Early retirement is a loaded phrase that ignites internet skepticism.
We can partly blame the mainstream financial media for picking up stories about “early retirees” that run six and seven-figure businesses.
Inconsistent messaging among early retirement bloggers doesn’t help, and I suspect the phrase is tossed around liberally on YouTube and TikTok.
The FIRE crowd insists financial independence is the more noble pursuit.
If financial independence means having enough money to never need to work again. Then early retirement should mean leaving the workforce before the average retirement age (62ish) and never actually working again. But it often doesn’t.
Angst toward early retirement stems from reality — we live in a world where many workers have complex lives and work hard to earn a modest living.
Early retirement is not feasible for people living paycheck to paycheck. That’s easily most of America (about 2/3 at last check) and probably a much higher percentage in places where such data isn’t collected.
I pursued early retirement for nearly 20 years.
The pursuit of early retirement is a pragmatic framework for personal finance and investing, even if you don’t intend to retire early.
I haven’t retired yet, and early retirement isn’t my focus right now. But my early retirement goal was an effective guidepost motivating me to make good financial decisions.
Early retirement and the pursuit of it have many financial and life benefits. Here are eight reasons to pursue early retirement.
Table of Contents
1. Life Happens
Life’s circumstances may require us to stop working before we plan — for reasons outside our control.
Injuries, health issues, disabilities, and family complications are background risks to our careers and lifestyles. Think of early retirement planning as preparing for the unknown.
We may not be physically or mentally capable of working at some earlier-than-anticipated point in our lives. Hopefully, and probably not. But it’s possible.
During the 2008 recession and the dog days of COVID, many older workers were forced into retirement due to job loss or trouble finding work in a competitive hiring landscape.
Life insurance, disability insurance, and Social Security play a planning role. But a better preventative measure is to design a life where actively earned income is not required indefinitely.
Prepare for the worst when times are good.
2. Career Leverage
Financial independence and the ability to retire early are a straight flush when it comes to employer negotiations.
Over many years at my former employer and client, I witnessed several executives and IT specialists retire from their jobs only to be hired back a few months later.
They had retirement parties and everything. So what brought them back?
During their careers, they proved themselves to be valuable. Retiring left a gaping hole.
Everyone is replaceable. But hiring someone who needs to be trained and may ultimately not work out is riskier than paying more money to someone already known to be exemplary.
In a short time, my coworkers went from being retired to a higher income with more flexibility (e.g., reduced hours, more vacation), sometimes on top of a pension.
Retiring early gave them leverage to negotiate better employment terms for a job they still enjoyed.
3. Explore the Unusual
Retirement travel can be like a carrot on a stick — always out there, never bitten.
The longer we are tethered to full-time careers, the less time there will be for transformative travel to dream destinations.
Transformative travel doesn’t come from an 8-day cruise or Rick Steve’s two-week tour of Italy. It comes from extended periods (e.g., months) in unfamiliar and unusual places.
Younger bodies are more tolerant of uncomfortable travel, but often that’s what it takes to see the world’s most extraordinary scenery.
People that retire in their sixties have a limited window for extended travel. Bump up your retirement date to experience the world.
I prioritized travel over advanced education in my 20s. The experience is part of who I am today and inspired my early retirement goal. I wanted to build upon the immersive travel of my 20s to explore the most unusual places which often need more time to visit properly.
Retirement travel remains a primary financial motivator. When the time is right, I’ll bite the carrot. But reality has changed, and parenting dictates life today.
My early retirement goal led to reaching financial independence in 2021. I now have a flexible work-life balance aligned with our family travel ambitions to less exotic destinations (for now).
4. More Income and Wealth
When you set an early retirement goal and start running the numbers, you may realize the status quo won’t get you there.
Spending sacrifices will only get you so far. Income potential has no ceiling.
Early retirement motivates employees to strive for excellence in their current employment roles, positioning themselves for promotions and raises. It may also spark an inclination to explore additional income streams beyond a salary more urgently.
Aspiring early retirees typically discover ways to grow their income faster, leading to more wealth and financial security. I found mine, which led to a new career.
5. Financial Clarity
Most people are unprepared for retirement and expect to work well into their 60s or beyond.
This common situation largely results from not setting long-term goals early on. With long-term goals, it’s easier to be motivated to implement the good saving and investing habits needed to retire.
