Retirement is a concept that didn’t age well
~ The Dividend Guy
Nope, this is not another article to tell you how those FIRE adepts (Financial Independence, Retire Early) are full of baloney. It’s not an article about how you should shut your mouth and endure your job until you reach 65 to finally enjoy life.
So Mike, what’s that article about?
It’s about what I discovered by not working for a full year. I’ll share with you what I found deep down my soul after living as a young retiree for a full year. Picture this:
- No work.
- No obligations.
- No places to be or time to go.
- All the time in the world.
- Your spouse and your young kids around you. All the time.
- Laugher, activities, challenges, emotionally charged situation
- Finally, going to bed EACH NIGHT and tell yourself “man, today was crazy, I can’t wait for tomorrow”.
I did that for a year and the realize a big secret. You want to know what it is? Keep reading. The best part: I’m not one of those goofy marketers trying to sell you my next course. I have nothing to sell. I just want to share something with you. It may be useful if you read this before dying. This is what this article is about: you are going to die. But first, let’s talk about the best period of your life before dying; retiring!
The Concept of Retirement
My wife has an uncle that I really like. The guy is smart, funny and enjoys life. He has worked his entire life and he keeps his eye on the prize: a fully funded pension plan waiting for him in exactly three years four months and seven days. Funny enough, this countdown started about 10 years prior his retirement date.
As opposed to many workers, he won’t have to worry about a thing once he retires; he has a defined pension plan. This means his employer will guarantee him a salary until his last day on earth. That was the deal when the concept of retirement entered the workplace several years ago: you work until the age of 60-65 and your employer keeps paying you until you pass away.
That deal has been taken off the table by most employers. The good news is you still have the option of saving money while you work and eventually have enough to retire around the same age. Depending on your saving habits and your lifestyle, you can even “negotiate” your retirement date.
The whole idea is to sacrifice a good part of your life while you are young and healthy so you can have enough money saved to enjoy your last days on earth comfortably. What’s better than a cruise in the Galapagos with dinner served at 6pm so you can go to bed before 9pm?
Why Retirement Sucks
The concept of retirement hasn’t aged very well (pun intended). The first problem we now face is there isn’t enough money for everyone to retire at 60. When I stared working in a big bank, I had a similar deal to my wife’s uncle. I had to work until the age of 58 (I started at 23) and I could retire with a full pension (70% of my salary!).
Jackpot. Then 2008 happened.
A couple of years after 2008, I remember that all employees were invited to a special meeting (that’s never good news). They told us that the new retirement age was now 65, no matter when you started working. My initial deal was taken off the table without me having a say in it. In a 15 minutes meeting, I lost 7 years of my life. I don’t even blame the bank; the problem lies with the gap between investment performance expectations and life expectations. 2008 cut down investment returns expectations with an axe. The fact that we all live longer did the rest. If you want to retire at 65, you need to make sure you have enough to live for 30 years… maybe 35. My employer didn’t want to take the risk of seeing me leaving at 58 and living until 95. I get that.
But this could be worst. That’s not why retirement sucks. Because it does. Big time.
Picture my former colleague. She’s in her late 40’s and found her long lost high school flame. They live the perfect love, finally. Two years later, they start making retirement plan. A vacation property on the mountain, a Trip to Bali, long walks by the beach. The perfect plan. Then, the guy turns 49 and dies from cancer 6 months later. So much for working your entire life and saving for that dream.
As I wrote; retirement sucks.
I guess this is one of the reason why the FIRE movement saw the light in the 90’s.
The FIRE Generation
FIRE: financial independence, retire early. I’m sure you heard about it and I won’t re-write the whole concept here. In basic terms, FIRE adepts are willing to work harder and longer and make more sacrifice to rapidly save money and inject steroids in the concept of compounding interest.
Imagine you start working at 24 and you save $2K per month to invest. By the age of 45 you will likely amass enough to retire (assuming you keep a very low budget). Some extreme FIREs make it happen before they turn 40.
No more working for the man and enduring a job you hate. You do that for a very small amount of year and you focus on a single goal. Then boom! You are retired!
Why FIRE Sucks
FIRE sucks for two main reasons in my opinion. First, it requires that you have barely no life during the span of 10 to 15 years. You can tell me otherwise, but if you are working 10-12 hours a day, it’s hard to build a family. I don’t know when I would see my wife and children if I must work from 7am to 5pm each day. Plus, I doubt they could do any type of sports or activities since I would have to save all my money ?. The idea of sacrificing several years where my energy level and health should be at its max doesn’t fit the bill for me.
