In 2012, I left my day job in finance with a severance package that paid for over five years of living expenses. In 2015, my wife, who is three years younger, joined me in early retirement as well after also successfully negotiating a severance.
When I left work, we agreed that if I wasn't miserable and starving to death after three years, she would also retire early at 34. She hasn't been back to work since either.
The FIRE lifestyle is great mainly due to the complete freedom you gain once you are no longer beholden to a boss or to money. It's the ability to do whatever you want, whenever you want that is the best part of early retirement.
However, along your way to FIRE, you will hear a bunch of statements about early retirement that will make you hesitate. The naysayers, who are invariably still working, will make you second-guess your quest for freedom with your one and only life.
Heck, you might start getting attacked by the Internet Retirement Police if you voice your opinions too loud or have a popular FIRE blog. Those are some of the most annoying people online who perpetually spout off all these FIRE myths because they're jealous.
As one of the pioneers of the modern day FIRE movement, Let me share some financial independence early retirement myths that just aren't true.
5 Financial Independence Retire Early Myths That Aren't True
1) You will go broke.
The younger you retire, the more at risk you are of running out of money because you have a longer life to care for. Despite this logical assumption, running out of money in early retirement is an irrational worry because you will do things to ensure you don't run out of money.
Before leaving work, I had a fear of running out of money. This fear led me to not only work one more year longer than I wanted to, but also spurred me to come up with a strategic plan to get laid off so I could get a severance package.
Working one more year allowed me to save for two more years of living expenses given I saved 70% of my last year's after-tax income.
Engineering my layoff provided me with a severance package that provided for five more years of living expenses since I also got all my deferred stock and cash compensation paid out along with a severance check.
In other words, the fear of running out of money will make you rationally take actions that help ensure you never run out of money. I was able to accumulate 7-8 years of living expenses due to my fear.
Nobody who wants to retire early decides to just wake up one day and tell their boss they quit. Instead, many years of planning, saving, investing, and testing goes into the early retirement process.
For example, when I retired in 2012, I had passive retirement income that was generating about $80,000 a year gross. I knew I could comfortably survive off of $80,000 gross because I tested living off of $60,000 gross for six months prior to leaving. Today, my passive income is closer to $265,000.
If, for some reason, money was tight in early retirement, I could simply pick up some freelance work to make up for the gap between my retirement income and the money I needed. In addition to making additional freelance income if needed, I could always cut expenses further by selling my house, selling my car, and reducing consumption.
You are unlikely to run out of money in early retirement because you have planned for many scenarios and are adaptable. It takes a lot of effort to retire early. Further, the younger you retire, the more energy and opportunities you have to make money if necessary.
2) You will be on cloud 9 forever.
Unfortunately, the happiness of being free only lasts for at most a year. Once you get used to your freedom, you start taking it for granted like the air you breathe. In fact, due to your immense freedom, you may become more easily agitated by things working folks feel are no big deal, such as traffic jams or people asking for your time.
Think back to your high school or college days when you didn’t have any money compared to now. I’d venture to guess you were just as happy, if not happier when you were a broke college student.
If you were a grumpy person before retiring early, it is likely you will still be a grumpy person afterward. You'll just find different things to get grumpy about.
I've always been a relatively cheerful and optimistic person. For example, whenever I sprain my ankle, after shouting out in pain, I give thanks that I didn't break my ankle.
My happiness ticketed up from an 8 out of 10 to a 9 or 10 out of 10 for about six months, especially after I got my severance check. However, I'm back down to my steady state of 8 out of 10 because I've come to expect freedom every day. My worries have shifted towards the well-being of my children and the health of my parents and in-laws.
3) You will die of boredom.
It's true. For the first six months after retiring early, I often found myself twiddling my thumbs. I went from working 12-14 hours a day to not having to do anything. Things tend to break when you come to a complete stop so quickly.
After the initial shock, I developed a regular schedule writing on Financial Samurai and playing tennis with a group of friends who had also retired early. A year later, I was given the opportunity to consult part-time with a number of financial tech startups, which is something I had always wanted to do since arriving in San Francisco in 2001.
Once my wife negotiated her own severance package in 2015, we decided to go on three-week international trips to new countries. It was a blast to check off countries on our travel bucket list.
Then in 2017, after years of trying, we had our son. As two full-time parents, we don't have the luxury to get bored anymore because we no longer have nearly as much free time. When our daughter arrived at the end of 2019, our free time shrank even more.
In early retirement, you will naturally find things that you enjoy doing and purge the things you hate doing because you can. It just might take longer for some than others, but you will eventually get rid of your boredom.
4) You'll have an identity crisis that will ruin your life.
The longer you spend working, the more your identity will get wrapped up in your work. Wherever we go, you'll always be asked what you do for a living. If your answer is nothing, you might feel like a loser.
Given early retirees work less than the average retiree, it is only natural for early retirees to not feel as attached to their work identity. In fact, because many retirees can't stand their work, they can't wait to get rid of their work identity once they retire.
When I left the financial services industry, I was burned out after 13 years. After the 2008-2009 financial crisis, nobody liked people who worked in finance anymore, even if they had nothing to do with the housing crisis. I was happy to drop my finance occupation in exchange for telling folks I was a writer and a high school tennis coach.
You may lose your identify for a little bit after you retire, but you'll ultimately find it because you will always be pursuing something true to who you are.
5) You'll will die young due to a lack of purpose.
Dying young might be the most insidious early retirement myth of them all. Ever since retiring in 2012, my chronic back pain, tennis elbow, TMJ, and gray hairs have gone away. These health issues have gone away because I feel less stressed every day. I also get to exercise more often.
It is unbelievable how long I was willing to endure chronic pain for the sake of climbing the corporate ladder. It was only after I made a conscious decision to stop the pursuit of riches that I started feeling as healthy as I did when I was in middle school. The health benefits of early retirement are priceless!
There's a reason why more socialist-leaning countries with high taxes and high social safety nets like Finland, Switzerland, Norway, Sweden, and Canada are consistently ranked as the happiest countries in the world. Meanwhile, America rarely ever cracks the top 10.
My wife and I absolutely have purpose: to live long enough for our children to grow up to be independent, happy, and loved adults. All I want is for our son and daughter to find someone who loves them as much as we love them. In other words, we have a mission to live for at least 30 more years.
My other main purpose is to keep writing on Financial Samurai to help as many people as possible achieve financial freedom sooner. It feels great to use my 20+-years of financial experience to help people save more, earn more, and find greater happiness, all for free. I highly recommend everyone start their own website if you haven't already. It's good to plant your flag on the internet.
Financial Independence Retire Early Is Worth It
Yes, retiring early can be very scary. Before retiring, I encourage you to take a 6-12 month test-drive by living on only what your passive retirement income can generate. Also, run through various what-if scenarios to see whether your finances can survive.
I could have made a lot of money if I kept working for another 10+ years. However, I feared something much worse than not having money. I feared I would regret not living a life true to myself.
Make sure you retire towards something instead of only away from a bad occupation. If you do, the transition will be much easier!
Recommendation For Early Retirement
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About the Author: Sam worked in finance for 13 years. He received his undergraduate degree in Economics from The College of William & Mary and got his MBA from UC Berkeley. In 2012, Sam was able to retire at the age of 34 largely due to his investments that now generate roughly $250,000 a year in passive income. He spends time playing tennis, taking care of his family, and writing online to help others achieve financial freedom too.
Sam started Financial Samurai in 2009 and has grown it to be one of the largest independently owned personal finance sites in the world. You can sign up for his free private newsletter here.