I like the idea of early retirement. Who doesn’t?
However, it’s a really vague concept. If we want to realize it for ourselves, then we need to get a lot clearer on what it means.
It meant one thing to the Baby Boomer generation. It means something entirely different to the millennials. Moreover, each person has to consider what they want post-work to look like.
Early Retirement for the Baby Boomers
My mom technically took early retirement. She had a government job. She worked there for thirty years. The traditional retirement age was 65. However, she retired when she was in her early-to-mid-fifties.
A few years after officially retiring, my mom took a part-time job working with animals. It keeps her busy and adds to her income.
This is what it looks like for many baby boomers to retire early. They stay at a job for decades, then retire before the usual statutory age. In her case, as with many others, she was able to start collecting her social security and retirement income. However, she took a financial hit as compared to if she waited until 65 to retire.
When it comes to an official definition of early retirement, you’re looking at when you can collect Medicare and Social Security. The usual retirement age is 65; 55 – 65 is considered early retirement. Based on this definition, you can’t retire before age 55.
The Dream of Retiring by 30
Age 55 sounds like early retirement to some people. On the other hand, more recent generations look at that number as a distant figure long past when they wish to stop working. With the hope of launching a successful multi-million dollar startup in mind, many young people truly expect to retire by age 30.
It’s not impossible. However, it’s also not likely for a lot of people. Moreover, what are you going to do with the other five or six decades post-retirement if you aren’t working? In other words, what does early retirement actually look like for you?
What Early Retirement Really Means
The thing about early retirement is that it’s not so much about the age at which you retire. Instead, it’s about your relationship with money and work. This varies wildly from person to person. Therefore, to retire early might mean:
- Securing financial independence so that you can live the rest of your years the way that you desire
- Setting up enough streams of passive income that you aren’t reliant on income from a full-time job
- Temporarily retiring to pursue passions with a plan to resume work in 5-15 years
- Switching to part-time, location-independent work at any age
- No longer working after age 55, cashing in on Medicare, Social Security, and other government money
Humans Need Purpose
Many of the baby boomers retired then realized that they had a lot of life left to live. Some found hobbies. Others returned to work either full or part-time. It’s not usually that they needed the money – although some did. It’s about needing a purpose.
In her book “The Power of Meaning: Crafting a Life That Matters,” author Emily Esfahani Smith shares research and anecdotal evidence about how purpose is what drives humans. Many of us chase happiness. However, happiness is fleeting and unsatisfactory. In contrast, when we have a purpose, we thrive.
Therefore, when you think about early retirement, you shouldn’t worry so much about the right age to retire. Instead, you should envision what your purpose looks like now and in the future. Of course, you have to make smart financial decisions to realize that vision. Nevertheless, it all starts with a picture of how you want to make the most of your life at every age.
What does early retirement mean to you?
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