Financial independence and retirement are used interchangeably, but there are some subtle differences. Financial independence is usually applicable to people across their entire lifespan. Those who cashed out $5 million dollars worth of Facebook stock at the age of 30 are financially independent just like those who saved $5 million in their retirement funds by the age of 65.
Retirement, on the other hand, is a term often used to describe someone in the last quarter of their lives e.g. ages 65 and up. This is why some folks get so hot and bothered if you aren’t in the upper ages but say you are retired. They don’t think you deserve retirement because you’re not old enough! If you don’t want unwanted attention as an early retiree, just say you are unemployed, on sabbatical, or an entrepreneur.
The reality is all of us would rather be financially independent earlier, so we have more time to enjoy our wealth. When the director of admissions at UC Berkeley asked why I was applying so early (25), I told her it was because I knew what I wanted to do and felt it best to leverage an MBA degree sooner, for a longer period of time. Little did I know I’d be done 10 years later.
Although I’m no longer considered a retiree due to the endless hours it takes being a full-time dad and maintaining this website, I did have at least one year of early retirement life after 2012 where I was completely carefree. For those curious about what early retirement feels like, I’m going to highlight all the positives and negatives I can think of since leaving the workforce in 2012.
The Positives Of Early Retirement
* No longer having to commute in traffic feels like heaven. It’s funny that not riding the bus was the first positive that came to mind as opposed to workplace politics, stress, or more common answers. I used to leave the house around 7:20am every morning to catch the 7:23am bus around the corner. Despite my punctuality, the bus would either not arrive on time or be so full of people I’d have to walk another 5 blocks just to get on. Now when I see folks crammed in buses I can’t help but smile.
* Running errands is easy. I do all my errands around 10:45am or 2:30pm, because that is when most people are still at work. There’s no traffic or lines at the store during these hours and I’m much more efficient in getting things done. I continue to wonder why everybody wants to come to work at 8am and leave at 5pm. It took me 1.5 hours to drive 20 miles to pick up my parents at Oakland Airport due to traffic the other month. It only takes 35 minutes during off peak hours. Come into work earlier and leave a little earlier. Your stress level will go way down.
* Lots of free entertainment. There is an incredible amount of free entertainment during the week. Part of it is because organizations want to show their community support and free access on weekdays provides the lowest amount of damage to their bottom lines. Museums that cost $15-$20 to enter are usually free at least once a month. There are also free cooking classes by Williams Sonoma, free interior design parties by AirBnb, free rock climbing lessons by REI, and so on. There are always free music festivals at various public parks as well here in SF.
* You learn to become more self-sufficient. When I was busy working, I didn’t have time to figure out how to fix the leaky toilet. I would call the plumber and pay him $150-$250 at a time. Nowadays, I simply search on YouTube for a home maintenance tutorial and voila! Call me handyman Sam. If I can’t fix something I’ll chat up the local hardware store attendee and see if he can tell me what’s wrong. Having a smartphone to videotape the issues helps tremendously. Learning how to do things myself has also saved me a lot of time and money on rental property maintenance.
* Better nightlife. Because I used to start work by 7:30am every morning for the past 10 years, I was tired by 10pm. I just wanted to stay in and watch some TV after work. Now I’m always down to go out for dinner or drinks with friends during the weekdays. I’ve attended multiple events that last until 11pm and am ecstatic to not have to go to work the next day.
* Better friendships. I spend more time cultivating my offline relationships now that I don’t work. Those thin relationships one has on Facebook become stronger as you actually send them personal messages to see what’s up and hang out. The more you go out, the more friends you’ll meet. This is especially helpful for single folks. Social integration is vital for happiness.
* Better family relationships. I spend much more time speaking to and visiting my family now that I have more time. Spending more time with family is probably the most rewarding part about retirement. The younger you are, the more you appreciate it because you likely have more family still around. While I was working, literally months would go by where I didn’t interact with my parents because I was too busy.
* More comprehensive posts. Good posts can take a long time to write. But with so much more time now, I can afford to write meatier content that can help more folks. Meatier content also tends to do better in the search engines, bringing in more traffic, and more revenue. In the past, I’d write 750 word posts. Now I’m able to spend more time researching to produce posts that are double in length on average.
