Financial Independence vs Retirement
A FEW FALSE SUPPOSITIONS REGARDING THE IDEA OF RETIREMENT
- All of us want to live the same lives along the same paths,
- Everybody will get enough old to get to the retirement age, nowadays set at 67-70 years and probably getting further away,
- One person has to work 30-40 years in a row before having the freedom to make their own choices about how to live.
We think you should not wait until retirement. Everyone wants to retire at some point, but you should enjoy yourself along the way and give yourself and your family the freedom to live how you want to live now.
You can have a retirement goal, however, we prefer to talk about financial independence.
FINANCIAL INDEPENDENCE IS THE RIGHT GOAL
From a purely financial standpoint, the idea of financial independence is somewhat similar to the concept of retirement. They both require you to have enough saved up so that you no longer have to work for money. But from a psychological standpoint, there are some key differences that open up a world of possibility.
Retirement is absolute. It’s an endpoint. You’re either still working or you’re not. Simple as that.
Financial independence has degrees, and those degrees give you the freedom to make some exciting life choices a whole lot sooner.
The end goal of financial independence is to eventually have enough money that you never need to work again. Not that you will definitely stop working, but you have the option to stop if you so choose.
Financial independence can also simply mean having enough money to temporarily give up income in pursuit of something you care about.
While financial independence frees you from dependence on income, it doesn’t assume that you stop working. After all, work done in support of a mission you believe in is one of the most fulfilling ways you can spend your time.
Financial independence, for instance, may support your quest to find fulfilling work you believe in, rather than forcing you to wait for the day you get to quit a job you hate.
When you stop working towards retirement and start working towards financial independence, you give yourself so much more opportunity to create a life you enjoy, both now and in the future. When you’re willing to think in degrees of financial independence, you open up a world of opportunities over the course of your lifetime.
It’s no longer about getting the same endpoint that everyone else reaches 30-40 years down the road; it’s suddenly about dreaming up whatever kind of life you want and starting to work towards it.
There are all kinds of stories about people who have reached financial independence at all different ages and are doing all sorts of exciting things with their lives. Some people decided to start a yoga studio, stay home with their kids, or go back to school. All of those choices required giving up income and having the savings in place to make up the difference. They required a degree of financial independence far before the traditional retirement age.
Financial independence is also achieved by avoiding bad investment decisions.
The point is this: you have OPTIONS. There are no rules. You get to decide what you want out of life.
The rest is simply a matter of using the financial opportunities available to you to make that life a reality.