If you laid a timeline of human existence across a 100-yard football field, the idea of "retirement" -- where people permanently stopped working and relied on financial support -- would show up after having covered 99.9 yards! The earliest evidence of homo sapiens dates back 300,000 years, after all, but German Chancellor Otto von Bismark's decision to introduce the first version of "retirement" just surfaced 129 years ago.
The point being: retirement is a very new and historically unusual idea.
Even then, our definition of "retirement" has changed over time. As a 1998 paper by the National Bureau of Economic Research reports: "In the past, men may have been more likely to phase work out of their lives slowly... The continued importance of farming and of artisanal enterprises to the American economy may have allowed owners to reduce hours of work and continue to operate their enterprises with the help of family members and hired labor."
Today, however, we have a much more strict definition of retirement, according to the same report: "a complete and permanent withdrawal from paid labor."
Forget "retirement," focus on "financial independence"
But I don't like that definition -- at all. It assumes that humans inherently don't want to work as they get older, and that doing so holds few benefits. But work is about much more than just earning a paycheck; what we choose to focus on during life not only gives us purpose and meaning, but it also gets us out in the world and interacting with our neighbors.
"Financial independence" doesn't have the same type of rigidity. Instead, it focuses on getting to the financial point in your life where you quit mandatory paid work, and choose instead to work whenever -- and on whatever -- you please.
I have been researching -- and experimenting with -- this topic for almost a decade now, so I have lots of ideas about why you should aim to "retire early." But I'm not yet at the point where that's financially feasible. Instead of guessing about the rewards of early retirement, I decided to reach out -- via Twitter -- to some popular bloggers that have already reached this stage and ask them: What's the greatest benefit to retiring early and/or achieving financial independence?
Here are their top three answers, in reverse order of how popular they were.
It's no secret that Americans spend more -- and get less, in terms of years added to our lives -- on healthcare than anyone else. There are lots of culprits, but bad diet and poor exercise habits are at the top of every list.
Our work lives don't often help remedy the situation. Feeling rushed in the morning, we don't eat breakfast or pack ourselves a lunch, instead opting for processed foods bought during our break. And sitting in a cubicle all day can be awful for your health. A 2013 study, for instance, found that:
- When comparing people who sit for 11 or more hours per day with those who sit for four or less hours, the former group had a 40% higher chance of death in the next three years.
- Workers in sedentary jobs for over 10 years had twice the risk of colon cancer.
That's why Mr. 1500 -- a Colorado native who runs the blog 1500 Days to Freedom -- cited improved health as his greatest benefit.
I'm in the best health of my life because I now have time to exercise. FI will allow me to live longer and with higher quality of life. Nothing is more important than health.— Mr. 1500 (@retirein1500) May 21, 2018
Peace of mind
Who doesn't worry about money from time to time? Sometimes, the anxiety surrounding the potential lack of money can be debilitating. A 2017 Northwestern Mutual study found that:
- Twenty-eight percent of millennials experience so much financial anxiety that their job performance is consistently affected.
- Twenty-one percent of millennials say that these anxieties make them physically ill on a weekly or monthly basis.
- Twelve percent of non-millennials suffer from the same financial anxiety-induced physical illnesses.
That's why the peace of mind that comes from knowing your nest egg can provide for you was cited by two others.
The Root of Good blog is run by a man who retired in 2013 at the age of 33. The biggest benefit he realized?
Huge stress reduction. Time for family and fun.— Justin RootofGood (@RootofGoodBlog) May 21, 2018
Another Twitter user, David Harvey, chimed in, saying: "it's going to be hands down peace of mind."
Freedom of time
But by far the most often cited benefit of financial independence is the freedom of time. Perhaps this shouldn't be too surprising. In 2014, award-winning former Motley Fool columnist Morgan Housel wrote that having control over your time is the only sensible financial goal.
From the article:
Older Americans overwhelmingly wish they had worked and less and spent more time with family, going for a walk, sleeping in, and just enjoying life. ... People adjust to material stuff quickly. But losing control of your time makes almost everyone miserable.
Morgan quipped that, "Few people my age will take this advice seriously."
Luckily for us, three bloggers who have retired early did heed similar advice, and have offered up validation of Morgan's point.
Steve at ThinkSaveRetire:
The freedom to design my life exactly how I want it. My schedule. My time. It's been amazing.— Steve @ Think Save Retire (@ThinkSaveRetire) May 21, 2018
Joe at RetireBy40:
Financial Independence takes freedom to another level. I have a lot more control of my time. Personally, it's much better than working for a corporation.— Retire by 40 (@retirebyforty) May 21, 2018
And the family of Jeremy, Winnie, and Julian at GoCurryCracker offered up my favorite sound bite:
2 weeks of vacation is nice. 52 weeks is better.— Go Curry Cracker! (@GoCurryCracker) May 21, 2018
How to get started
If retiring early -- or, better yet, becoming financially independent -- is something you're interested in, the big steps are simple:
- Pay off your high-interest debt. You can use one of three popular methods: the debt snowball (wiping out your smallest debts first), the debt avalanche (paying off your debts with the highest interest rates first), or the debt blizzard (where you start with the snowball method, and switch to the avalanche)
- Live significantly below your means. First, you need to take stock of where your money is going each month. Though it can be painful, tracking your spending is a "must" for getting your financial life in order. Once you've got that down, you can ask the deeper questions: how much is "enough" for me to live happily on?
- Save and invest the difference. It might seem daunting to start investing, but we can help you with that. Once you have an account set up, you can choose to take the hands-off approach of index investing, a more active approach in selecting individual stocks, or somewhere in between.
Clearly, "simple" and "easy" are not synonymous. So if you're looking for a little motivation, visit the blogs linked above, or check out some previous work here at The Motley Fool on the topic.