How to retire early: it may be easier than you think
Take an alternative approach to retirement and and you may realise that what you want is closer than you think.
In Never Stop Learning this week I will be covering the following 1-2-3:
One Big Thing - How to retire early!
Two Recommendations on what to consume this week
Three Actions to take this week
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One Big Thing - How to retire early!
The world of work is changing
We already know that the years of having one job from school until retirement are over but the changes haven’t stopped there.
On top of this, during the pandemic we were constantly hearing about the “Great Resignation” as employees sought to improve their work life balance, leaving employers balancing a push back to the office with needing to attract talent in an increasingly competitive market for talent.
To some extent, the pandemic opened peoples’ eyes to a world where they didn’t have to commute 2 hours a day to an office, eat expensive take away sandwiches at lunchtime and put up with constant noise and distractions in open plan offices.
The flip side saw parents find a better balance by actually having dinner with their children, finding time to work out and explore different interests outside of work.
Retirement feels a long way off
For many people in their 20’s and 30’s retirement feels a long way off. Coupled with this they hear a constant media narrative of retirement dates being pushed back and people not saving enough for this far off never land of endless time to do whatever they like.
At the same time they see the baby boomer generation sitting on large gains in property value and lucrative final salary schemes. To some extent this is a media induced victim culture that pits the young against the old.
Did the baby boomers get a much better deal?
Possibly, but when you look into the details it’s not 100% clear cut but that’s maybe one for another day.
I want to talk about retirement
With the goal of retiring at 50 and spending the rest of your days on the golf course or fishing feeling further and further away there has been a resurgence of wanting to do a job for more than just the pay cheque at the end of the month.
And why not?!
If you feel you’re going to be doing a job for the next 40 or more years you may as well push to do something meaningful and even enjoyable to you. Right?
So I think we are talking here about a re-evaluation of what retirement is.
It is certainly the case that the lines are becoming more grey the further we get into the 21st century.
I recommend reading the Almanac of Naval Ravikant who looks deeply into meaning of work and your relationship with that work. (see last week’s post) Another great book that gained a big following during the pandemic was the 4 Hour Work Week by Tim Ferris. Again, this book explores this new way of viewing work and how you can leverage the benefits of our connected world.
Some different ways to approach retirement
So building on some of the concepts of these two books here are a few different approaches to retirement. But first, I think you need to define what retirement means to you.
Naval talks about retirement being about freedom but he makes a very clear distinction between “freedom from” and “freedom to”. “Freedom from” is about escaping from something so it could be:
“Freedom from the 9 to 5”
“Freedom from working for someone else”
“Freedom from getting up early and travelling to a far off location”
“Freedom from” is therefore is a less positive way of looking at a situation. You could escape that job or that situation but to what end? What will you do next? Why did you even do that in the first place if you don’t really know where you’re heading.
“Freedom to” is therefore a much more positive way to approach this and can give you a much stronger “why”. So instead we can say:
“Freedom to” play golf when I want to”
“Freedom to take my kids to school and attend sports day”
“Freedom to choose when and for how long I want to work”
“Freedom to explore my passions”
So it’s one thing knowing what you want to retire or escape from. There needs to be a forward looking goal that will keep you going on your journey. Sitting down and defining what this new world might like for you can be a really exciting exercise to undertaken and really help you define what retirement means to you.
Assuming you’ve defined what you’re trying to achieve there are ways of getting to retirement you could consider. This is where the thought experiment gets interesting.
See what you think of these and how they might fit with your planning horizons.
1. Save as much money as you can and become financially independent
This is probably the most traditional route people have taken over the years. It’s probably what our parents have done. My parents were able to achieve this and have been enjoying a retirement of no work (and lots of golf) but it feels like it’s getting harder to achieve.
The loss of lucrative final salary schemes are leaving more people exposed to the uncertainty of the stock market for giving them the returns needed and very often people simply underestimate just how much money they will need to retire.
In the 4 Hour Work Week, Tim Ferris says this approach is now folly:
Those who achieve this these days probably had to devote so much of their life to earning money that they would be by definition a certain type of person. They would be devoted to their work, probably enjoy their work (in order to have worked so hard at it for so long and, having put the effort in for all those years, would find it really difficult to just stop on day one of their retirement!
These types of people simply won’t be satisfied with a pipe and slippers having been living a high octane life for all those years to get there.
Something of a paradox maybe?
2. Get your burn rate down to zero. Become a monk.
The flip side of number one is to cut your expenses down to almost zero and live like a monk. If you don’t have kids or dependents then you could do this today. Sell up and join a monastery in a mountainous kingdom somewhere between Nepal and Bhutan.
I guess if that’s what you’re looking for then go for it but of most of us this isn’t going to tick the box. However, depending on your aims for retirement you could speed up saving towards method 1 by cutting down on expenses. But, are you comfortable taking a big cut in your standard of living, eating root vegetable broth every day for 40 years so that you can then…….eat broth for another 20 years.
It doesn’t feel that aspirational.
And in any case, what if you only end up with a few years of retirement at the end. Would all the sacrifice have been worth it?
3. Build in mini retirements through your career
Am approach that’s starting to become more popular is to see your 40 year career chunked up into bursts of energy. Again, Tim Ferris is a big proponent of this approach.
Your mini retirements can be taken at many different levels throughout your working life. So at the macro level you could take a sabbatical that could be in the form of a month or two away from your work. It could even be 6 months off between jobs. Refresh, see some of the world and think about what you want to do in the next stage of life.
This certainly has some appeal. Why wait until you’re 65 and possibly unable to do some of the more energetic adventures when you could do them now.
You can also view this at the micro level. You can ensure you take time out between meetings, take a break for lunch, take a long weekend every couple of months and get some proper time away from the office at regular intervals throughout the year.
In summary, this is about seeing your career as a marathon rather than a sprint that could lead to burnout.
These days, many employers offer sabbaticals. If yours does, take them up on it and see what exciting adventures you could have.
4. Do something you love
Doing something that feels like play and doesn’t feel like work at all. Be authentic and do something you love and no one can compete with you. No one can match you for the passion you bring to that thing.
I think most of us can point to a few things in our lives that energise us when we do them. The magic happens when you can find things that both energise you AND allow you to make a living.
As I said above, 40 years is a long time to be doing something that makes you miserable.
This could be in the form of a change in career, exploring whether you could monetise your hobbies or simply finding those parts of your current job that excite you and leaning more in to them.
You don’t need to find the solution immediately but its important to try new things out to see if they work for you.
Two Recommendations - what to consume this week
1. The 4 Hour Work Week, Tim Ferriss
2. I hit 2,000 subscribers. Here’s what I learned, by Michael Estrin of Situation Normal
is a newsletter I've followed for a while but this post really caught my attention this week. Michael talks about what happened when he smashed his 2023 subscriber target in January and what it felt like going viral.
Three Actions To Take This Week
My vision for this newsletter is to provide you with weekly actions that you can take away and use in your life in the coming week. So, here are three things you could try this week:
Visualise what retirement means to you - take some time to write down what’s important to you and consider some of the options above.
Get on top of your bank accounts - stay on top of your money by ensuring you track spend across your bank accounts rather than waiting for the end of the month. It’s amazing at addressing money stresses. Face the fear.
Pick a meeting in your diary for next week…..and reject it - obviously be sensible with the one your choose but you often don’t need to be at ALL the meetings you’re invited to.
📝 Other Newsletters I Recommend
Here are 3 of the newsletters I’m currently recommending that I strongly suggest you check out:
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What’s the one thing you do at work that feels like play?