Disadvantages of early retirement: Early retirement is bad for your mind and money. Aim for financial independence instead. This post contains display ads by Monumetric and may contain affiliate links.
Having the option to retire early is a unique opportunity to live life on your own terms.
But like everything else, early retirement has its share of trade-offs.
To put it bluntly, sitting around on your ass without any responsibility or purpose is not good for you.
Because I am a realist and a logic seeker, I like to look at the pros and cons of everything.
So, instead of just glorifying early retirement on this blog, this post will look at the downsides of early retirement.
By the end of this post, you will know the downsides of early retirement and you will be presented with an alternate solution to pursue.
Let’s jump right in.
Disadvantages of Early Retirement
The Journey is Better than the Achievement
Have you ever noticed how the pursuit of something is more thrilling than getting what you want?
Achievements are nothing but a moment of acknowledgement.
After that moment has passed, there is nothing left to pursue.
In the same way, the pursuit of early retirement is more exhilarating than actually achieving it.
Even if you read financial blogs, you will often see that the magic dies as soon as retirement is reached. All of a sudden, there’s no journey to blog about.
Based on my own experience with a mini-retirement, I realized that the slow incremental build of my dividend portfolio is more fulfilling than doing nothing.
So, keep in mind that achieving early retirement will be a moment. But the pursuit is something that you can enjoy and work on for years.
Doing Nothing is Not Good for Your Mind
Similar to how the human body requires exercise to function properly, our minds need to be exercised to maintain cognitive abilities.
The perfect examples are Warren Buffett and Charlie Munger, the CEO and Chairman of Berkshire Hathaway.
Even though Warren is 90 and Charlie is 97, they are both still as sharp as ever because they read every day and continue to work.
On the other hand, if you retire early to spend your time drinking and watching Netflix, your mind will begin to deteriorate.
Studies have shown that continuing to engage in mental challenges keeps the brain from deteriorating in early retirement.
A Happy Life Includes Purpose and Responsibility
Unless you are a self-starter, it’s likely that you would be miserable during early retirement.
Let’s be honest, the average millennial would watch tv and play video games all day if they were retired.
It’s amazing at first. But after a while, that kind of lifestyle is not fulfilling. Matter of fact, it’s depressing.
According to Jordan Peterson, who is a famous author and psychologist, purpose and responsibility are keys to a fulfilling life.
Essentially, doing nothing will slowly make you feel worse about yourself.
You often hear about retirees that lose their identity after they retire.
After working for so many years and getting used to a certain title, retirees can suffer identity crises.
Of course, early retirees have more time to find themselves. However, this is only relevant if they are a self-starter.
Related: How to Find Passion and Purpose (and Make Money from it)
Falling Out of Touch
If you are an early retiree, you might fall out of the normal loop.
Just like an elderly person, you stop seeing what is happening in the real world.
You’re no longer privy to the water cooler talk at the office. So, naturally, you will fall out of touch with reality.
Difficult to Make Friends
Another one of the disadvantages of early retirement is that it’s more difficult to make friends.
Friends are created at school and work. Without a connection to work, it is more difficult to meet new people. You need to have a close group of friends already, or you have to find other ways to meet like-minded people.
And even if you are an introvert like me, surrounding yourself with like-minded people is important.
Loss of Skills
When you don’t work, you are not forced to learn any new skills.
As such, you slowly become obsolete and less employable.
Of course, if you are a self-starter, you will start a business or take courses to continue growing.
But most people don’t have a natural interest in working. They need a manager or teacher to drive them.
Loss of Benefits
If you have ever been fortunate enough to work for a company that provides benefits, you understand how valuable they are.
Without benefits, you have to pay for dental and other health-related expenses on your own.
It doesn’t seem like as big of a deal when you are young, but when you are older, benefits are almost essential.
If you decide to retire early, you need enough money to cover the cost of benefits now and when you are older.
Less Ability to Spend
Minimalism and being frugal with your money is admirable.
But there is a difference between being a cheapskate and being frugal with your money.
Even though you own your time, early retirement means you have to stick to your budget more than ever.
If a new product comes out that you want to buy, you don’t have that constant payday to make up for extra purchases.
Unless you retired with a lot or unless you work on the side, you will have less ability to splurge.
Financial Independence is Better than Early Retirement
By this point, you might be wondering why a financial independence blog is talking about the downsides of early retirement.
To put it bluntly, it’s because I don’t want to stop working—work is great. I don’t want to reach early retirement and go lay on the beach for the next 40 years.
What I want is fulfilling work I am passionate about with the option to lay on the beach whenever I want.
Financial Independence is the Solution
Aim for financial independence, not early retirement.
Having enough wealth to own your time is a blessing.
But if you waste your time doing nothing, early retirement is not fulfilling just like most jobs. Plus, doing nothing is not good for you.
Therefore, it’s better to pursue financial independence instead of early retirement.
Financial independence means you are free to do what you want, but you still occupy yourself instead of retire. You choose a hobby or work you are passionate about instead of work you dread.
So instead of retiring, select a hobby or work you love and pursue financial independence because you desperately want to spend time on it.
In my case, I am pursuing financial independence because I want to spend time on blogging and investing.
Disadvantages of Early Retirement – Final Thoughts
To arrive at the conclusion that there are disadvantages of early retirement, I tested out mini-retirement, full-time work, part-time work, slow FI, and I have attempted entrepreneurship.
Although I have not personally reached early retirement, basic human psychology and countless examples of early retirees show that there are many downsides.
But that doesn’t mean you should stop saving money and investing.
Rather than pursuing early retirement to aimlessly do nothing, you should pursue financial independence to do fulfilling work and to have more control over your time.
Related Posts You Might Enjoy
Mini-Retirement: An Extended Break from Work
Why Pursue Barista FIRE?
How to Live an Early Retired Lifestyle in 5 Years (Without Retiring)
Why Taking a Year Off Work was a Mistake
Slow FIRE Financial Independence: (Slow FI) is a more Enjoyable Path to Freedom
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