Why I’m Glad I Didn’t Retire Early

Life is full of choices. Looking back, I am glad I didn’t make retiring early the focus of my life. Let me explain why.

Browse the web or articles on Pinterest for stories about early retirement and you will find headlines like “You Can Retire by Age 40.” I even saw one story that claimed you could retire by age 25. Really?

The FIRE Movement for Early Retirement

Planning for early retirement, and by that I mean extremely early retirement, has become trendy. Just do a web search for “FIRE movement” and you will see what I mean. The FIRE acronym stands for the “Financial Independence, Retire Early” movement, and it is gaining followers among Millennials not only in the U.S. and Canada but also in Europe and elsewhere.

Who wouldn’t love the idea of being wealthy enough by age 35 or 40 that you never have to work again? While the concept sounds exciting, my problem with it has to do with the life choices and sacrifices you will have to make to achieve it. It is not uncommon for FIRE advocates to save 50 percent or more of their income so they can retire early. That’s an extraordinary feat. Maybe some people can save that much, but at what cost to raising a family and enjoying life along the way?

On one hand, as a Certified Financial Planner and someone who has led numerous Dave Ramsey Financial Peace classes, I admire many of the principles behind the FIRE movement: Budgeting. Discipline. Getting out of debt. Saving seriously for your future. Living simply. These are all admirable, at least if not taken to the extreme. In their defense, FIRE advocates don’t say they won’t ever work again once they reach their retirement goal, but they want to attain financial independence so they can choose whether and how much to work, or how they might better invest the rest of their life. It’s hard to find argument with such a lofty objective.

Where I Differ With The FIRE Movement

If the FIRE movement had been around when I was 30 years old, I might have been considered a likely convert. I was already working in the investment field by then, teaching my clients about the power of compounding, the Rule of 72, and how to gain wealth through disciplined savings and smart investing. My wife and I saved a portion of every paycheck for the future. We kept an emergency fund. We even put cash in budget envelopes to control our spending on discretionary items like eating out. We still use budget envelopes, but not as much as when we were younger. I really believed in this stuff then and still do today.

I could have pursued aggressive saving, slashed expenses, and been financially able to retire sooner, but that’s not the path I chose, fortunately.

Kathy and I lived within our means and saved well, but we tried hard to maintain a sensible balance between present and future, between saving and spending. We didn’t want to focus so much on the future that we ignored the life that was happening all around us.

While we were good savers, we didn’t mind spending money when there was a purpose for doing so. We took nice vacations with our children and made happy memories that remain with us years later. We didn’t buy a mansion, but neither did we make the kids live in a cramped tiny house just so mom and dad could retire while the children were still in school. We never, ever saved anywhere close to 50 percent of our income toward retirement, or even half that amount. To have done so while the children were home would have required deep, draconian cuts to our standard of living that I do not think would have served our family well.

Life is not only full of choices, but it is fleeting. You will never get today back. With the advantage of hindsight, now that I am at a typical retirement age, I can see the value of enjoying each stage of life as it happens and not putting one’s primary focus on the future. Your children are only at home for a relatively few years. You don’t want to sacrifice so much when the children are small that you fail to provide for them and make happy memories along the way. Even some travel and adventure experiences are best accomplished while still relatively young and healthy.

Swimming Pool, or More Money for the IRA?

Many years ago, when the children were still at home, Kathy and I sank a lot of money into building a backyard swimming pool for our family. It was a choice we made knowingly and together, fully aware of the financial consequences. As a financial guy, don’t think that was an easy decision for me! I knew how much that money could be worth someday if we had invested it rather than building the pool. We might be $100,000 or more wealthier today, given compounding and growth on that money. I also knew that adding a swimming pool to a house was not a smart investment. Do you think we regret it? Not one iota. Never. Some of our best family times happened in that pool. It was worth every penny we spent.

For other families, it may be a decision to purchase a pop-up camper or RV for weekend family adventures. Maybe your family’s big splurge is to buy a vacation home at the lake or beach, or a week at a timeshare resort. Or to travel cross-country, at least once, with the kids in a motorhome.

My point is that not every decision in life should be made based on financial criteria, or whether it will speed up or delay retirement. Have a plan for the future and save for it, but don’t it let spoil the special enjoyments of each decade of life.

Admittedly, we would be wealthier today if we had never built that pool. But whether it’s travel, camping, a boat, or a backyard pool, these are “investments” in your family and in the story of your life. Looked at that way, they are priceless and well worth working an extra year or two before retiring.

FIRE Movement Not All Bad

In our society, there are far more families who aren’t saving enough for retirement than there are FIRE movement activists socking away 50 percent or more so they can choose to exit the working world early if they wish. To that extent, the early retirement movement has hopefully motivated some young and middle-aged adults to get more serious about saving for their future. I also commend the early-retirement advocates for promoting a simpler lifestyle and shunning excess materialism. The success of one’s life isn’t measured by how much he or she accumulates.

— Should you save regularly for retirement during your working years? Yes, absolutely. Ideally, you should start saving for retirement with your first real paycheck after college or trade school.

— Does saving for the future sometimes require real sacrifices? Yes, it does.

— Should you strive to get out of debt and live within your means, even when at times that may mean forgoing a vacation or delaying other planned purchases? Yes, definitely.

At the same time, saving so aggressively when you’re a young adult that you could retire by age 35 is not a plan I care to endorse. If by retiring early, you mean 55, then maybe, but not 35. Be a prudent saver and manage your money well, but enjoy each stage of life as it happens.