There is a dark side of early retirement I want to tell you about.
I originally wrote this post in 2011 when I was strongly considering retiring early from banking after 12 years. I was burned out and stopped caring about climbing the corporate ladder or making a lot of money. I felt similar to the way quiet quitters are feeling today.
I ultimately did retire a year later in 2012 and have stayed “retired” ever since. After 11 years of early retirement, or fake retirement as I fondly call it, I’ve updated this post with lot more perspective. The pandemic also gave me a gut-check regarding whether I’m spending time in a meaningful way each day.
Early retirement is generally great. You can do what you want when you want. But there is a dark side of early retirement that people need to be aware about. Let me share the negatives with you today.
The Dark Side Of Early Retirement
If you look carefully around the web, you’ll read scores of articles about the desire to retire early or how fabulous the early retirement lifestyle is. The FIRE movement (Financial Independence Retire Early) has grown rapidly since I first began writing about retiring early in 2009.
The reality is, there is a lot of downsides to retiring early nobody talks about. Take it from me, someone who left their corporate job for good in 2012 at the age of 34. I’m not 45 years old with a lot more perspective.
I agonized with the early retirement decision before I left. I also experienced some negative surprises that I did not anticipate until after I had already left Corporate America.
Leaving a stable job, especially during times of uncertainty is tough. As a result, many employees end up suffering from the “one more year syndrome” for far too long. If you decide to retire early and realize six months later you want to come back to work, there may not be a job to come back to!
Let me be clear. I love early retirement. I’m happier because I retired early. However, there are some things I would have done differently if I could rewind time.
Namely, I would have retired closer to 40 years old and had children while working, to take advantage of parental leave! But other than these two things, I have no regrets.
Let us explore several reasons why people want to retire early, why they exist, as well as understand why we should all think twice about pulling the ripcord too early.
Why People Want To Retire Early
You would think the reason why people want to retire early would be obvious: the desire for freedom. However, life is much more complicated than wanting to do what you want, whenever you want.
The below reasons why people want to retire early might sting, but thy are the truth. It is the dark side to early retirement.
1) Haven’t found the right job.
The number one reason why people want to retire early is because people haven’t found a job that gives them enough fulfillment to do for the rest of their lives. Nobody quits a job they like. If there was a job paying $80,000 a year to hike in the mornings and get massages in the afternoon, I’d do that forever!
2) Easier way out.
If you are a sub-optimal performer, you tend to experience a sub-optimal lifestyle. It’s easier to just give up as a result. Let’s say you are a research scientist who after 10 years never produces any relevant research and finds no cures. Instead of going on with failure, you decide to give up and get out of the game. Early retirement is like the cowards way of not having to be the best any more. Some even liken it to suicide.
3) Some people want shortcuts in life.
Society has shifted our ideals from hard work and thinking long term to instant gratification. Nobody has the patience to work for decades before being eligible for a pension.
Look at our pathetic <6% saving rate before the pandemic began in 2020. We all think we know more than we do and deserve to be the rich boss now. When we don’t get our way, we quit, rather than letting people know we couldn’t reach our potential.
4) A feeling of hopelessness.
During the downturn a tremendous number of people began writing about location independent lifestyles that allow one to break free from the 9-5 and “really doing what you want.” In actuality, we all know that what they really wanted was to have a good job and be accepted by society.
It’s because of the downturn of 2008-2009 that so many were displaced with nowhere to go. If they did, perhaps they’d think differently. In an economy where everybody is losing money left and right, what’s the point of working some think. I suspect the same thing may happen in 2020 as well.
5) Realization that time is precious.
With the median lifespan hovering around 80 years old, you only have 20 years of retirement to enjoy your life if you retire after 60, when most people do. People in this camp have a heightened awareness of time and therefore do everything possible to make sure they are financially stable sooner, rather than later.
I’m a strong believer in this thought process, but at the same time, I don’t want to cut short my potential. The worst is running out of money and being too old to do anything about it.
The Dangers Of Early Retirement
1) Oops, you change your mind.
Imagine retiring at 37 after 15 years of work after undergrad. You spend the next 3 years traveling the world, living a leisure lifestyle and experiencing new things.
At age 40, you realize the reason why travel and play is so fun is because of work! You have the urge to get back into the game, but who’s going to risk hiring a 40 year old with a 3 year employment gap?
