Early retirement is a road less traveled for a good reason. The stars have to align just right for someone to retire early. Early retirees are a very small minority of the population, but awareness has been growing recently. The internet has made it much easier to share our stories and the early retirement stories are spreading to more people. If anyone is curious about early retirement, all they have to do is Google it. I’m sure most regular people are dubious, skeptical, and probably a little jealous. The truth is most of us can retire early if we make it a top priority. Early retirement just isn’t a high priority for most people. They tend to value things like an expensive home, luxury living, contributing to society, self worth derived from a prestigious career, and other things more than the concept of early retirement. So today we will look at the 3 essential ingredients to early retirement. Everyone’s situation is different, but you really need all 3 things to come together for early retirement to happen.
Ingredient #1 – The Push
No one ever goes to college, starts a career, and plans to retire early. When we’re young, we all want to be successful in our careers, gain recognition, and make a lot of money. Tell me if I’m wrong about this. Does anyone start off their career and plan to retire early from day one? I know I didn’t.
However, life rarely turns out like we plan. I was just 17 when I chose to major in electrical engineering. All I knew about the career was that the field is relatively secure and the pay is pretty good. I was handy with math and science so I thought it would be a good career for me. And it was a good career initially. I enjoyed working with technology and R&D was fun for quite a while. The job gradually changed as I got promoted, though. The company pressured senior engineers to take on more responsibilities and it wasn’t enough to excel only at engineering anymore. Gradually, I began to hate my old job and eventually it took all I had to drag myself to work in the morning. The career just wasn’t a good fit for me anymore. The stress caused a lot of physical and mental health issues and I knew I had to get out.
Things just don’t always work out like you hope. I’m sure many people had a similar problem with their job/career like I did. I also think there are many other issues that could push you out of your comfort zone. Life happens. Let’s try to list some of them here.
- Career not the right fit – Most of us chose a career when we were too young to know ourselves. It seems like an apprenticeship program would work better. That way you learn on the job and if you don’t like it, you can start over quickly.
- Evolving interests – People change as well as their passions. It was fun to work in technology in my 20s, but I don’t even care about it anymore at this point.
- Career burnout – That was me.
- Change in technology – Technology has a way of making careers obsolete.
- Personal changes – Marriage, kids, and other family obligations can make you want to change.
- Hostile working environment – Some companies are just terrible places to work.
- Tired of the rat race – The competitive environment isn’t for everyone. Some of us want to live a more relaxed pace.
- Health – Sometimes our health doesn’t permit us to continue working in the same field.
- Age – We all get old. You can’t keep working forever and someday you’ll need to retire. I hope most of us here makes the transition early, of course.
So that’s the Push. There has to be some reason to make a change. If you’re happy with your work, then there is no reason to retire early unless some of these other issues occur.
Ingredient #2 – The Pull
I was planning to change jobs when I was struggling at my old company. I interviewed with a few companies, but they weren’t the right fit either. I didn’t really considered early retirement until RB40Jr came along. I wanted to spend more time being a dad and full time work prevented that. As a side note, I’m better with kids than Mrs. RB40 so I thought it made more sense for me to be the one to stay at home. We both did not like sending our kid to the daycare at all. We only got to see him a few hours per day and our lives were harried. Our son was the primary reason why I choose to retire early instead of changing jobs or starting over in another field.
That’s the Pull. There has got to be something calling to you. If you don’t have something calling, then changing jobs might be a better choice than taking an early retirement. A lot of people change their jobs or careers every day. It’s normal to change jobs to try to find a better situation. Early retirement is just one option. You have to figure out why you want to retire early or else it is just not very attractive.
- Family – Some people want to spend more time with their kids, take care of their elderly parents, or just spend more time with their spouse.
- Travel – Full time work takes a lot of time. Some people want to see the world and experience life to the fullest.
- Freedom – You can set your own schedule and do whatever you want in retirement. Life without a boss is ridiculously amazing.
- Pursue a passion – Most of us are not passionate about our jobs. We’d rather be doing something we care about instead. Early retirement will give you the time to follow your passions and interests.
- Fulfillment – There must be more to life than working all day.
- A mission – What’s your mission? The world needs saving.
- Lifestyle – The normal American lifestyle just doesn’t work for some people. Some of us would rather have less money and more time.
When you’re working in a job you don’t enjoy, retiring early and doing nothing all day sounds heavenly. However, I doubt early retirement will work out if you don’t have something to retire to.
Ingredient #3 – The Hurdle
Early retirement is tantalizing, but it’s out of reach for most people. There are a lot of hurdles you have to overcome. Finance is the first thing we need to think about when it comes to early retirement, but it isn’t the only hurdle you have to deal with.
- Finance – How will you pay the bills when you’re not working full time anymore? You don’t have to be financial independence, but it would make early retirement much easier.
- Lifestyle – Most of us are accustomed to a certain lifestyle. Would you have to cut back if you retire early?
- Personality – I don’t think early retirement would work for Type A people.
- Social pressure – Society expects us to work until 65. Retiring in your 40s is frowned upon by most people.
- Family – Your family might not be supportive of early retirement. Luckily, I was able to convince Mrs. RB40 that early retirement is a better option for our family.
- Identity and self esteem – Is your job your major identity? Can you keep your self esteem when you’re no longer a big shot at work?
The good news here is you don’t have to deal with all these hurdles at the same time. Most of us will start off working on the financial part while figuring out the rest. Financial independence can take many years to achieve. I started saving and investing right when I began my engineering career in 1996. That gave me a head start when I figured out that early retirement was my goal. I only needed to make a big push in the final few years to achieve my net worth goal.
3 Essential Ingredients to Early Retirement
All 3 of these essential ingredients have to come together to facilitate a successful early exit from the rat race. If you’re missing one of them, early retirement will be a struggle. For me, everything came together just at the right time and early retirement has been working out well.
What do you think? Do you have all 3 ingredients needed for a successful early retirement?
Image by Steven Pisano