I've finally discovered the best reason to retire early. A longer steady-state period of happiness. It has taken me 10 years of fake retirement to come up with this epiphany because I had to experience the process myself.
In the past, I've written that early retirement isn't all sunshine and rainbows. I went through plenty of struggles trying to find meaning and purpose during my first two years post traditional work.
On my financial independence journey, I've also encountered plenty of miserable rich people. They've got F You Money out the wazoo. Yet, they're like black clouds of bitterness because they're always comparing themselves to those with more.
No matter how much money we have, ultimately, we want to feel happier. Therefore, it is with great pleasure that I can confidently tell you retiring early makes you happier. Let's dig into why!
Traditional Happiness By Age Chart
In a recent weekly newsletter, I included a chart about life satisfaction or happiness by age by the American Time Use survey. Notice the reasons why happiness rises and falls throughout our lifetime.
I didn't pay much attention to the chart in the past because I was too young and inexperienced to care. I had my whole life ahead of me without too much responsibility or despair.
But now that I've lived for 45 years, I see the meaning of the chart so clearly now. Life satisfaction improves for most people once their lives become simpler and more secure.
Age 57 Is The Beginning Of A Rebound In Happiness
Look how significant happiness increases around 57 all the way up to age 72. What happens for the average person starting around age 57?
Your kids are out of the house or almost out of the house so you have or anticipate to have more freedom. You no longer have to work or work as much because you've had 35+ years of saving and investing. You're only two-and-a-half years away from being able to tap your 401(k) penalty-free, which provides mental relief. Further, your responsibility for taking care of your parents may, sadly, no longer be necessary.
Hence, the best reason to retire earlier is to accelerate when your happiness curve starts to rebound! Instead of going through a 30-year plateau of happiness between ages 30 – 57, what if you could retire at the ideal age of 45?
If you did, your happiness curve would likely slope upward sooner and plateau at “peak satisfaction” for almost 20 years longer! To do so, you would have to give up the pursuit of making maximum money. But in exchange, you might receive something priceless.
The New Happiness By Age Chart For Early Retirees
Let me redraw the happiness curve below in red for those who retire at age 45, or 20 years before the traditional retirement age of 65.
The traditional retiree feels a boost in happiness starting around age 57, or eight years earlier than age 65. Therefore, the 45-year-old retiree may start feeling a rebound in happiness perhaps starting as early as age 37.
However, I suspect the boost in happiness starts after 40 due to the need for more financial security, kids still at home, less years of misery at work, and many more years until tax-advantaged accounts can be available penalty-free.
The early retiree then experiences peak levels of happiness from ages 55-to-75 until their health starts to fade. Early retirees may also experience a greater level of happiness during the end of life due to having less regret.
In other words, the early retiree gets to experience three benefits:
- An earlier rebound in happiness
- A higher peak level of happiness
- A longer steady-state level of happiness
How much would you pay for all these benefits? I guess the answer partially depends on how miserable you are in the first place. For me, the answer is millions of dollars.
Reviewing My Happiness By Age
Logically, most of you will agree that having enough money to retire earlier should bring about greater levels of happiness. Being able to do what you want when you're younger and healthier rocks. So is not having to interact with people you do not like.
However, it's worth reviewing our happiness by age to see whether the above charts make sense. Given I write everything based on firsthand experience, this will be an insightful exercise for me.
Let's just be careful about revisionist history when we reflect. Over time, we might make bad things seem less bad or much worse than they really are! Understand your biases.
Happiness Between Ages 10 – 15: A Golden Period (9/10)
When I was in middle school, I was extremely happy because I had lots of friends. There was no pressure to do well at the International School of Kuala Lumpur because grades didn't matter until high school.
My friends and I would skateboard for hours after school and then talk on landline phones after eating dinner. I don't remember having to do much homework at all.
At age 12, I also got my first girlfriend. Valerie was the coolest girl in the 7th grade and somehow I lucked out. But I was too immature to make the relationship last. So I moved on to Nicola and then to Melissa, from Garden International School.
Happiness Between Ages 16 – 22: The Pit Of Uncertainty (3-to-8/10)
The pressure to do well in high school was immense. Coming to America from Malaysia for high school wasn't an easy transition. A lot of the kids had been friends with each other since elementary school.
I ended up getting in trouble many times because I hung out with a neglected crowd of misfits. We shoplifted, prank-called, experimented with drugs and alcohol, and got into fights. In retrospect, the public high school environment in McLean, Virginia was a suboptimal fit.
Both my parents had day jobs and wouldn't get back until 6 pm or so. By then, they were too tired to spend much time with me. Maybe if they had more flexible hours, I wouldn't haven't been up to no good between the hours of 2:30 pm – 6 pm.
Feeling Of Hopelessness
After getting in big trouble the summer before college, my happiness dropped to a 3 for three months because I felt like I had no future. During college, I kept wondering what was the point of studying so hard if I wouldn't be able to get a job after graduation.