* More purpose in life. Most people I know don’t believe their purpose in life is to do whatever they do at their jobs. Plenty of folks start getting depressed when they talk about spending all their time at a job that doesn’t really make a positive impact. They see a job as a stepping stone for something greater and can’t wait to get out. Once you no longer have to work for a living, you hone in on exactly what you want to do that provides meaning.
* In better shape. Without having to sit in a chair for hours at a time, you’ll naturally burn more calories being more active. At 5’10”, I used to struggle maintaining a weight of ~165 lbs, now it requires less effort because I now play tennis, bike, walk, or hike at least three times a week compared to just once or twice a week while working. Being in better shape feels great. It might even extend your life, who knows!
* Your aging slows down. I found my first gray hair at 33 in 2011. Several more gray hairs sprouted out in early 2012 and I thought the dam had broke. At almost 41, I no longer have any gray hair. It’s as if a new dam was built behind the old damn. I also still have a full head of hair despite showing some recession in 2011 as well. When you’re in the thick of work, you don’t realize how much stress you’re under each day until you walk away.
* You can always keep busy. One of the biggest fears working people have before retirement is figuring out what they are going to do with all their free time. I worried how I was going to go from working 70 hours a week to just writing for 20 hours a week and playing sports in the afternoon. If you have a hobby you are passionate about, you don’t have to worry about not being able to fill the void in retirement. There is an endless amount of things to do.
* No fear of getting fired. No employee is ever safe in this hyper competitive world. You could be a star performer, but if your new boss hates you for whatever reason, you’re done. I used to worry about whether I’d be called into the HR’s office due to a recession, underperformance, complaint, error on my expense report, etc. Now there is no worry. Related: How To Be A Rockstar Freelancer And Make More Than Your Day Job
* A more positive disposition. Do you know that smile you get after carving down a black diamond or riding a jet ski over some waves? You will catch yourself smiling without even knowing because people will randomly smile back at you because you’re smiling at them. Smiling when you don’t even know it is probably the #1 outward signal for true happiness.
* The ability to be present with your kids. Our baby boy is the most precious thing in the world and has crystalized the value of early retirement. Before our son was born, it was nice to travel, sleep in, play sports, and write. But now, I’m excited each morning to give my son a hug and play with him for hours. Every day we thank our lucky stars that we get to spend the critical first five years of his life raising him before kindergarten. They grow up so fast!
The Negatives Of Early Retirement
* Become more impatient with delays and waste. Traffic and long lunch lines used to annoy me, but now they really annoy me because I hardly ever experience them anymore. I get annoyed with myself for going anywhere during peak rush hour. I really try not to meet anybody if I have to commute during the hours of 7am-10am and 4pm-7pm. I have to remind myself when it’s bumper to bumper thank goodness I no longer have to deal with such jams on a regular basis.
* Gets lonely sometimes. While your friends and acquaintances are busy working, you’re sometimes busy doing nothing. If you don’t have a partner or family, then you might end up having breakfast, lunch, and dinner alone. I’ve built a small network of work-from-home, unemployed, or work at night friends to play tennis and hang out with. I’m trying to meet more people through a softball meetup that I’ve joined, but I haven’t met anybody I’d like to hang out with so far. It’s easy to feel disconnected if you’re always working from home.
* Easy to get lazy. Before my son was born, I found myself taking hour long naps after lunch, watching too much sports on TV, and chilling in the hot tub for hours. It takes a lot more discipline once you’ve retired to push yourself to do something meaningful because nobody is telling you what to do.
* Potentially less money. This one is obvious, but maybe not. You only voluntarily retire and stay retired if you have enough money to support your desired lifestyle. It’s a different situation if you are forced into retirement. It did sting a little bit to no longer have a healthy W2 income the first six months. However, just like how we adapt quickly to a nice bonus or raise, we also adapt quickly to a loss of income. The fear of running out of money in retirement is overblown.
* Vacations aren’t as exciting anymore. I used to love taking five to six weeks of vacation every year. If my old job could grant 10 weeks of vacation a year, I would have stayed on for at least another five years. Now that we can go on vacation 365 days a year, it’s just not that exciting anymore. We did travel for 6-8 weeks between 2012 – 2016, but by the end of 2016 we were completely traveled out. All the churches in Europe started looking the same.