The employer will suspect you are rusty, and that you may just bolt after a year. As a result, the employer simply chooses to hire someone with no gap in their employment, or someone else from another firm.
2) You run out of money.
No matter how conservative we are in our retirement money needs, something unforeseen may happen. Maybe you have a medical disaster, or your house blows down. Maybe your investments tank due to a massive economic downturn. Who knows what the future holds, which is why the proper safe withdrawal rate is dynamic.
But if you partake in “normal” early retirement, without the mega-millions windfall, you may find yourself needing more one day. Again, a large employment gap is perceived as riskier by the employer and you may be unhireable if you need to return.
If you want to retire early, the most you should be out of the workforce is three years, but preferably two years. After two years, you should have enough taste of the early retirement lifestyle to figure out if never working a normal day job is right for you.
Here’s a savings guideline by age you should consider before retiring early.
3) You lose touch with friends and family.
It’s nice to have all the time in the world to do whatever you want. But, if your friends and loved ones are busy working all day, they can’t join you on your midday hike or adventure to Bora Bora.
They may also have a family to tend to during the evenings and on weekends. If you’ve ever taken a staycation by yourself, you’ll soon realize how lonely it is when others are busy leading their own lives.
There’s a loneliness epidemic that is spreading across the world, partially accelerated by the pandemic. Work from home is nice, but it is also causing people to lose vital connections for a better life. If you retire early, you will feel more alone if you don’t have any hobbies or friends outside of work.
4) You may find it difficult to start your own family.
Unless you retire with a tremendous amount of money, having a child and raising a child may be too expensive an endeavor to undertake as early retirees. In big cities like New York City and San Francisco, you might have to spend around $1 million to raise your child from birth through college.
Even if your household has a $5 million net worth, it’s not easy to sustain an early retirement lifestyle with two kids in a big city like Los Angeles. Interest rates are close to all-time lows, which means the relative income generated by your retirement investments are also likely at all-time lows.
Finally, your focus on saving and investing enough money to retire early might make it more difficult for you to have kids if you wait too long.
I know so many couples who were so focused on keeping expenses down in order to retire early, that by the time they started trying after 35, it was too late. They had to go through IUI, IVF, and all sorts of expensive and arduous procedures, many to no luck.
5) You may lose your own self-respect, and the respect of others.
Unless you’re out there helping the poor, fighting racism, or trying to make a positive difference in people’s lives, you might start getting depressed you are contributing very little to society. You need purpose in retirement, otherwise, it’s hard to stay retired.
Others may stop respecting you because you aren’t doing anything productive either. Traveling the world and writing about how great your life is, is a very unproductive endeavor.
A great many rich early retiree friends from the first dotcom bubble in 2000 have mentioned they wish they didn’t get rich so quickly. Instead, they wish they worked a little harder for their money.
During the first year of early retirement, I was bored out of my mind. I would wake up automatically at 6 am every morning and just twiddle my thumbs until my wife woke up at 8 am or later. It was when I committed to writing on Financial Samurai every day where I found my purpose in early retirement.
Related: Once You Retire Early, It’s Hard To Stay Retired
Careful Who You Listen To About Early Retirement
The dark side of early retirement is real.
Early retirees will croon about how great their lifestyles are. In some ways they are spot on. But notice how they seldom write about the hardships they face.
They can’t, because it’s important they continue highlighting how awesome everything is, to justify their decision to no longer work. It might not even be their decision to retire early as they may have gotten laid off.
The louder you have to brag about how great your early retirement lifestyle is, the less great it probably is. Just like how confident people don’t brag about their achievements, people who are busy living great lives aren’t telling the world about how great their lives really are.
Can you imagine spending 16 years going to school (grade school + four years of college) only to work for 10 years? Some would surely say that’s a waste, would they not?
Perhaps the worst that could happen is some aspiring scientist, musician, lawyer, or teacher decides to give up their careers because they believe traveling around the world on a shoe-string budget is so glamorous.
Years later, they realize their fingers don’t remember the notes anymore and the chemical formulas are one big haze. Maybe they would have made it as a concert pianist, or helped discover the cure for seasonal allergies, ACHOO!
What a shame they never reached their full potential. Perhaps this is the real dark side of early retirement.
Related: If I Could Retire Again Here Are The Things I’d Do Differently
Early Retirement Can Be Selfish
I think back upon my childhood years and remember how much effort my parents put into raising me. My mother would spend hours explaining mathematical equations after dinner every day. My father would read all my essays and fix all the punctuations and grammatical mistakes.
