How do I imagine early retirement? Cruising in a Ferrari with millions in my pocket.
Maybe when I was in my teens. For those of you who have been following this blog over the years, you’ll probably laugh out loud at the opening statement.
As my internet handle indicates, I’m a pretty frugal guy but with some splurges on things that I find valuable. These days, this would be: exposing the kids to as many fun, physical and educational activities as possible; family travel; and food (I really like to eat).
I also place a high value on my time and having control in what I do on a daily basis. This is probably the biggest reason why I find the concept of financial freedom so alluring.
In the most recent financial freedom update, I wrote about how we reached over $37k in passive dividend income. With $40k right around the corner, the reality of financial independence is starting to sink in.
While $40k for our family of four isn’t quite enough to live our preferred lifestyle, it’s certainly enough to phase out of full-time work and perhaps focus on new pursuits. However for now, since I just started a new career that is still in the learning phase, leaving the workforce hasn’t been on my mind. In fact, this time around it feels a bit different. It feels more like I’m “choosing” to work rather than something that I “have” to do. What difference does that make? To me, it’s more fun and less restrictive which makes a big difference to me.
Over the years, I’ve discovered and accepted that growth is what keeps me engaged. Once growth stagnates, my eyes start to wander onto other opportunities and often thoughts of early retirement as one of the options.
When I first imagined early retirement many years ago, my thought was that every day would be like a Saturday afternoon that is full of leisure. While I enjoy my Saturday afternoons, I’m pretty certain that it would get tiresome after a while.
Have you ever had a 2 or 3-week vacation and by the end, you feel the need to get back to doing something more productive? That’s what can happen with permanent vacation (ie. early retirement), eventually, you’ll want to continue growing and providing value of some sort to society.
Many people assume that retirement is about getting to a financial “number” and leave it at that. While money is a huge factor in retirement, it’s not the only factor. The other aspect of retirement that is just as important is the answer to the question – what’s next? I’ve read too many stories of people entering retirement, suddenly stopping their daily work routine and losing meaning in their lives.
Retirement doesn’t mean you stop doing things, it means that now you get to pursue other ventures/hobbies on your own schedule. So even if you have the financial means to enter “retirement”, no matter if you are 30 or 65, you need to plan for “what’s next” just as much as you planned financially.
I prefer to term financial freedom over “early retirement” simply because most people will want to continue adding value or some sort during “retirement”, just perhaps with a less rigid schedule.
For me, financial independence isn’t so far away. When I do decide to leave the regular 9-5 job, I plan to… continue working. Ironic isn’t it? Actually, I can’t imagine not working. I’ll likely move into consulting of some sort, continue working online in some capacity, but leave the schedule flexible for family events, travel, and exercise. I also imagine myself starting another business of some sort. I’ll also continue building and watching my portfolio just because I find that stuff fun and maybe even dabble a little more in private equity.
To bring this back to the beginning of the article, rather than the Ferrari, here is the car that I’m more likely to be driving during retirement:
How do you picture your retirement? How do you plan to stay engaged and maintain purpose?