Unemployment VS Retirement

James is 57 and he just got laid off. He has enough savings to frugally get by for a few years until social security kicks in so he can make it work financially. He’d need to cut back on his monthly expenses, but he should be okay. He’s still very unhappy and stressed out about being unemployed. He knows that it will be very difficult to get a similar paying job in the same field. There are many younger workers who are job hunting, without demanding the higher starting salary. James is losing a lot of sleep while he waits for human resources to process the pink slip.

Sofia is a year older than James, but she has been thinking about early retirement for some time so being laid off isn’t that stressful for her. She can take the small separation package and look around for another job while collecting unemployment. If she can’t find a better job, then it’s no big deal. She can take the time to ease into retirement. Since she was already considering early retirement, she has started cutting back her expenses in anticipation of having less income. Getting laid off is really a blessing in disguise for Sofia. She can’t wait to clean up her office and say farewell to her friends at work.

I hope you’re not too engrossed with their lives because James and Sofia are not real people. However, everyone can see that Sofia would be a lot happier than James over the next few years. They have a similar financial profile, but their mentality is completely different. James would be very unhappy to be stuck at home and he’d probably drive his family nuts. Meanwhile, Sofia could enjoy her time off and see if early retirement is a good option for her. Their situations are exactly the same, but they just look at it differently.

What’s retirement?

Unemployed vs retired
Typical day for a retiree

What’s retirement anyway? The whole retirement concept seems very artificial to me. If you look back 100 years ago, there is no such thing as retirement. People worked until they couldn’t anymore. Then they contributed in different ways like helping to take care of the children or cooking. These days, retirement means working and saving until you’re about 60, then using the rest of your time to spend what you saved up. It’s a bit depressing actually. Is that really the best we can do with retirement?

James is unemployed, but Sofia is retired. Being unemployed is something that happened to James. Being retired is a choice that Sofia made. That feeling of control can make a big difference on how happy you feel.

Here is one of the definitions of retirement from the online Merriam Webster dictionary.

Retirement – withdrawal from one’s position or occupation or from active working life.

This definition of retirement is very inclusive and I really like it. Most people have a much more rigid definition in their mind. If your wife is working, then you’re not retired. You’re a stay at home dad so you’re not retired. You’re blogging so you’re not retired. I’ve heard all these before and sure, they have a point. Their definition of retirement is different from mine.

Two years ago, I retired from my engineering career to become a stay at home dad/blogger. I don’t plan on going back to work for a company anytime soon. So as far as I’m concerned, I’m quite happily retired. If Sofia was 47 in the scenario above, people would be surprised, but there wouldn’t be much scrutiny. If she was 35 and left work to be a mom, then many people would say she’s not really retired.

Personally, I’d like to think I’m retired. It makes me happy and I’m enjoying my life quite a bit. I could look at my situation and think of it as being unemployed and stuck at home with the kid, but that’d just make me depressed. Life is good, so why not be happy and enjoy it in your own way? I prefer to think of retirement as a state of mind. I have a lot more self directed time these days and I can do whatever I want at my own pace. I don’t have to work on certain project or go to meetings. That’s retirement to me.

Do you think the meaning of retirement should be more flexible? We really need a new word because semi-retirement is pretty boring.

Have a great Memorial Day Weekend! We’re planning to have our first BBQ of the year. I hope you get to enjoy some quality time with friends and family as well.

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Joe started Retire by 40 in 2010 to figure out how to retire early. After 16 years of investing and saving, he achieved financial independence and retired at 38.

Passive income is the key to early retirement. This year, Joe is investing in commercial real estate with CrowdStreet. They have many projects across the USA so check them out!

Joe also highly recommends Personal Capital for DIY investors. They have many useful tools that will help you reach financial independence.
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23 thoughts on “Unemployment VS Retirement”

  1. Technically speaking, I reached “retirement” the day I was about to accumulate $1.5 mil in assets in my 30’s. I am lucky I did this by doing my own business at 29 and “retiring” for a well-paid 9 to 5 corporate job at 30. Now, that I am 48 and have reached all the financial goals I ever set for myself and then some, I think I will finally call myself and describe myself as retired. The difference, however, is that I run a home-based business part-time that brings high six figures but even if that was gone, I have more than enough just from my passive income. So I guess I am retiree that works out of habit and joy but not out of necessity.

  2. We have been retired for over 20 years now into our late 70’s. It’s been a blast despite a significant loss of income due to the bankruptcy of our annuity company. We made it up by starting all over again at age 65 by going back to school for another master’s degree to teach ESL in several universities in the Middle East for five years. When we reached the age hiring barrier we started RVing (8th year full-time) in the USA. Seasonal jobs to add to cash flow.

    Each has been an interersting experience and keeps us on our toes and mind sharp as we head into our 80’s. One of our favorite activities, however, is to go off the grid and kayak, fish, and hike the lakes of Central Oregon during the summer (with expenses less than $1000 a month) and then camp in the Sonoran Desert in Arizona in the winter at places like Organ Pipe Cactus National Monument near the Mexican border. One thing the USA really does offer all citizens is an incredible mix of public lands in the American West. In comparing the advantages of healthcare, retirement, and education in Canada, Australia, and Europe these days recently, several overseas visitors have remarked how fortunate we are to have these incredible National Parks, National Forests, Monuments, and State Parks in the USA. Let’s hope and pray that these pubic lands will be available for the next generations.

    What retirement provides for us is freedom of choice. Loving every minute of it!

    • It’s great that you went back to school and got another degree. Teaching ESL in various foreign countries sounds like a great adventure.

