Alternatives to Early Retirement
As long time readers may know, we could be financially independent now, but we have decided to delay this major financial milestone. Essentially, rather than expedite our financial independence retire early (FIRE) journey, we decided to take a much slower approach due to various reasons.
Within the FIRE community, more and more people are starting to talk about taking a more balanced approach. People are trying to find their own personal balance between saving for the future and spending their time or money to enjoy the present moment. I believe this is an extremely important message.
Today I have invited the Fioneers to talk about alternatives to early retirement and why a slow FI approach may be the right approach for many people.
When I first learned about financial independence, I wanted to retire early. Wasn’t the point to get to a place in life where you no longer needed to work?
Reading Your Money or Your Life by Vicki Robin was my introduction. I was excited to reflect on this question: what would I do if I didn’t need to work for a living?
At the time, I had believed there was only one option in life. This one option was to work full-time at a job you hopefully didn’t hate until you were 60-ish.
My first exposure to FIRE (financial independence retire early) expanded my options. I started to believe that there were two options:
- Working a full-time job until I was 60, or
- Saving as much money as possible, retiring early, and then doing whatever I want.
While incomplete, this new mindset allowed me to start thinking bigger about what I wanted my future to look like. I began to ask myself questions like:
- What do I truly enjoy doing?
- What do I want my life to look like?
- What would I do for the rest of my life if money weren’t a factor?
Now, I could just race to the finish line, retire early in 10 years, and live my dream life.
Things Don’t Always Work Out As Planned
Unfortunately (or fortunately), things don’t always work out as planned.
When I learned about FI, I was already miserable in my high-paying, full-time job. While I wanted to live my dream life, I wasn’t sure if running toward early retirement was the most desirable course.
A few months later, I became burned out from work and was forced to take a medical leave of absence for several months. When this happened, I knew that “Fast FI” – sprinting to the finish line – wasn’t going to be possible for me.
At first, I was very disappointed. I’ve come to realize that I was still looking at financial freedom too narrowly.
The Dominant FIRE Narrative is Too Narrow
The vast majority of the financial independence narrative still focuses on saving as much money as possible for a short time. If you deprive yourself now, you can retire early to a life of full freedom later.
The most visible examples feature people who have retired early in their 30s and, sometimes, even their 20s. The mass media makes it seem like all of these people take frugality to the extreme. They subsist off beans and rice, ride their bikes everywhere, cut their own hair, buy everything second-hand, never go out to eat, etc.
It wasn’t just the mass media perpetuating these stereotypes. Many of the most popular FIRE bloggers were using strategies that could be seen as extreme.
Recently, many of these popular FIRE bloggers have begun to share that their chosen paths to FIRE made them miserable.
Carl from 1500 days began to call his path to FIRE a “death march,” urging his readers to enjoy the journey. Brandon, the Mad Fientist, shared that his “healthy frugality was turning into harmful deprivation” which was causing isolation and depression.
Kristy from Millennial Revolution has recently added her voice to this discussion responding to a reader question. The reader asks if they should take a stressful job to reach FI more quickly. She says, ”Wouldn’t it be amazing to be able to flip your boss off in the next 5 years, instead of waiting for 10 years?… Five years ago, I probably would’ve told you to go for it… As I get older and (hopefully) wiser, I’ve realized that the most important thing in life isn’t money or even time. It’s health.”
Given the burnout that I was already experiencing, I knew I needed to heed these warnings. I couldn’t take an extreme path to financial independence. I needed to create a more expansive definition of financial freedom for myself.
Broadening my Perspective After Learning More about FI
I now know that the mass media often uses extreme examples because those stories get clicks. Most people who are pursuing FI actually have a lot more balance in their lives than what is portrayed in the media.
As I learned more about financial independence and lifestyle design, I learned about lesser-known people who were pursuing a path to FI in a different way. Many of these people were focused on living lives of purpose and enjoyment along the way. They weren’t waiting until early retirement.
I used to think of financial freedom as all or nothing (i.e. you are either FI or you aren’t). Because of the stories of many incredible people, I began to see financial freedom as a spectrum. People were grabbing hold of freedom along the path to financial independence and they were using it to make incremental changes to their lives.
So many people are living a Slow FI lifestyle. The ultimate goal of Slow FI is to reach financial independence, but the focus is on making the journey as remarkable as the destination.
Alternatives to Early Retirement
I’ve come to understand that the purpose of financial freedom is not to retire early. It’s to live a life you love that provides you with meaning and purpose.
When you have a life you love, there’s little reason to sprint toward early retirement.
There are so many possibilities.
Find a Job You Love
Some people love their jobs so much that they’d continue working after they no longer needed the money.
I recently asked on twitter who this was true for, and I was flooded with responses!
There were certain commonalities among people who loved their jobs. These included utilizing skills, working toward something they believe in, and great colleagues.
Here are just a few awesome examples!
I’m not yet in a place where I could say that it’s true for me, but I know that I am taking steps in the right direction.
Find a Job that Provides Flexibility
I realize that not everyone will find a job they love this much. An alternative is finding a job with working conditions that allow you to pursue other important things in your life. There are different types of flexibility in a job. Here are a few examples.
Work From Home
Negotiating a remote working arrangement can allow for a lot of flexibility. Working from home eliminates your commute. It can also allow you to take care of “life maintenance” activities during the day and avoid office politics.