As a parent now, I appreciate how much time and effort it takes to raise children. To work less years than you went to school doesn’t feel right. It feels like I wasted some of my studies and my parent’s efforts.
To not want to be a productive member of society when I know I can is selfish and lazy. Again, this is one of the main reasons why I’ve committed to writing 3X a week on Financial Samurai for the past 10 years. If I’m not going to be a laborer, then I want to at least help more people reach financial independence sooner.
By stopping work early, you are also depriving the government and society of your valuable tax dollars. Taxes are used to help fund schools, roads, libraries, Social Security, Medicare, defense, and more. I was paying over $100,000 a year in taxes for 10 years before I retired in 2012. Then I stopped paying as much for the first several years to help society.
Look Beyond The Smoke And Mirrors
Early retirees sometimes like to pity those who have to work. Yet perhaps we should empathize with those who are lost and haven’t found something they truly love to do (point #1).
It’s impossible to all be great humanitarians working tirelessly until the age of 65. It’s easier just to give up and tell the world how fabulous your life is, and how you’ve retired on your “own” terms.
But what are early retirees really running away from? What is the dark side of early retirement they can’t face? Once you recognize the truth, your career path and your life will be much clearer.
The best thing you can do is work at a job you’d do for free. Sometimes, it takes doing your own thing to truly find what makes you happy.
So long as you have purpose, whether you are working or in early retirement, everything will turn out OK. It often just takes finding what that purpose really is in life.
Personally, I’m sick of writing so much and trying to earn supplemental retirement income online. After a long and arduous pandemic, I’m happy to re-retire again.
I plan to spend my days writing books and spending as much time with my children as possible. More than 80% of the time we will ever spend with our children is during their first 18 years of life. I don’t want to waste a moment.
Retire Earlier With Real Estate
Real estate is my favorite way to build wealth and increase your chances of retiring earlier. Real estate is less volatile than stocks, provides utility, and generates higher income.
The combination of rising rents and rising capital values is a very powerful combination over time. By the time I was 30, I had bought two properties in San Francisco and one property in Lake Tahoe. The income from these properties helped give me the confidence to leave work in 2012 at age 34.
In 2016, I started diversifying into heartland real estate to take advantage of lower valuations and higher cap rates. I did so by investing $810,000 with real estate crowdfunding platforms. With interest rates down, the value of cash flow is up. Further, the pandemic has made working from home more common.
Take a look at my two favorite real estate crowdfunding platforms. Both are free to sign up and explore.
Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing. For most people, investing in a diversified eREIT is the easiest way to gain low-volatility exposure.
CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations, higher rental yields, and potentially higher growth due to job growth and demographic trends. If you have a lot more capital, you can build you own diversified realestate portfolio.
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Stay On Top Of Your Finances
One of the best way to become financially independent is to get a handle on your finances by signing up with Empower (previously Personal Capital). It is a free online platform which aggregates all your financial accounts in one place so you can see where you can optimize your money.
Before Empower, I had to log into eight different systems to track 25+ difference accounts (brokerage, multiple banks, 401K, etc) to manage my finances on an Excel spreadsheet. Now, I can just log into Empower to see how all my accounts are doing, including my net worth. I can also see how much I’m spending and saving every month through their cash flow tool.
A great feature is their Portfolio Fee Analyzer, which runs your investment portfolio(s) through its software in a click of a button to see what you are paying. I found out I was paying $1,700 a year in portfolio fees I had no idea I was hemorrhaging!
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The Dark Side Of Early Retirement is a Financial Samurai original post. As one of the founders of the modern-day FIRE movement, I’m always trying to share with readers as much real-life perspective as possible.
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Hello Sam, I am a 67 year old man that has been retired for about 5 years. My wife retired 2.5 years ago. Finances are not a problem for us and we have no debt. I retired from a job that was demanding with a lot of pressure. I enjoyed my job up until about 6 months before I retired as I got tired trying to find employees who wanted a career more that a check. I never had any hobbies, cabin, fishing boat as most people do so being retired, I find retirement to be a real downer. My wife does not want me to get a job of any kind so I just sit here and exist here every day sound small tasks. Any suggestions ?
Hello James,
You and I are are same age and I retired 5 years ago and moved to a new city to be near the grandkids, so I am now a professional grandfather, so to speak.
