Is Early Retirement a Good Idea?

Early retirement is not exactly the same as career change but it is linked to it. Many people take this route instead of career change under the belief that once they reach financial freedom, they can start living their best life and realize their dreams.

Well, at least this is one category of people. Personally, I don't agree with this view. Here is why.


In my opinion, striving for early retirement is an extreme approach to living life. This school of thought suggests that we should work hard during our prime years, save as much money as possible, live frugally, and work in high paying jobs to accelerate the early retirement. After this is achieved, we will be rewarded in the future by a large net worth made up of our savings accounts, retirement accounts, and assets. At this point, we can quit our job and reclaim our freedom. However, this means that during the working period of our lives, we must be working hard perhaps also clinging to high stress jobs that are high pay, putting our social life and well-being to a lower priority, and not rewarding ourselves enough with the things we want from life like vacations, material possessions, and more time with friends and family.

Even if we are willing to live an extreme lifestyle for the first part of our lives, will we reach happiness later in life? Happiness cannot be bought with money, it comes from within. Happiness is the combination of being healthy, having enough money to live a decent lifestyle to meet our needs, maintaining meaningful relationships with friends and family, and having a purpose in life. Now money is important to provide us with the things we need, but beyond that, it is of less value. But how do we determine what constitutes a "need"? Of course, this varies with each of us based on our values and background. Personally, I think a financial need is any need that is a basic need (like having a place to live, clothing, food, having access to a mode of transportation (like a car), having an education) or a useful need (basically an investment that is going to result in an improvement or financial return like taking classes, investing in a business, etc.) I believe that these needs can be met gradually through a balanced approach to living life.

Along the same lines, I believe that work is good and is in fact necessary for our well-being. In fact, as the statistics show that unemployment is the riskiest job to have. Jobs are not mere vehicles of making money, but they are ways to express ourselves through them, to reach our potential, and to make a difference at the end of the day. So why retire early? If we do not work as hard and slow down to smell the roses, our net worth will build up more slowly, but this is for the better. If we retire early and stay home while other people our age hold regular jobs and are being productive every day, how are we going to spend our time?

However, there may be some cases where early retirement can be benefitial. If a parent retires to take care of family obligations like raising children, or the case when one is as rich as Bill Gates and can spend their future career working on volunteer activities. Otherwise, it is not a path that I want to pursue, unless it happens by accident! :-)

All in all, this is my biased view of work and life :-) Maybe it's because I am more conventional, I like enjoying my time and accumulating material possessions gradually and not postponing everything until retirement :-) But I guess for other people who live their lives differently, early retirement might be an attractive option!