But college was a freaking blast! From the friends I met to the parties, to the freedom, to studying abroad in China in 1997, college was an incredible four years of joy.
I also met my wife in college senior year, which turned out to be a wonderful blessing.
Happiness Between Ages 23 – 34: Enormous Stress And Excitement (4-to-8/10)
My four years of worry about not being employable disappeared once I landed a job in NYC. It only paid a $40,000 base salary, which was equivalent to earning $23,000 in Dallas at the time. But going up to the 49th floor at 1 New York Plaza every 5:30 am was exhilarating.
The stress was immense and I disliked one of my bosses, whom I called Evil English. But I sucked it up because I was employed at a top investment bank. If I could just hang on for at least 10 years, I knew I would have many more options.
The stress returned in 2001 when I overheard I was not going to be offered a third-year analyst position. Thankfully, I landed on my feet at a competing firm in San Francisco.
Moving to San Francisco in 2001 provided another jolt of excitement. I only knew a couple of people, so everything was new. I still remember driving to Golden Gate Park and banging on drums while the heavy aroma of marijuana lingered in the air.
Here are the top 10 financial moves to make to reduce stress and anxiety. Some are easy, while others are hard. The more of these financial moves you accomplish, the happier you'll be.
Finally Experienced True Work Fear
My career was on the up and up until the 2008 global financial crisis began. Right before the crisis, my happiness was around an 8 due to a promotion and great pay. Then fear set in because I had bought a house at the end of 2004 with a ~$1.2 million mortgage.
If I had gotten laid off, I might have been done for. All my liquid savings had gone into the 20 percent down payment and it would have been difficult to keep paying a ~$6,000 monthly mortgage. My happiness declined to about a 4 due to so much worry.
The global financial crisis was a huge wake-up call to right-size my risk exposure. I started telling myself that if I could just regain all that I had lost, I would leave the finance world behind. So I did in 2012.
Leaving banking with a severance package felt like I had won the lottery. With a rebound in my net worth, a severance check, and Financial Samurai, I became excited about my future once more.
Happiness Between Ages 35 – 40: The Golden Years (8-9/10)
Although I no longer had a six-figure income, my happiness went from about a 6 right before I left my job to a 8 during my first year of early retirement. It felt incredible to have full control over my time. No longer did I have multiple bosses telling me what to do. It was also nice to no longer have client requests.
The surge in happiness felt like I had taken a magical elixir. The magical elixir permanently shifted my happiness curve upwards. I might have even gotten to a 10/10 in happiness for several weeks. But such supreme happiness didn’t last.
For the first six months after work, I was also uncertain whether I had made the right move. Leaving a well-paying career at age 34 was unconventional. Some might say stupid. Hence, the anxiety of the unknown kept my happiness below a 9.
As time went on, I settled into my new life as a writer. I'd say my happiness averaged an 8 from age 34-40, which is the shift up in happiness I had projected in the chart.
When my son was born in April 2017, my happiness shot to a 10. For three years, we had tried to conceive. So we appreciated his birth even more.
Happiness Between Ages 41 – 45: The Silver Years (3-7/10)
Although having a baby provides incredible joy, raising a baby is also the hardest thing I have ever done. And my wife did the majority of the work!
From the sleepless nights to the constant fear of injury or death during the first three years of a child's life, raising children is not for the uncommitted.
There were many times when my happiness sunk to a 3/10 due to exhaustion, arguments, the lack of free time, rejections from my children, and worry.
Before our son was born, my wife and I would never argue. But after he was born, we probably argued at least once a week because we were both so exhausted and always around each other.
One of my frustrations was sometimes feeling like no matter how hard I tried as a full-time dad, it didn't seem like enough. I was regularly committing 40+ hours a week to childcare while also keeping up my writing cadence on Financial Samurai.
But taking care of a baby/toddler actually requires 168 hours a week, especially if your kids are bad sleepers like ours were. Constant exhaustion and worry are no good for happiness.
I even sold an important rental property in 2017 to free up more time for fatherhood. The property was supposed to be a huge part of our retirement plan. At the time, I felt like a quitter because I knew the property still had upside.
Regular Frustration As A Father
Due to regular rebuffs from my son, there were many times I considered going back to work since I felt inadequate as a father. I wished more people would talk about dad-guilt as well.
I figured, if I wasn't cutting it as a stay-at-home dad, I might as well utilize my time to earn more money. It was as if evolution was shouting at me to go out and earn!
But going back to work would feel like admitting defeat both as a father and as a FIRE founder. I was determined for both my wife and I to remain stay-at-home parents until our son went to school full-time.
More Responsibility And A Pandemic Ages 42-45
The birth of our daughter in December 2019 was another 10/10 moment. Getting pregnant a second time was much easier. And our daughter's was also smooth sailing.
I remember going to the lounge next to our birthing room at 6 am to get a drink and veg out a bit. Ten minutes later I get a text saying, “You better come back quick, she's coming!”