  3. I took early retirement at 53. But when I say I’m retired, people reply back that they didn’t know I was that old. I’m going to quit saying I’m retired. I’m going to say I’m independently wealthy – which is a very subjective term anyway. I’m wealthy enough not to work, to pay my bills, travel, bicycle, play tennis, really do whatever I want and still have a nice nest egg. Independently wealthy. There it is.

    • Good move. I like independently wealthy or financial independent too. That doesn’t fit me though because I’m not quite there yet.

  4. Nice article RB40,

    I agree – retirement is choice. Retirement is being able to wake up and choosing what to contribute to other’s lives when/how/how much etc to contribute as well. It’s not having the concern/worry in the world about how to also cover your next meal, as you have cash flow coming from assets that cover those items, which gives you the choice to do what you want with time. Retirement really equals the freedom of choice to spend your time the way you choose without much concern regarding the monetary aspect of life, in a way. Thoughts? Thanks RB40

    -Lanny, one of the diplomats

    • The freedom is the best benefit of early retirement. I like your definition! It’s tough to be unconcern about the monetary aspect of life, though. I’m sure even moderately wealthy people are concern about the money. Only the really rich folks don’t have to worry about it.

  5. Always make plans for being out of work. If you plan, and have some backup capital, it’s easy.

    We had a 1 week furlough this year, and I was sort of hoping for a severance and then UE then retire…

  6. How about you have achieved a state of :”Findependance”.

    Hi Joe,

    A few of us have already had this discussion in the past and I would love to follow the gang above but I still can’t do that. I respect you, your intelligence, and you have a nice informative blog. You truly seem like an overall nice guy.

    Part of the reason you can do what you do and even take the risk to do so in the first place is you have a significant other that works full time. Your are using her health care benefits (very convenient particularly when recently having a child). You simply swapped roles of what would have been called a traditional marriage decades back. Instead of blogging in those days maybe your wife would have sold Tupperware or Avon or Amway part time from home back in the day. Its nothing new or exciting… it simply a variation of roles and employment choices. Many people work from home now.

    You do have a job in fact you had/have several. Part time landlord/property manager, a mini loan officer (with you dabbling in micro loans), investment manager, caregiver, all valid and important roles.

    I’m not trying to be a hater here, I’m a realist. If anyone watches the series the bridge, the star of the show has no filter on what they say. It creates uncomfortable moments at times. But she looks at things for what they are, and does not sugar coat reality. I like to think I’m looking at this from a different angle.

    All the best just my take on this….

  7. I got bogged down in an attack on my “retirement” status in an online discussion forum recently. I figured out that there is a “retirement orthodoxy” where some consider only those with millions and millions invested in their portfolio and the ability to pay for 100% of any expense that occurs today and may occur ever in the future (long term care, serious illness only curable by experimental treatments not covered by insurance, full tuition, room and board at private schools through PhD’s for all kids, grand kids, etc, all other kid costs while they are in school, taking care of aging parents and other family members that might need possibly unlimited funding).

    Under the rules of the retirement orthodoxy, working any amount (even blogging part time!), whether you enjoy it or not, and whether you need the money or not, makes you not retired. Having a working spouse (even one that works a few hours per month) makes you not retired (you’re just a stay at home spouse!).

    By the definition of the retirement orthodoxy crowd, virtually no one would be able to “retire” early! I like the more flexible definition that acknowledges there’s risk in retiring early (you might need to earn more money if things go really really bad with investments). There is nothing wrong with working a little in retirement (or whatever you choose to call it).

    The retirement orthodoxy people can keep their version of early retirement as far as I’m concerned. I’m too busy enjoying my own version of early retirement to worry about whether I can ever meet the lofty thresholds required by the early retirement orthodoxy folks. 🙂

    • Interesting take. I think the retirement orthodoxy people are just jealous. Maybe they don’t know to be more flexible and are a bit envious of the people who can pull it off. I’m sure they wouldn’t admit it, though.

  8. Yes retirement needs to be revamped, as it is viewed differently by so many people. When I read your story when you took the dive, I viewed it as retired. I don’t think a wife who is still working has any input on a retired or non-retired status. If someone is not working it is considered retired, just let those haters come up with a new word for retirement, and smile as you sleep in.

  9. The word retirement and being old is considered a social norm, so good luck changing people’s perceptions, which should not be the goal.

    I’ve heard pre-tired, semi retired, financially independent, and many others I think each person has their own definition. I’m hoping when I reach that point in my journey I will tell people a story where no titles will be used and it will be my own.

  10. RB40,
    I like the word semi-retirement because it implies that someone is done working a full time job but still plans to earn an income another way. I went to a retirement party for a 51 year old years ago. He still planned to work in a consulting role, but only on his terms and when he had the time. Most of his free time he would be doing exactly what he wanted.

    I don’t like the term pretirement because when I hear that I think someone is approaching traditional retirement from a career but not quite there yet.

    • I like semi-retirement too, but it’s just a bit boring. 🙂
      51 is quite a good age to downshift a bit.

  11. I’m not sure that the word retirement needs to be more flexible or that peoples interpretation should be a little more flexible. There seems to have always been this rift between what people believe retirement to be and who qualifies to be considered as retired, but retirement is just a word to convey an idea and as you stated, a relatively new idea for affluent societies.

    The word is broad enough to include all of our conceptions of what it means. If one believes that we all have unique situations in our lives then it shouldn’t be much of a stretch to believe common words, that merely convey ideas, should be able to “stretch” to accommodate the uniqueness of individual lives.

    Have a great holiday weekend!
    The Stoic

  12. I don’t know why some people get so hung up about the correct definition of retirement. If you have worked hard early on in life and fancy taking a break from working , be a stay at home parent or just try something a little different then that’s up to you. As long as what you’re doing (or not doing) is making you and your family happy then that should be what matters.


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