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 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.
Passive income is the key to early retirement. This year, Joe is increasing his investment in real estate with CrowdStreet. He can invest in projects across the U.S. and diversify his real estate portfolio. There are many interesting projects available so sign up and check them out.
Joe also highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help DIY investors analyze their portfolio and plan for retirement.