Can You Handle an Early Retirement?

Are you thinking about retiring early - or better yet, ready to retire early but not sure whether it would be good for you? In other words, are you wondering what life might be like in retirement and whether you would like it?

Well I had similar fears and questions before I recently retired from my long engineering career. I was ready to retire early when I was 40, but waited another three full years before actually pressing the 'Exit' button. I waited mainly because I wanted to work through all the factors involving my decision and make sure I wasn't making a mistake retiring early.

It's been three months since I have retired and I haven't looked back. So far everything has been going per plan and I am enjoying all the free time doing things I like and living a low stress life. It may have been the best decision I made in my life; however, there was lot of thought and consideration that went into making such a big decision..

There are many factors to take into consideration before deciding to walk out the door. And not all of those factors are money or finance related. Obviously, you are going to need enough money saved away or other means to generate cash flow to pay your expenses and sustain an early retirement life.

How much money you are going to need in retirement really depends on your own circumstances and lifestyle. There is a famous 4 percent rule-of-thumb used for determining how much money you can withdraw from your retirement nest egg each year without running out of money in retirement. You can read about it on the internet, just Google '4% Rule, as it is covered elsewhere in quite detail. However, the key point to realize is that it takes more than just saving money to retire early.

In early retirement, not only you need to have a good plan to generate a dependable cash flow without using up your savings, you also need to consider the non-financial aspects of early retirement.

For example, have you thought about how you would spend all that free time? How would you feel about your own personal worth? How would you answer the question "what you do for living?" a question that gets asked in almost every social gathering when meeting new people. What we do for living tends to become our identity and how others use it to judge our importance, competence, and trust worthiness. In some cultures, where you work and how high you are on the career ladder defines your social standing.

Therefore, if you have a need to constantly advertise your importance or job title to your co-workers or in a social setting then you might want to reconsider your decision of retiring early as you will likely not going to be happy without the corporate-importance facade attached to your identity.

Early retirement is still a new concept for most people to grasp, especially for our parent's or grandparent's generation who spent all their lives working for some company and retiring with a nice pension plan. They would look at you as if you are crazy or simply lazy for retiring early. You will hear statements such as - you are too young to retire or you will get bored, or are you crazy why are you leaving such a good paying job and career?

It's not just your parents or grandparents that may think you have lost your mind, even people in your own age group may think you are making a big mistake. When I told my colleagues I am leaving the company to retire early, many of them had a hard time believing or accepting it. They thought I was going to another company or maybe starting my own little startup company. One guy kept asking me " must be going somewhere else, where are you going? Tell me, is it Apple, or maybe Google?"

It was hard for people who knew me all these years to comprehend that I was simply walking away on my own and retiring early. Early retirement to me means ultimate freedom from a traditional corporate work environment, but it is hard for some people to understand. We have been conditioned to want more material things in life and then work more to pay for those things, and as a result we get caught-up in a vicious cycle of working our lives away just for a paycheck.

Therefore, don't expect people to understand why you retired early or treat you based on your former corporate job title. You have to be comfortable with just being yourself and the value you bring to your family, friends, and community as an individual person.

Knowing what to do with all that free time can be challenging for some people, especially if you are used to having a daily routine or structure. I have a daily routine that I follow almost everyday and it involves getting up early, eating breakfast, exercising, going for a walk, working on my investment portfolio, tinkering with my Commodore 64, doing lot of reading and watching CNBC, making lunch and dinner, and doing household errands. I also manage to squeeze a little nap in between my daily activities. What can I say? Life is pretty good :)

Most days, time just flies away. I am a routine and planning guy and having full control of my daily schedule and activities is quite comforting to me. Though, sometimes I feel as if I am stuck in a Bill Murray's "Groundhog Day" movie as my days can be quite the same, day after day. I could do whatever I want without worrying about the time as I have always tomorrow and day after tomorrow and the day after... You got the picture.