Second, most people achieving FIRE aren’t really retired at the age of ~40. Most of them will keep working to earn income in one way to another. The real difference is that they can do what they want. I remember reading Dividend Mantra’s old blog where people thought he was living off dividends while the majority of his income came from his blog.
Then, you get into the whole debate on what is retired and what not. What is really financial independence and what not.
Are you retired if you do you own schedule, travel when you want and have plenty of time?
Yes.
But some will argue the answer is “no” if you make money while doing so.
Therefore, if you manage your portfolio or rental properties, you will never qualify as being retired. This seems like a never-ending logical debate.
How about Lifestyle Design?
I like to say that I’m retired from the corporate world because I don’t work for anyone anymore. I have built a lifestyle with flexibility and freedom. I have the luxury of time. I walk (I don’t have to drive) with my kid to school. I coach my two sons at soccer. I’m always there for everybody.
This doesn’t mean I don’t work, but this is the closest to “retired” I’ll ever be.
Who really wants to do nothing at retirement?
A while ago, I discover the term “lifestyle design” from the Four Hour Workweek by Tim Ferris. I really like this concept as it doesn’t force you to be called “financially independent” or “retired”. Lifestyle design is all about knowing what you want to do of your days, weeks, years… what you want to do about your life.
In retirement and FIRE, the main currency is money. This is why they both suck. Why would you define your life around money? In lifestyle design, the main currency is time. You make a list of things you want to do and then you find ways to make time for them. It can be simple or expensive, it doesn’t matter. That’s not the point. The point is going to bed each evening and thinking “wow, today was an awesome day, I can’t wait for tomorrow”.
You are going to die
This is what I discovered when I took a one year off in my mid 30’s. Nobody wants to, but we are all going to. After spending so many adventures with the persons I love most in the world, I told myself I could die tomorrow morning and I would not have regrets. I definitely want to do more, but at least, I got that incredible amount of time with my family.
The thought of dying pushed me to quit my job and redesign my life. A life that is really worth living according to my standards (because that definition is incredibly personal). The point is if you are going to die and you don’t know when, why are you making tons of sacrifices for all those years? You don’t even know if you are going to enjoy the fruit of those sacrifices.
Some people are afraid to survive their portfolio, to lack of money at retirement.
I’m dead scared to live an “okay” life.
I rather live an awesome life now and figure it out as it goes. As long as I work and learn, I keep my skills up and I can either run businesses or work for someone down the line. I lived 7 months in Central America with my entire family in a space smaller than my kitchen. I’m not afraid of not having money.
Great post Mike
It’s not about money, it’s about : more time for me. I love that concept.
And no « OK » Life.
Did you ever consider that working towards FIRE can be incredibly rewarding and fulfilling in itself. I look forward to payday now like never before. I’ve mapped out and pre-planned where every penny is going to be invested or spent. I know exactly when the money will be in our investment account, so I can make the trade and update our projections. I suspect the buzz I get is similar to what a shopperholic gets when they buy stuff. I must be a saverholic.
I know that I could die tomorrow, but I’m guessing I’d be too dead to regret not doing something different. Something awful health wise could happen to me or my wife (or any of our kids), but whatever that might be, it will not be compounded by money worries.
Although we’re frugal, we are not on the extreme path of FIRE (actually, we’re already F.I.), and there are many great lessons to be learned from the FIRE community, as is there yours.
In short, “each to their own”.
Hello Bob,
I agree there are many ways to be happy and the most important part is to find one that suits us. For me, it’s not about money, it’s about time and experiences. I can understand that you find FIRE fulfilling. When one has a goal and is motivated to achieve it, it’s the best feeling ever!
I’ve never stressed about money as I rather enjoy life today then wait for some distant future. For example, my children won’t be “kids” for long, if I wait 10-15 years, they won’t be at home anymore (my oldest one is 14 already!).
Cheers,
Mike
I think you have it right for your personality type and your family. Sometimes I wish I was a little less of an INTJ; we’re weird!
weird is cool, normal isn’t 😉
Good post! Totally agree with your thoughts here. I am not racing towards FIRE. I’m taking a slower, balanced approach and maximizing my time and the freedom to chose my pursuits along the way. Perhaps it’s because I’m in my 40’s and have had close friends pass, and have faced mortality. Something we ignore in our youth. I have also realized that I enjoy my job. As long as I can do it on my terms and my schedule.