However, I too have a lot of free time that is spent inside my own head, thinking my own thoughts and realizing how hard it is to just sit with my own thoughts and emotions without giving in to the urge to find some distraction to pull me away. I tend to gravitate toward snacking, drinking, or mindlessly web surfing and indulging in the recreational outrage and negativity so pervasive online. I came to realize how ultimately destructive to my own contentment and happiness this is.
I don’t give advice, so please don’t take what I’m about to say as any sort of prescription or correct way to live your life in retirement. This is simply what I have done that I enjoy and that has been of benefit. I was compelled to respond to your post as a way to clarify my own thinking as much as by the hope that it might be of some help to you. I am certainly no expert in these matters beyond what seems to work for me personally.
What I’ve been doing that has helped me enormously is to engage in a brief but consistent 20-30 minute daily practice of yoga, not only the postures and stretches, but breathing exercises and allowing whatever comes to my mind to pass through without getting wrapped up in it. Mindfulness, some people call it. There are a ton of online resources that can help point you in the right direction.
I find sitting and meditating a bit of a challenge so I walk instead, pretty rapidly, and listen to podcasts devoted to all sorts of self help and health related issues. I quit consuming more that 5-10 minutes of news daily, just enough to keep up with current events, started eating a healthier diet, gave up the booze, found things in my daily life to be grateful for and I also keep a journal that I fill with whatever random thoughts I want to record. I’ve also started learning to read music and attempt to play the mandolin. I’m pretty unaccomplished, but it’s getting better. I try to connect with nature, going outside, gardening, digging in the dirt, hiking or just walking down the street to chat with whomever I happen to meet. Being in a new city I’ve had to make the effort to make new friends, an ongoing challenge.
If I don’t feel like doing any of this, I may skip a day or two, without guilt of self-judgement for doing so, but I do find the daily routine and consistent engagement in them to have allowed me to just relax and be grateful for this time in my life where I have to freedom to disengage from the pervasive cultural momentum of productivity and achievement. I’m learning to allow the day to unfold, without any particular need to plan and control, but to be open and positive toward whatever comes my way. I must add that this takes effort, as for many years I was a busy, over-working, anxious professional and that is my underlying personality, conditioned by my upbringing and education.
I realize that much of what I’ve said is internally directed and meant to change the way I experience the moments in life. It is a skill to be developed, no doubt, like any other skill, and that gives me meaning and purpose.
I wish you the best!
Yes! Explore hobbies. Try art, woodworking, writing a book.
Take classes.try on line classes. In person University classes. Local mom and pop shops’ classes (like a pottery place, a cooking class at a William Sonoma). Teach a class for fun by getting a booth at the farmers market, etc., and doing impromptu classes right there.
Volunteer. Work for the scouts, a hospital. Proof read a resume for college kids. The small business association needs people to help others get started with a business plan.
Join a local club like for hiking, canoeing, toastmasters, gardening.
Be mindful about getting into shape.
Learn how to eat right. What we were taught as kids re nutrition has changed in 60 years.
Read Happy Money (a book on why some people are successful retirees and others aren’t.) Learn about Blue zones which has entire communities living well into their 120s. And happily and healthily living that long.
Was your work your calling? If so how can you still participate in that field without having long term commitments( meaning promising someone you will be at a place for X amount of hours every. Single. Morning/day.)
What about you “going back to work” has your wife aflutter? Address her needs.
If your career wasn’t your calling which aspect had you loving it? Was it helping others? Organizing info? Starting from scratch and seeing the building process through to completion? How can this desire translate into something else?
What did you wish you could do when you were working but you never had the time/money? How did you spend your time as a kid that you couldn’t wait to get out of school to go do?
Treat your locale as if you’ve never been there. Go exploring. I bet you don’t realize half the new businesses that have popped up around you. I’ve lived here all my life and never knew about the pig races 25 mins away (I’m in Houston) nor there was such a thing as goat yoga. Lol.
Research a place you want to travel to. Go. Can’t go? (War torn, societal collapse) there are online “tours” that let you explore at least parts of the town.
If you’re bored with reading for example, try to spice it up. Get a kindle. Read on your phone. Listen to audible. Don’t just read at home. Make your lunch and go read at the park. Waterproof kindles are great at the pool.
Try new tech. Get an oculus or a Tesla. Buy a curved 49” monitor, smart appliances.