Setting an early retirement goal using either a dollar amount or retirement age gives you a target from which you can reverse engineer the habits and behaviors needed to get there.
Retirement calculators and spreadsheets can estimate how much you need to save monthly to reach your financial objectives.
As your wealth grows and you approach the goal, calculators help us spend to live our desired lifestyle.
If you aim to save enough for early retirement, you’ll have multiple options when you reach your goal. Working longer is a popular choice.
I built elaborate spreadsheet models in the early days to determine my goal’s feasibility. Some people use financial planners.
An early retirement goal increases the urgency to clarify your financial plan.
6. The Option to Prioritize Health
Time and good health are our most precious assets.
Office work is time-consuming and sedentary. Breakroom treats are a constant temptation.
Early retirement doesn’t guarantee good physical health. Lots of retirees continue the same bad habits as when they were working. Plenty of full-time workers prioritize exercise and healthy eating.
But when you have more time, you have more control over daily health choices and more personal accountability.
Count me as someone who thought I’d start living healthier when I left my full-time career. I go to the gym more and walk daily, but there’s work to do!
Health goes beyond weight control and muscle tone. Improved mental health is a significant factor in pursuing early retirement.
This is particularly true if you’re working in an unfulfilling career. For the past decade, I commuted, sat in meetings, and created unread PowerPoint slides when I wanted to be working on other personal projects.
Working only for a paycheck was debilitating to my psyche. My passions were elsewhere, but my full-time work prohibited me from using premium daily brainpower on what I cared about most.
More time lets you prioritize what’s most important. When it’s not health, it’s family.
7. Stronger Relationships
Relationships are like health — you have to work on them to be strong.
More time in early retirement makes room for family, catching up with old friends, and making new ones. But only if you make it a priority.
One of the most meaningful byproducts of leaving my career is weekly lunch dates with Mrs. RBD.
Leaving our kids with a babysitter to go out to eat on a Saturday night never made sense to us. A babysitter plus a fancy restaurant are an expensive way to spend three hours.
Instead, we go to lunch while the kids are in school. Lunch is cheaper, less crowded, and unhurried.
Strong relationships do form in the office and from careers. I mostly kept work and social life separate for all of my career. Forty-plus minute commutes made after-work socializing difficult. Microsoft Teams happy hours never felt right.
Today, I volunteer to chaperone my kids’ school field trips and chauffeur them to after-school activities. I feel more present now because my stressful career is in the past.
8. Refine Your Purpose
In my late 20s, my purpose was travel, adventure, and learning about the world’s people and economies — being a mindful, engaged, and empathetic global citizen.
That’s who I was when I set my original early retirement goal (age 55) in 2003.
As I settled into a career and started a family, I had to find a greater purpose closer to home to bridge the gap between 20s travel and retirement travel (50s-70s).
My career never satisfied that void.
In hindsight, it’s why I started blogging.
RBD provided a platform to write about my travel and investing interests.
More travel was the goal. Investing was the utility to enable retirement travel.
A positive outcome from writing about my passions was the side income that helped accelerate progress toward early retirement.
Now my purpose is multifaceted— family, community, craft (writing to help others), and global citizenship.
I can still find adventure and new places to explore close to home and be engaged with the rest of the world through reading, watching documentaries, and visiting local embassies (living near Washington D.C. helps).
An accelerated retirement timeline will force you to find a purpose for when you retire sooner. Discovering your “second act” purpose before retirement grants you extra time to enjoy it.
This is not a pros and con list. Early retirement isn’t a perfect goal, and it’s not for everyone.
The idea of retirement is even chastised at times. Financial independence is superior! Or Build a career you don’t want to retire from!
Full retirement at age 55 may not be what I want anymore. My youngest daughter finishes college when I’m 62 — sounds like a good age to retire 🙂
Pursuing early retirement led me here. I’m happier, more financially secure, and purpose-driven than I would be otherwise.
Unusual featured photo via DepositPhotos used under license.
Craig is a former IT professional who left his 20-year career to be a full-time finance writer. A DIY investor since 1995, he started Retire Before Dad in 2013 as a creative outlet to share his investment portfolios. Craig studied Finance at Michigan State University and lives in Northern Virginia with his wife and three children. Read more.
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