There is More to Retiring Early Than You Think

First, if you are reading this post, congratulations! Retiring early before the age of 65 years is a dream that more than half of Americans have. But there is more to retiring early than you think. Achieving financial independence is certainly great. But retiring early needs some sort of vision, even if there is no coherent plan. I am 51 and cruising toward retirement by the end of this year from my corporate job. Whether this is going to be my final retirement or a mini-retirement, only time will tell.

The financial aspect of retirement is where most of the study is about. Mostly, that’s a math problem. It’s a function of your income and expenses. But once the financial math works for you, then the other area that comes into play do you do with your time? So, in this post I’ll cover more on my purpose to retire early and the challenges I foresee from now on. Why do I call them challenges? Don’t most of us want to be masters of our time and be our own boss? Yes, true, but in a job there are other people and a structure that govern our time and what we do. But when we are our own bosses, we direct what we do. More so than anyone else, we ourselves only can motivate and inspire us to do what we want to do.

“Musicians don’t retire; they stop when there’s no more music in them.”

~ Louis Armstrong

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There is More to Retiring Early Than You Think

Voluntary early retirement without compulsion relates to financial independence. If you can fund your living expenses from your own resources, then you don’t need to do your 9 – to – 5 jobs to earn a living. Then, many times people, even if they can retire, don’t choose to do so and continue their day jobs. Many people cannot stop because they are addicted to the paychecks, even though other meaningful work offers them immense joy. Then there are folks who don’t leave their day jobs since they just don’t know what to do with their time. Lastly, there are also people who go to work just to get away from their spouses. That’s life.

So, let’s try to understand what the nuances are in retiring early. It is not as straightforward as having enough money that you don’t need to work anymore. Everyone’s personal situations are unique, and preferences too. In this post, I’ll share some of my perspectives on how there is more to retiring early than you think.

What is Financial Independence?

Financial independence is driven by a certain amount of resources that can generate an ongoing income to meet our living expenses. The average American household spends about $60k per year in retirement. So you need assets that can generate $60k per year, inflation-adjusted. If all your assets are in financial investments, then per the 4% rule you need a portfolio of 25 times your annual expenses, i.e. $1.5 million. Now, if you want to go with a more conservative safe withdrawal rate of 3%, then you need a portfolio of 33 times your annual expense i.e. about $2 million. Again, these numbers exclude any social security, rental income, side hustle or part-time retirement job income. Thus, you may not need the entire amount to fund your retirement expenses.

In my case, my math says that an extremely conservative safe withdrawal rate would also cover my living expenses given our frugal spending and life choices around moving back to India, which is a much lower cost-of-living country. Then why shouldn’t I take the plunge and explore some ideas that I have, which has been my dream forever? But this is not so straightforward for me. Trust me. Financial independence is only half the story. The actual story is, do I have a purpose to pursue something meaningful that is close to my heart? Because if not, I am afraid my energy and drive may fizzle out in a couple of years.

What is Your Purpose in Retiring Early?

So here I am moving towards the coveted early retirement journey, but not without trepidation. In fact, it is scary, like moving into an uncertain future. More like jumping off a bridge into the water knowing that I’ll survive, but a nagging feeling of uncertainty persists. I have a sort of end-state hazy vision but don’t really have a roadmap or a plan. Our ego tries to control the outcomes of our actions, but in my case now it seems my ego is helpless. That is a strange feeling, as if my ego is not in control, as if I am transcending my ego.

But the topic I want to focus on in this post is that if you have done the math right and even conservatively can fund your living expenses from your investments and/or passive income, then does it mean you just quit your day jobs and retire? Do you need some sort of plan or can wing it as you go?

You Will Own Your Time

The biggest change in retirement is that you will own your time. Now that is a big change since, for most of our lives, when we have done our day jobs, our employers have owned that time at work. That means we will have plenty of time. But do we have a purpose in retiring early and doing some work that is meaningful to us? Do we have a strong passion towards that work and why that is important for us? Would we have the drive and the energy to explore and pursue it? Moreso would we be able to drive and inspire ourselves to grind on it every day?

So, the question is, how will you be in charge of your time? For me, I plan to contribute to this blog regularly and probably start a YouTube channel at some point. I am very interested in business and finance, so that could be what I could talk about on my channel. I might take up a part-time job teaching business at a community college or business school. Only time will tell. But I feel excited and look forward to this journey. But my intuition tells me it is going to be different and, guess, maybe a bumpy ride. Since after having worked in a regular job for over 28 years, this is a big change.

How Shall You Motivate Yourself to Keep Going?

This, I think, is going to be my biggest challenge. I have my purpose, the hazy end-state vision to serve others selflessly in this journey, especially the ones who are not that privileged economically. So, I plan to return to India in another couple of years from the US and find the right sustainable business model through which I can give back but also make sure it is sustainable over the long run. I have some ideas that I want to explore and then, I guess, pursue at some point.

My purpose in being able to give back sustainably is a powerful motivator for me. But I have my fears and doubts, unfortunately, especially around the uncertainty. I am cautiously optimistic. What I don’t want is not to get off the hedonic treadmill and keep on working a job and then realize 5 to 10 years later that while I could retire and explore my dream, I didn’t gather the courage to even try.

Conclusion on There is More to Retiring Early Than You Think

In conclusion, there is significantly more to retiring early than you think. It’s just not about being financially independent but more about what our purpose in life is. All these years I focussed on my job and saved money as much as I could, which has helped me achieve financial freedom. But now it the time to pursue my calling. I believe it’s time, even if the path is going to be difficult and totally uncertain. Guess will figure it out; only time will tell.