as they live since there is no external expectation for them to retire even past their retirement age.

Conclusion on Why Early Retirement Is a Dilemma?

Early retirement is truly a dilemma, especially if financially you can. Do you still continue the work that you have been doing for decades even if you don’t need the money or retire early and pursue other opportunities that you always wanted to do? They could be passion projects, volunteering, selfless service or starting your own business to create value for others from where you never plan to retire. This is a tough choice, leaving the security of a job and embracing the uncertainty to start up something of your own with no clear path.

But the question I ask myself is, is it worth taking that risk and exploring building something new from scratch by retiring early? When financially you can, you have the time and the health? That has been more of my dilemma. Does it make sense to regret 10-15 years later continuing our traditional jobs and retiring at a traditional age that I never even tried to explore my dreams when I could? For me, the weight of not regretting later is bigger that my motivation to continue my traditional corporate job. So I took the plunge to pursue the journey as an adventure. Whether I made the right choice, only time will tell. But in this process of following my heart, I am highly grateful for the support and understanding I received from all quarters. It would not have been possible without it. Truly indebted.