Early retirement sounds great and it is great for the most part. But there are negatives of early retirement life that needs to be discussed. I retired early in 2012, at the age of 34. Then I unretired a year later because early retirement felt unnatural.
You won’t really know what early retirement life feels like until you actually walk away from a steady paycheck. It’s easy to pontificate what you should and shouldn’t do in retirement. Further, you can assume a high proper safe withdrawal rate when you are gainfully employed.
However, I promise you your expectations about retirement and the reality once you no longer have a paycheck will be different. Please don’t be fooled by early retirees who only crow how amazing early retirement life is. Be wary instead.
For all the glamour of living an early retirement lifestyle, there are plenty of negatives I’ve come to discover since I permanently left my job in 2012. I know why we revert back to our baseline state of happiness, no matter how much freedom and money you have.
Negatives Of Early Retirement
Now that I’m a grizzled veteran, here are the six main negatives of early retirement.
1) You will suffer an identity crisis for an unknown period of time.
When you’ve spent at least a decade working in a profession, you’ll find it incredibly jolting to no longer be identified as the person who is a marketing expert, an investment professional, or the management consultant who can figure out how to optimize a business. It’s only after you leave your job do you truly realize how wound up you were in your profession.
Your identity crisis may last as short as three months or it might last for years. It all depends on how wrapped up you were in your job. It also depends on long you spent getting educated after high school and whether you have a clear plan post-retirement.
Doctors are some of the people who suffer the most after leaving their occupations. Conversely, high school graduates who somehow struck it rich with a product or an invention seem to adjust much easier in post-retirement life.
Job titles can be incredibly addictive. Why else do people get so depressed when passed over for promotion? Why else do people try so hard to get promoted sooner and faster than everybody else? Do not underestimate the importance of being a manager, director, vice president, or even a C-level executive.
After all, the most common question people ask when they first meet each other is: What do you do for a living? And if you tell them you don’t do anything for a living, well then you might just feel like a sheepish loser. You’ll want to try to explain yourself, but by then, your three-second first impression will no longer hold the other person’s attention.
Negatives Of Early Retirement #1: What happened to me
After working in the Asian equities business for 13 years, it felt hollow to no longer have my Executive Director title or be identified with my investment firm. I felt sad that I could no longer go to Asia for conferences or with clients. For so long, taking a business class trip to Hong Kong, India, China or Taiwan was part of my quarterly routine. Shallow as it may sound, it felt special to have priority boarding. I felt important when clients would entrust me to show them around in a foreign land.
For the first year after leaving my job, I wondered how the business was doing without me. Could they really survive without my expertise? After all, I was there for 11 years. Surely, they needed my relationships. But after months went by with no email or phone call from my old firm saying they wanted me back, I had to come to terms that I was no longer important to them.
I wanted to believe that my position meant something to the firm and to the people that I serviced. But at the end of the day, the person I trained to replace me as part of my severance agreement, was good enough. And because he was good enough, I concluded that I was no longer any good.
This ego hit took me a full year to get over.
2) You will be stuck in your head.
When you suddenly have an extra 10 – 14 hours a day of free time, it’s very difficult to optimize your time wisely. Just like how bedrooms naturally get messy, your mind naturally gets lazy the more time you have to do anything.
Your productivity will suffer in retirement. You will no longer feel motivated to achieve great wins. As a result, you may slowly start to get depressed. Only after some really deep soul-searching and some, what the hell am I doing with my life questioning will you begin to organize your time better and become more productive.
Your mind can be very dangerous because it can always second-guess your actions. Did I retire too soon? What if I run out of money? Will people think I’m a loser? What if I can’t ever get back into the workforce if things go wrong? When you have a lot of time to think, your doubts go on and on.
Perhaps one analogy is to compare being stuck in your head with Locked-in syndrome. LIS is a condition in which a patient is aware but cannot move or communicate verbally due to complete paralysis of nearly all voluntary muscles in the body except for vertical eye movements and blinking. This could be one of my worst nightmares. Retiring early may render you inoperable for a while.
Negatives Of Early Retirement #2: What happened to me
Because I left work at the age of 34, I was worried for about the first two years whether or not I had made the right choice. No rational person leaves a well-paying job to be unemployed in their mid-30s. Your late-30s is when you start to finally make good money. And by the time you reach your 40s, you should be at your maximum earnings power.
During my first year of early retirement, to the outside world I proudly proclaimed I was retired from a career in finance. But on the inside, I was second-guessing my decision to leave. Because of my uncertainty, I decided to do some part-time consulting with a financial technology startup for ~20 hours a week. It was a great way to distract my mind from all my fears. I also earned some side income and got to replug myself into society. I also kept in touch with multiple banks until my Series 7 and 63 licenses expired.
