The growing FIRE (financial independence, retire early) movement is frequently pursued with zeal under the assumption that retiring in order to escape unfulfilling jobs is the path to happiness. The sooner we get there, the better, the thinking goes.
But sometimes that makes us less happy, at least for a while. I experienced this in my own quest for early retirement, and I discovered this is a common experience for others as well. That only changed after we learned to focus on appreciating the progressive security and freedom that you gain on the journey to financial independence.
Many people reading this are capable of saving far more than the commonly recommended 10% of your income. Doing so would enable you to become financially independent long before the accepted retirement age. But it can be hard to do something so out of step with those that surround you.
Stories from the FIRE community can have the opposite effect. The most dramatic stories tend to draw the most attention. Some people report saving upward of 70% of their salaries and retiring as early as their 30s or even late 20s. These stories can be inspirational as well as illuminate lessons and principals that can be applied to your own finances. Creating a new “normal” can be incredibly powerful for those looking to change their financial future.
Unfortunately, this can also lead to a different comparison game. Instead of trying to keep up with the Joneses, I started to compare myself to others seeking to achieve financial independence and retire as quickly as possible, leading to regret over mistakes that I couldn’t go back and change.
Another challenge was becoming overly focused on early retirement as a nirvana. I felt the need to retire early. Then I could be happy. I became overly focused on money, believing I needed to save as much as possible to retire as soon as possible. Rather than gaining the freedom I desired, I led myself into a different trap. I was trying to live up to what I believed to be other people’s values and expectations rather than being true to my own.
What I and others have discovered is that early retirement is often the wrong goal. Instead, we need to start with a completely different construct. Rather than focusing on the future goal of retirement, we should focus on financial independence.
A big piece of finding happiness on the path to financial independence is to set the right goal.
Similarly, it’s easy to view financial independence as a dichotomy. You are or you aren’t. Instead, we need to understand that financial independence is a continuum. We start to gain freedom and power the instant we make the choice to pursue it.
Getting your net worth to zero begins to give you options. Most people go through life with debt from car loans, student loans, credit cards and other consumer debt. On top of that, the largest expense for most people is housing, with a rent or mortgage payment due each month. For many people, the next paycheck is already spent paying for past decisions. This is a restrictive way to live, leaving little freedom to choose the life you want going forward. Getting to zero is an important step in living a happier life because it gives you options.
Starting to accumulate even small amounts of wealth can provide feelings of peace and security. When things go wrong, as they inevitably will for all of us, you’re in a position to handle them with far less stress.
Rather than waiting until becoming fully financially independent, when your assets will support your spending indefinitely, you can progressively exercise your increased freedom to live a better life. Maybe you want to have a stay-at-home parent. Or have both parents cut back work when the kids are young. Instead of waiting until full retirement, you can start fitting in work around your life while you are in a position to enjoy it rather than trying to squeeze in life around work while delaying gratification until retirement.
Others may choose to start a business they would otherwise be afraid to launch or switch to a lower-paying but more rewarding career. Having several years of savings enables these types of decisions that would seem too risky for many people on the standard path through life.
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My wife and I incorporated these strategies in our life. Getting out of debt quickly allowed us to pursue work opportunities we enjoyed and had growth potential, rather than having to go for the highest paying positions when getting started. As we progressed in our careers, we used the power our growing financial independence gave to improve work conditions, like negotiating more vacation time in place of pay increases.
A big piece of finding happiness on the path to financial independence is to set the right goal. Conventional wisdom is that retirement is the ultimate financial goal. The commonly accepted definition of retirement is that you stop working. It’s difficult to find a retirement planning commercial or brochure without a couple walking on a beach or a group playing golf.
But is that what retirement has to be? And will that bring us happiness? Or will that just introduce new challenges and stress into our lives.
We can redefine retirement. Becoming fully financially independent allows you to completely dissociate work from earning money. Instead of focusing on retiring early to escape jobs and lives you don’t like, you can focus on pursuing FI so you can create a life (which often includes ongoing work) that you love.
My wife cut back to part-time, location-independent work after the birth of our daughter. A few years later I left my career completely to be a stay-at-home parent, blogger and writer with no idea how much or even if I would make any money. We both continue to work, but our lives could not look and feel any more different than they had before we understood the power our level of financial independence gave us.
We have the things we wanted from retirement. These include more time with our daughter and one another, the ability to get outside and pursue hobbies we are passionate about while we have our health, and simply having space in our lives to be present with others. This is possible without the feelings of scarcity and uncertainty that can accompany traditional retirement.
Retirement can certainly be a time of leisure if that’s what you choose. But the key is realizing that you get to choose. Freeing ourselves from both the need to work for money and the artificial construct of what retirement is or should be allows us to lead more impactful and rewarding lives than we previously realized were possible.
Chris Mamula is the co-author of “Choose FI: Your Blueprint to Financial Independence,” with Brad Barrett and Jonathan Mendonsa, co-hosts of the popular ChooseFI podcast. He also blogs on “Can I Retire Yet?”