Other Observations After Retirement
* Spend less time on social media. I spend probably 50% less time on Twitter than when I was working. Perhaps it’s because Twitter was a great way to pass the time during commutes or in between meetings. I also continue to spend very little time on Facebook except for my tennis team group page.
* Know a lot of unemployed people. No matter what time during the day I go out between Monday and Friday, there are tons of people out on the street or hanging out at the tennis courts. When you’re working, you think everybody is holed up in an office building and only comes out during lunch or when the clock strikes 5pm. In reality, plenty of people are unemployed or have flexible work schedules.
* Discover so many different ways to live. When I was working I just figured most people just had a normal 8am – 5pm day job. But during my time away from work I’ve met dog walkers, nannies, professional athletes, teachers during summer vacations, government employees who retired early with great pensions, bartenders, strippers, bouncers, tennis teachers, coffee shop owners, small business owners, and plenty of online entrepreneurs who enjoy a lot of freedom during the day. Related: Abolish Welfare Mentality: A Janitor Makes $271,000 A Year
* No desire to play golf. The cliché is that once guys retire we end up playing golf all day. I thought I would love to play at least once a week with all my free time, but instead, I found the game to be absolutely boring when I had to play it alone or with strangers. Further, the game takes way too long.
* Feel inspired by older workers. Every time I go grocery shopping, I bump into cashiers and baggers who are over 60 years old. They probably only make around $13 an hour. Their hard work inspires me to not take things for granted and keep this site going. Everybody starts off with different opportunities in life. We’ve got to make the most of what we’ve got.
* Just want to feel useful and relevant. So much of your identity is wrapped up in your occupation while still working. But once you’re out, you lose a support network you’ve grown so accustom to. It’s a disconcerting feeling to no longer be relevant to perhaps hundreds of people. If I don’t feel useful to someone, I feel like a loser. Hence, I try and stay busy writing online, volunteering as a foster kid mentor, doing work around the house, and coaching high school tennis while I’m not taking care of my baby boy. Retirement takes away that good feeling of having someone depending on you for guidance.
* Sometimes wonder what else is there in life. When I was busy working, I didn’t have much time left to think about philosophy. With so much more free time I sometimes think, is this all there is to life? Starting Financial Samurai has given me a strong sense of purpose. I recommend all retirees start their own site as well to find their tribe online.
* It gets harder to stay retired over time. The first six months of retirement were full of excitement, fear, and joy. As time went on, I adapted to my newfound freedom by creating a routine that best suited my desires. Once I mastered my routine life got incredibly easy. When life gets easy, life also begins to get boring. With such a strong economy since 2012, I couldn’t help do some consulting with several fintech companies and see if I could build Financial Samurai into something larger. See: Staying Retired Is Impossible Once You Retire Early
* You need much less money than you think to be happy. My biggest surprise since leaving my day job is realizing how much less I need to be happy by about 30% – 50%. One of the reasons is that once you’re retired, you no longer have to save for retirement. It feels foreign to spend 100% of your retirement income or passive income, but that’s what you get to do if you truly have enough. Further, you are so much happier in retirement that you don’t need to spend a lot of money to make you happy.
Early Retirement Is Worth It
There are studies that show death comes quicker after retirement due to a lack of purpose. With the internet and so much good we can do once we have our free time back, I can’t see how anybody would ever feel permanently lost in retirement. Try volunteering at a charity or mentoring a child if you start feeling aimless. Everybody could use a helping hand.
Retiring early is a blessing because our bodies still allow us to climb the steepest Mayan steps and start the most daunting businesses when we still have the energy. Hopefully this post gives you some inspiration to get up a little earlier, save more money, and take calculated risks to retire early as well. The feeling of being able to do whatever you want is priceless.
Reach Retirement Sooner
Stay On Top Of Your Money: If you want to reach retirement sooner, sign up for Personal Capital, the web’s #1 free wealth management tool to get a better handle on your finances. In addition to better money oversight, run your investments through their award-winning Investment Checkup tool to see exactly how much you are paying in fees. I was paying $1,700 a year in fees I had no idea I was paying. The Investment Checkup will give you a good overview of how your net worth is currently being invested.
After you link all your accounts, use their free Retirement Planner that pulls your real data to give you as pure an estimation of your financial future as possible using Monte Carlo simulation algorithms. There’s no rewind button. Your retirement is too important not to get right. Are you in good shape?
Updated for 2019 and beyond.