Finally, I dived deep into my writing on Financial Samurai. Writing has always been my most cathartic way to deal with any uncertainty or problems I might have. For example, now that I have a son, I’ve been worried about whether our ~$200,000 a year in passive income is enough to support a family of three if he doesn’t win the SF public school lottery system. It’s taken almost 20 years for me to generate this passive income level, and it still doesn’t seem like enough.
Given this worry, I did a deep dive budget analysis for a family earning $300,000 a year. It it sure seems like we need to earn $100,000 more to maintain our lifestyle in San Francisco. Alternatively, we can always move to a lower cost area of the country.
3) People will treat you like a weird misfit.
Whether it’s because retiring early is unconventional or because people are secretly jealous you aren’t grinding away at a day job, people won’t give you the same amount of respect as working class citizens. After all, if they can’t describe what you do for a living, then they can’t pigeonhole you into an archetype that is comfortable for them.
Having a job means you are a productive member of society. If you retire at a young age, people will assume you are simply slacking off and not paying any taxes. They’ll sometimes look at you as a leech they want to flick off.
Further, if you are an outcast, then you won’t be invited to parties or events that other working people always get to attend pre-pandemic. You’re simply not top of mind to them. If you are an extrovert, early retirement will be much more difficult than if you are an introvert.
Negatives Of Early Retirement #3: What happened to me
After the first year of early retirement, I no longer told anybody I retired early. Instead, I told anybody who asked that I was a writer, a tennis teacher, or a fintech consultant. Prior to that, I think a lot of people just assumed I was a trust fund baby who did not have to work. And the last thing this middle-class guy who went to public school wants to be known as is a trust fund baby.
My favorite time of the year was during the winter holidays. I loved going to all the holiday parties and getting tipsy with fellow revelers. Now, I get invited to zero holiday parties because I don’t work for anyone. Nor do I get invited to client holiday parties either.
Even though I have several partners who are based in the SF Bay Area. It may sound silly, but having a drink with good people with shared interests really means a lot to me.
It takes a lot of effort to build new social networks if you aren’t part of a larger organization. There is no weekend BBQ party a colleague is hosting on Labor Day Weekend to attend. I’ve had to participate in various meet-up events in order to find new people to hang out with.
So far, my social network only revolves around tennis and softball. But even then, it’s not like I’ve found buddies who will come over and just chill in the hot tub over a beer or anything.
4) You’ll be disappointed that you aren’t much happier.
So many people think that once they achieve financial freedom or leave a job they dislike, they’ll suddenly be permanently happier. The truth of the matter is, your elevated happiness will only last at most three to six months. Eventually, you’ll revert to your natural state of being.
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.
Having the freedom to do what you want is priceless. But you will eventually take your freedom for granted like the air you breathe. On the days you feel angry or sad, you will start questioning what the hell is wrong with you since you’ve got more than the average person. You’ll feel stupid for feeling unhappy when there are literally hundreds of millions of people in the world wondering whether they’ll have enough to eat the next day.
You think, if I can’t be happy when I’m financially independent, surely there must be something seriously wrong with me. And you could be right! Can you imagine being unhappy as a Norwegian? Norway is perpetually ranked as one of the top five happiest countries in the world.
Negatives Of Early Retirement #4: What happened to me
I thought I’d be much happier not having to report to a micromanager boss I did not respect. But my increased happiness was fleeting. It only lasted for about a week before I was back to my regular self. Instead, my happiness was weighed down by months of uncertainty on whether I had made the right move to leave my job. It was only after about two years did my doubt finally start to dissipate.
Although corporate politics no longer piss me off, other things end up filling the void. For example, drivers who decide to double park on a busy street in rush hour traffic really piss me off now. So do dog owners who let their dogs poop in front of my house and don’t pick up after them. In the past, I could only allocate a small amount of annoyance to such incidences.
Instead of being permanently at a happier level, I’m simply no longer as annoyed at things as frequently. Further, the volatility around my steady state of happiness is lower. In other words, I’ve mellowed out. That said, don’t offend me because I still enjoy a really good fight!
5) You constantly wonder whether this is all there is to life.
Retiring early is like finishing up your favorite longstanding TV show. You’re glad there’s a conclusion, but you’re also sad that it’s over. You hope to find a show that’s as good or better, but there are no guarantees.
Most of us spend 13 years going to grade school so we can spend four years in college in order to get a decent job. Then we spend decades trying to earn and save money in order to provide for our family. Then one day we hope to retire by 65. With good luck, we’ll live for another 20 years to enjoy all the fruits of our labor.
When you retire at a much earlier age, you are constantly left wondering what’s next. A potentially 50-year retirement is a very long time! You are mentally twiddling your thumbs waiting for the next big thing while your close friends are all at work. Early retirement can get extremely mundane and boring because you have nobody to spend time with.
As a result, you’re repeatedly forced to will yourself into action. This constant self-starting attitude can become extremely trying. It may get to the point where you long to rejoin the workforce and be told what to do.