Therefore, it really depends on your own personality and tolerance for boredom and whether you like doing the same things day-in and day-out or do you like new stuff everyday. Main thing to think about is whether you will be happy staying home alone or would you rather be happy working with other people. Do you thrive in an hectic environment or do you prefer calm peaceful and quite environment. Those are some of the things you should think about before taking a leap into early retirement.

As for how to deal with the "what I do for living?" question, I simply tell people that I have retired early from my long engineering career and now I work for myself managing our investments and exploring other areas of personal interests and growth. I still make good money through my investments and financially contribute towards our household income and pay my share of household expenses.

If ever I start doubting my life achievements or worthiness, I simply glance over the numerous recognition awards and patent plaques I have collected over the years working at Intel. At a personal level, being financially free and able to retire early is an achievement in it's own. As my wife puts it, I have paid my dues and now it's my time to enjoy doing whatever I like, it doesn't matter what people think.

Sure I am lucky to have a very supportive spouse, as it is very important for anyone thinking about retiring early to make sure they have support of their spouse and family as there will be times when they would need some reassurance from their loved ones.

One last thing I would like to point is early retirement doesn't mean you sit on a beach and do nothing. It would be quite boring. For most people early retirement simply means not having to work for somebody else and rather work for themselves doing things that bring them meaning and provide happiness in life. Most people are unsatisfied at their jobs or careers because of lack of meaningful work and as you get old, it becomes even more important to spend time doing things that mean something to you and bring enjoyment in your life.

So, be brave and have a courage to take a leap into early retirement but please make sure you understand that there is more to early retirement than simply being financially independent. Talk to your spouse and family to assess how they feel about your plans, even if they are not completely on-board with the idea, don't give up and continue to work towards your goal.

Remember, early retirement simply means freedom from a traditional work life and not having to work just for a paycheck. You would still need to have a plan on how you would spend your free time and keep yourself occupied with useful and meaningful things.


  1. I think what I will do in retirement is what I struggle most with. Having a small child I am not quite in the position to travel around the world. Unfortunately, I also do not love golf. I get a lot of enjoyment from the work and relationships I have at work so until I can find a new vision I plan to continue working for the foreseeable future. But as soon as I do, I will be putting in my retirement papers.

  2. Makes sense. It's good to have a plan for what to do in retirement. I don't like golf either, neither do I plan to travel the world as travelling is too much work for me.

    My plan has been to simply explore and be open to new learning and personal development opportunities in areas that I skipped or thought as super boring when I was in college.

  3. "One guy kept asking me " must be going somewhere else, where are you going? Tell me, is it Apple, or maybe Google?"" man, I hate nosy people who don't believe a word you are saying just because you are doing something that's out of the norm. People kept assuming I had a trust fund when the few times I told them a ball park of how much I had in the bank as a 21 year old. Distrust will never go away.

    I hope I get to retire early! Sounds like you're really enjoying the no-corporate life.

  4. Well looks like you are already on your way to early retirement. I wasn't even thinking about retirement, let alone early retirement in my 20s. So, you are definitely ahead on the planning and execution :)

  5. For me, I continue to work in a job I feel is just so so only these days, even though I can stop from a financial standpoint, because I wouldn't know what else to do with my time. I know I can't stand being a stay at home dad. I don't love traveling and prefer having 3 to 4 week vacations instead of months of world travel. I get it that it's a luxury that most working folks don't have, but for me, I'll continue to work until I can figure out a decent idea of what I'd do. It's a question I continue to ask, "if I won $100 million lotto, what the hell would I do?" Obviously at that level of financial security, I'd leave my job, but I still don't have the answer to my hypothetical question unfortunately.

  6. In early retirement you can try different things without worrying about success or failure. You don't have to answer to anyone. You can explore new hobbies or learn new skills or even start a new profession/career/job. So, you don't have to stay home, you can always find things to do outside.

    The point is there are just limitless opportunities if you don't have to worry about monetary return.

    We have only so much time on this planet, so why waste it in a so so job when there are so many interesting and fun things we can do and explore in this world.


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