Ms. Mod from Modest Millionaires negotiated a work-from-home arrangement with her employer. Because of this, she has more time to focus on her blog and spend time with her kids at night.
A mini-retirement is when you take time off of work (a few months to a few years) to focus on something that you are passionate about. Sometimes, workplaces sanction this and call it a sabbatical. Other times, you can negotiate unpaid time off and return to your job afterward.
M from The Radical FIRE is currently taking her second mini-retirement. She was able to build up a level of financial freedom that allowed her to take 4 months off of work to travel the world. She was in a strong position to negotiate this with her employer. If they said no, she would have quit and gone anyways.
Part-time work is a great option because it provides you with additional time every week (or every day). These extra hours allow for both more balance and the ability to pursue activities outside of work that you enjoy.
I started working part-time about a year ago. I currently work 3 days/week (24 hours/week), and I love it. It provides me with time to focus on my physical and mental health, to write for The Fioneers, and to have a level of balance I desire.
Angela from the blog Tread Lightly Retire Early also works part-time, She has chosen to work ~6 hours/day. This provides her with additional time each day to spend with her son and work on passions projects like her blog and garden.
Another option that can provide freedom and flexibility is to become self-employed. People take different approaches to self-employment.
One approach is to do freelance or contract work that utilizes your skills and expertise. Some people do consulting work in their field. Others do freelance writing or editing.
K. Wright made the leap to freelance writing over the last several months. She works remotely for many different clients. Remote work allows her location flexibility. She also has the opportunity to work with clients that align with her interests and turn down clients who don’t.
Another approach is to become an entrepreneur. Some people run their own online businesses. They might run websites, create products to sell on Etsy, or provide coaching services. These types of businesses often take much longer to build. Once they are up and running, they are often more lucrative and take less time to manage.
Zach, who runs the blog Four Pillar Freedom, recently quit his full-time job to pursue entrepreneurship. After running an online business for 3 years, he was able to make enough money to cover his standard of living. He is now focusing on running various websites, selling courses and ebooks, and doing other work online that he finds enjoyable.
Become a Digital Nomad
There are people who choose to take their love of travel on the road full-time by becoming a digital nomad. This type of lifestyle is a possibility for more people than you’d think. A nomadic lifestyle is open to remote workers, freelancers, and people who are self-employed.
Nick True, from Mapped Out Money, and his wife Hanna travel around the country full-time in an RV. They do digital freelance work, which allows them to travel anywhere that has internet. This allows them to live their dream life before reaching financial independence.
When we were in Panama this past year, we met a woman who was staying at the same bed and breakfast. She was a Colombian woman living in the United States. After getting into a conversation with her, we learned that she travels the world for 6 months out of the year. Typically, she travels around Latin American to visit family and avoid the snow. She can do this because she has a remote job doing accounting work.
There are now even programs that facilitate a digital nomad life such as Remote Year. You can sign up for this travel program as long as you have a job you can work remotely.
Live a Semi-Retired Lifestyle
This final alternative lifestyle is semi-retirement. Semi-retirement is when people choose to intentionally work less than a full-time schedule so that they can enjoy their lives. People do this by working for a portion of the year, by working part-time (at a job or for yourself), or having side hustles to generate extra income.
People who are semi-retired typically have reached Coast FI. This means that they already have enough saved in their retirement accounts that if left to grow, they would be able to retire comfortably at traditional retirement age. Those who are beyond Coast FI may even begin to draw down some funds out of their retirement accounts.
One great example is Michelle from Frugality and Freedom. Michelle is a semi-retired woman in her mid-30s. She works for a portion of the year and spends the rest of her time traveling internationally.
Tawcan: I suppose we can categorize ourselves as Coast FI too.
Financial Freedom Creates Options
As you gain more financial freedom, you accumulate options. The level of financial freedom needed to take hold of various options will be different for each person.
For me, achieving Coast FI has unlocked this feeling of freedom for me. Because I have achieved Coast FI, I know that I theoretically only need to cover my cost of living. I still save a significant portion of my income, but this knowledge allowed me to cut back my work hours.
Some people might not need this level of a safety net to transition to a lifestyle that they will enjoy more. For some, 6 months’ worth of expenses in your emergency fund would be enough. This financial freedom could allow someone to quit their fulltime job to pursue the side hustle that covers half of their expenses.
Others might have more people depending on them and might feel like they need even more of a safety net. Someone could have enough saved in their investments that they only need to generate $10-20K of active income each year. They could begin to sustainably draw down their investments to cover the rest of their living expenses. This could allow someone to transition earlier who was confident in being able to make $10-20K/year.
Each person will have a different level of risk tolerance depending on their experiences and life situation. What’s most important is that we don’t just keep accumulating options without ever taking stock of how we could improve our lives with them.
Balancing Living Today and Saving for the Future
The concept of YOLO (You Only Life Once) is misunderstood. Most people think of YOLO as consumption. If I only live once, I should definitely buy that thing and spend that money.
I’ve actually found that when you save for your future, it gives you more freedom to live a life you want now. It could allow you to work less, set boundaries, take time off of work, focus on your health, invest in your relationships, and so much more.
It’s important to save for the future. What most people don’t realize is that saving for the future is what enables us to live an awesome life in the present.