Negatives Of Early Retirement #5: What happened to me
I probably drove my wife nuts during the first two years of early retirement. I constantly told her I was bored. Only boring people get bored right? Wrong. Everybody gets bored at some point. When you’re working, you don’t have time to get bored because you’re working. There’s only so much tennis, golf, and softball I can play before my knees break apart. There are only so many churches to visit in Europe before they all start looking the same.
She used to have vacations from me because I would be away traveling for work every month. Now she was seeing my cherubic face every single day! It’s a good thing we had three bedrooms at the time. Otherwise, I’m pretty sure we’d both have gone crazy from seeing each other so often.
It was only after our son was born in early 2017 that I felt a renewed sense of purpose. Before my boy, I felt my purpose was to help educate as many readers as possible about personal finance.
After my boy was born, my purpose has expanded to keeping Financial Samurai running long enough to teach him about operating an online business. I fear he may have a tough time getting ahead. In addition, I now need to live long enough until he finds someone who loves him as much as I love my wife.
I don’t think I’d be able to die in peace if there’s nobody to replace his mom or me. As a result, I’m exercising more, eating healthier, and meditating longer.
6) You relationship with your significant other might suffer.
As more people retire, I’m noticing an increase in breakups post retirement because there is a mismatch in retirement philosophies. The most obvious one is where one spouse retires first and the other spouse keeps working for years.
Resentment naturally builds up by the working spouse who doesn’t absolutely love his or her job. And nobody loves their job so much that they’d rather work than be free to do whatever.
There is also an interesting anthropological trend where the man retires early and the wife still works. Instead of the man saying he is a stay at home dad taking care of his children, mostly due to ego, he tells everyone he retired early.
Meanwhile, he is frantically behind the scenes trying to make supplemental retirement income. Sadly, they don’t truly have enough money for both to comfortably retire.
To minimize relationship problems, it’s important to have the same philosophies. It’s also important for couples to have enough passive income to cover the couple’s desired living expenses. It would be a shame to let money get in the way of a happy retirement!
Negatives Of Early Retirement #6: What happened to me
When I retired in 2012 at age 34, my wife and I made an agreement when she was 32 that she could retire early before she turned 35 in 2015 as well. We shot for equality. With almost a three year deadline, we created some cash flow and financial goals.
When she finally retired, it was great b/c financial and career objectives were met, and she also negotiated a severance package much better than expected. We traveled together a bunch and it was nice.
However, I did have some resentment for the first couple of years because she was able to sleep in while I couldn’t after 13 years of getting up at 5 am. In other words, I was jealous she was enjoying her initial years of retirement so much! During my first year of early retirement I was always wondering: hmmm did I do the right thing leaving my job so young.
To solve this jealousy and resentment, we agreed that she would spend more time working on the back end work for Financial Samurai. Once we had our son in 2017, there was no more jealous and resentment at all. Being a full-time mom is the hardest job in the world! Now that we have a 10-month old daughter, I’m mostly super grateful for any support she can provide with FS.
Early Retirement Is Great, But It Doesn’t Solve Everything
It might sound like after reading this article that I’m depressed. But I’m not. I’m simply highlighting some of the negatives of early retirement you will probably go through if you decide to leave the workforce early as well. The more extroverted you are and the higher your position, the more you will have difficulties making the early retirement adjustment.
Having the freedom to do what you want cannot be overstated. However, your mind will play games with your spirit during the first few years after leaving work. Some of you won’t be able to handle early retirement life and will go back to work.
Just know that with enough conditioning, you will eventually embrace your freedom. Nobody I know who retired from corporate life early has stayed retired. You will find your purpose. Once you do, you will take steps, such as building passive income, to ensure you remain free forever.
Having Enough Money Is Important For Happiness
Since 2012, I have not spent a single dollar of my investment principle. This is due to the rise in the stock market, real estate market, and the growth of Financial Samurai. With interest rates plummeting in 2020, I strongly recommend everyone build more capital before retiring and lower their safe withdrawal rate in retirement.
With tremendous uncertainty in the pandemic and the need to support two kids, my retirement funds have been tested. But I’m confident everything will turn out fine because I’ve been preparing for when the good times finish.
Hopefully you can appreciate all the negatives of early retirement I’ve shared with you in this post. It is one thing to run the models and pontificate about what early retirement is like when you are still gainfully employed. It’s another thing to actually experience early retirement when you and your partner, if you have one, no longer have steady paychecks.
In the end, I believe the positives of early retirement outweigh the negatives of early retirement by a 3:1 ratio. Therefore, you might as well shoot for early retirement and discover what all the fuss is about for yourself!
Recommendation To Retire Earlier
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Earn Income Passive In Retirement
In 2017, I sold a rental property to simplify life. I reinvested $550,000 of the proceeds into real estate crowdfunding to earn income 100% passively.
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The Negatives Of Early Retirement is a Financial Samurai original post. I’ve been writing about FIRE since 2009.