Or go the reverse. Try off-gridding your daily activities. Like hand grind your coffee beans. Buy wheat berries and grind them, make bread from scratch. I bought old fashioned sponge rollers and the overhead hairdryers my grandmother had and now I sit with my morning drink for 30 minutes instead of standing and blowing my hair straight for the same amount of time.
Power and water outages are more and more frequent. How can you make your house so that you’re less inconvenienced if you can’t get water from the city or you start having rolling brownouts for hours a day.
What is your love language. Your wife’s? Kids? Grandkids? Best friend. How can you be a better friend to the people in your life knowing this info?
I could go on and on. Lol. You’ve got this. You have a whole new world of experiences I
Open to you now.
Surely you have some hobbies that are shared by others? I fill my time playing pickleball nowadays where I meet dozens of people with the same passion.
You must find connections in common interests.
See: Solutions to the loneliness epidemic
I feel like Mr. Financial Samurai may be expressing some slight buyer’s remorse. Even after reading this article and it has some good reminders, I still feel the need to FIRE. I am turning 46 this year, worked, saved and invested all my life. I’m married but no kids yet, though we are trying. I am at a point where I don’t find any joy doing what I am doing anymore. Thought about changing to something I am more passionate about but then I might have to deal with new office politics, as currently I love my team, just not what I am doing. I feel like I have been running a long long marathon, and I just want a break, a long long break. I enjoy playing table tennis, traveling and would love to go stay in Asia for a few years. Take it easy and maybe when I am rejuvenated and will come back on my own time and pace. The only thing preventing me from saying I quite is I just sold my house and we are in rental right now and wife always wanted a house so she could feel a little secure but I am ok renting, much less headache compared to when I was a homeowner. By the way, I live in LA, so houses are no pocket change here. Financially I can FIRE, but caveat is I will be renting.
I don’t think I have buyers remorse. I left in 2012 at age 34 and really appreciate the freedom and journey since then.
It is definitely scary to retire early. It’s one of the reasons why I wrote this post in the first place, to reveal any things I hadn’t thought about as I planned towards leaving work.
It’s been a fun journey! And, I’m excited to share my new book out this summer with you. It’s called Buy This, Not That: How To Spend Your Way To Wealth And Freedom.
https://www.financialsamurai.com/btnt/
I hope you order it and enjoy!
I have found this to be a very helpful and enlightening read about early retirement. I have to confess I come from a different perspective. Early retirement actually does not appeal to me. I have spent substantial periods of my life unemployed, so I already know about the feelings of boredom and lack of direction. I am now in my 50s, and whilst I am in a good state financially, I currently do not feel any desire to retire whatsoever. My current job is not my dream job, but it is satisfactory. It keeps me active both mentally and physically. But it is a physical job, so I cannot do it forever.
But it is interesting that your article has focused on the psychological side of it, rather than the financial side, and to hear your first hand perspective.
Thanks. Boredom is a big issue that I experienced for a while. It takes time to get in a different groove. After about one year of early retirement, I decided to “go back to work” by writing more on Financial Samurai.
It is important to do work that provides meaning.
ER can be a way to tap out for burnt-out individuals. However, I do not see ER as selfish; instead, I see it as a poor reflection on our society. What does it say about the traditional 40 hour work week that so many people are disenfranchised enough to quit and walk away from it? I would love to see a societal transformation of the labor system in the US, and I am hopeful the pandemic will provide this to a certain extent. Allowing workers to remain remote and live where they want is a powerful way to keep employees satisfied, plus it adds back hours to their life to spend with those around them since commuting is no longer necessary.
Hi Sam,
I’m reaching out to say how much I liked your article.
I’m in a bit of a similar situation, where I was able to stop working at 35 and move down to South America with the goal of learning Spanish and experiencing a different culture.
I think you really hit the nail on the head with the article and I totally resonate with the downsides you’ve mentioned. It’s been the best decision of my life, but when people ask I tell them you still have good and bad days and your problems don’t all go away once you take work out of the equation and change locations. It was really interesting to see someone write an article talking about the same thing!
I count myself as really lucky to have been hit with those realizations at 35, though. I think they’re bound to come at some point in life, so better to learn these things about yourself and about life at this age than to work your whole life at something you hate and then be hit with that feeling of purposelessness and regret at 65.
Anyway, great piece! I’ve sent it to a number of friends who are in the same boat and who I’ve had similar discussions with.
All the best,
John