As veteran parents, we no longer felt a constant anxiety like we did as first-time parents. The confidence felt great. Unfortunately, our plans of sending our son to preschool while we spent more time with our daughter went to crap once the pandemic began on March 18, 2020.
We pulled our son from preschool for 18 months and went into Mama Bear and Papa Bear mode to protect our kids from an invisible enemy. I also stepped up my entrepreneurial endeavors online since I wasn't going back to work.
In retrospect, being able to spend 24 hours a day with both children in 2020 and most of 2021 was a blessing. It showed us how much pressure we could take as parents. Our family also became closer.
Happiness Today At 45: 8/10
Today, I'm happier because the pandemic has died down and my daughter is three. Based on experience with my son, between 3-3.5 is when my anxiety declined about him hurting himself. I also have hope she will show more love within the next six months.
My son is happy going to school every day, which is the most a parent could hope for. I experienced so much trouble since elementary school that I'm hypersensitive about bullies and bad school environments today.
My daughter is also going to school thrice a week. It was a difficult transition for the first month. But now she is usually happy to attend. Now it's about keeping them both healthy enough to go to school given all the viruses going around.
With plenty of free time on Tuesday and Thursday, my wife and I go play pickleball for 2-3 hours. Finally, we discovered a sport we can easily play together and have a lot of fun.
Most picklers we see are in their 60s or older. Their children are adults and they seem free from worry. While on the pickleball court, it feels like I've transported 20 years ahead while still having the fitness of a 45-year-old. It almost feels like cheating.
So perhaps the best reason to retire early is to gain this unfair competitive advantage to do more fun physical activities before your health fades. It's harder to drive a race car when you're 70 because it's harder to bend your knees!
Diversify Your Sources Of Happiness
If my family is healthy and happy and I'm healthy, I am always at an 8 or higher on the happiness scale. Because I only work on Financial Samurai for 15-20 hours a week, a lot of my time is spent with family.
However, relying only on my children for happiness is dangerous because inevitably, something bad will happen to them. And when something does I will feel crushed. Hence, having a variety of purposes is important to maintaining a high level of happiness.
Since 2020, I have found new satisfaction in being a published author with Buy This, Not That. The book is a happiness injector every time I see a copy at home, in the library, or at the bookstore.
Interestingly, after BTNT became a WSJ bestseller, my elevated excitement only lasted for a couple of weeks. I soon experienced a trough of sorrow because I had lost a purpose I had worked on for years. Therefore, happiness takes continuous work and diversification.
Having a variety of purposes will create a stronger baseline level of happiness. Today, my purposes are:
- Being a present father, husband, and son
- Keep Financial Samurai going until 2042
- Win a 4.0 pickleball tournament
- Write another great personal finance book
- Raise awareness and fight for people with disabilities
Good-Enough Happiness Is A 7 Or 8
Just as being a good-enough investor will likely make you richer than expected, having good-enough happiness will likely provide you with a more fulfilling lifestyle than expected.
The search for ultimate happiness is elusive because it never lasts for very long. No matter how good or bad the situation, we revert back to our steady state of happiness range. So yes, I believe there is a genetic component to our happiness predisposition.
Once you get to a 10, it's unsustainable because achieving happiness is limitless. The same goes for reaching an income or a net worth goal. Once you get there, there's always more money to make.
If you can maintain a 7 or 8 out of 10 on the happiness scale, I think you're in the sweet spot. Overall, you're pretty happy, but you're not deliriously happy. As a result, you've got enough “happiness upside” left to give you something to strive for.
Once you're at a 9 or 10 on the happiness scale, there's mostly downside. The downside is why many athletes smartly retire once they've won it all. If you go out on top, you'll always be remembered for being a winner.
Instead, it's the pursuit of happiness that is the most fun. It's the challenge of taking on a new challenge and mastering it. Do hard things and happiness will come!
Progress: My One-Word Definition Of Happiness
Happiness is going from a 25 handicap to a 10 handicap in golf. Once your handicap is under a 10, playing golf starts feeling like a burden because you have to get on the green in regulation each time.
Happiness is going from being a self-published ebook author to a national bestselling author. It's thrilling to create something from nothing.
Happiness is about committing the next 16 weekends to teaching your child how to ride a bike. When you finally let go and he realizes he's riding on his own, that is supreme happiness!
So long as we are making progress in whatever it is we find important, we'll experience happiness. As soon as we start regressing, we may need to work harder or find a new endeavor to pursue.
Feeling happy is priceless. If you're miserable at your job, then retiring earlier or taking on a better job for less pay is absolutely worth it. Please don't stay stuck in a miserable relationship either.
If something is keeping you down, make a positive change. Nobody else will change for you.
Readers, what do you think is the best reason to retire early? How much money would you be willing to pay to increase your happiness level by one or two points for 10-20 years? Did you experience greater happiness after you retired?
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