Retire Early – Should You Take The Plunge?

Should you retire early?  The question of early retirement is a lot more complicated than most writers admit.  Because leaving work early and achieving financial independence are a dream for so many, financial writers (especially on the internet) tend to sell to those dreams and paper over the real challenges that many encountert when the choose to retire early.  

Following are some of the upsides and downsides of early retirement as I have personally experienced myself and observed in others.

Retire Early - The Upsides

• Your cost of living drops dramatically.

• You no longer have a commute. You are putting fewer miles on your car, and you don't have to be on the road at crunch time (rush hour).

• Fewer expenses on professional clothes.

• Less work-related stress.

• Better sleep.

• Related to less stress and better sleep, much better health.

• The chance to go "counter-cyclical."

• All of the challenges of early retirement outlined below force tremendous personal growth. When your day isn't a mad scramble just to get all the work done that is flying at you, yes, you may experience an existential vacuum initially.  But that vacuum leads to tremendous personal growth in my experience.  It also teaches you to value many aspects of life (like colleagues or working on teams) in a way you never did before.

The upsides of early retirement are generally pretty obvious.  The downsides are much less so. I encourage you to ponder each of these challenges and factor them into the timing of your decision to retire.

Retire Early - The Downsides

• You lose your tribe.  If you truly hate your job, this may not be an issue, but for most people, the daily interaction with colleagues, working together towards common goals and overcoming challenges is a deep part of the meaning in their life.  Once you cut loose from the group, you may feel lost and alone (especially if you retire quite early).

• Many people derive their sense of self-worth from their job.  Indeed, our society puts a lot of value on people based on their jobs and occupations.  Striping that identity away can be demoralizing.

• For most people, having a sense of being productive is incredibly important to happiness and self-worth.  If your sense of productivity drops off significantly, you may feel worthless.

• Especially if you leave a high-powered job, there may emerge a real vacuum in your life. Intense jobs tend to take up most of our mental energy--working very hard during the week and recovering on weekends and during vacations.  Once you get off the hamster wheel, you may discover that other interests, hobbies, and aspects of your personality atrophied during years of intense focus on work.

• Especially if you are single and live alone, you may experience a dramatic drop off in the amount of social interactions you have daily--as in 1/100th of the amount of human contact you used to have.  Think about if this is healthy for you.

• Particularly for very early retirees, you may feel embarrassed that you don't quite fit in socially when being introduced.  This one is pretty easy to handle, actually.  At a minimum, you can always say you are a full-time investor (which is actually true).

• Finally, the absence of the discipline of a job, that forces you to constantly maintain professional standards--in terms of work skills, how you dress, etc--may lead to a subtle shift from approaching life as a professional to that of the dabbling amateur.  (Think of those retired folks you see sort of shuffling aimlessly through their day.)  This lack of excellence and professionalism could drain the snap and vigor from your approach to life.

For some additional perspective, this article in the Wall Street Journal follows the paths of several early retirees and chronicles some of the challenges and surprises they encountered.

This Is A Deeply Personal Decision

I realize this post may seem a bit negative.  It's not meant to be.  However, there is so little information online ​about the actual challenges people face when they retire early that I wanted to give readers a dose of reality, including the downsides as well as the upsides.  Indeed, nearly all the early retirees I know of either become entrepreneurs or go back to work in some capacity.

At the end of the day, whether to retire early is a deeply personal decision.  The later in life you consider doing this, the easier it is likely to be.  In my experience, those who retire in their early-to-mid fifties find the transition easier (though not a cakewalk) than those in their early forties or even earlier.

We humans are built to be productive.  So think hard about how you will create meaning and a sense of productivity in your life if you retire early.  Personally, though I attained financial independence at 42, I hope to never really retire.