Retirement at Age 60 Is Still Early Retirement
Use the power money gives you to make your job better
That FIRE stands for Financial Independence and Retire Early, you already know. Generally, these two components are viewed very differently by people in general.
Financial Independence tends to be seen with “good eyes” as a noble goal that has many sympathies; after all, it is buying your freedom, while Early Retirement is most often seen as the “ugly duckling” of the equation.
It turns out that when we talk about early retirement, two things come to mind:
Stop working completely and live like a traditional retiree, doing nothing
Retire early, very early, at the age of 30 or 40.
However, few really realize that if you stop working (in your main profession) at the age of 60, you are also retiring early.
Financial Independence allows you to slow down and enjoy things in a different way.
FIRE Does Not Mean Quit Working
According to The Washington Post, only 13% of the population enjoys their work. If you are part of the huge minority who love what you do, don’t read on, it’s not for you.
Many people, when they think or hear the term FIRE or early retirement, turn up their noses. They have the traditional image of retired old people. Stop working, sit around the house doing nothing all day. But this is not what the traditional FIRE community tells us.
Stopping work is optional. But let’s talk a little bit today about why people reject “stop working” and that this is conditioned to their mind and society, and not to their free will.
There are thousands and thousands of people with high incomes. In the US, for example, there are more than 13.61 million households with a net worth of $1 million or more. Most of these millionaires have not stopped working; they continue to work every day.
This makes it clear that having money is not the only thing that makes one FIRE and the psychological issue is the central issue.
The vast majority of people do not fit into the FIRE mindset because the vast majority of human beings need something to occupy themselves, a purpose in life, and unfortunately, most people only find this purpose in work.
In the FIRE community, there are also examples of people who have discovered that they have this profile. That only by working do they feel productive and useful.
Let’s make it clear that going back to work because the FIRE plan is in trouble and you need to have more income and accumulate more capital is totally OK.
After all, we know that often things, plans, life changes, and going back to work for financial reasons is necessary and does not mean failure in the FIRE plan, just course adjustments.
FIRE is about:
Discovering and achieving life goals: “What would I do with my life if I didn’t have to work for money?”
Simplifying and reshaping your lifestyle to reduce spending. Your wants and needs should not be imposed by society or the media.
Work to increase your extra income streams, whether with dividends, rent, fixed income, or any other type of investment.
Strive to save a large percentage (usually more than 50%) of your income to accelerate financial independence.
Invest to make your money work for you. Learning how to manage and optimize those investments.
FIRE is NOT about:
Gaining wealth for the purpose of increasing consumption.
Retiring by the traditional method via social security or doing nothing forever
Risking your assets in dubious, risky, non-traditional investments
Getting rich quickly by investing everything in the stock market or in “fashionable” investments
Becoming financially independent requires hard work and a healthy but responsible attitude toward money. It means acquiring, over time, a well above average level of knowledge about the financial market and investments in order to have even more control over money and consumption.
Don’t Wait. Invest Today And Teach Your Children To Do The Same
Ordinary people usually don’t think about retirement, whether they are 18 or 50. So when we talk about financial education and FIRE, we should always focus on the part that can provide the most motivation, i.e., the FI part (Financial Freedom), and not talk too much about RE (Retirement Early) or few will implement it.
We know the power of compound interest, and we also know that its fuel is TIME. Teaching your children about FI (Financial Freedom) is extremely important today more than ever.
Knowing what we know today about investments and how interest works, we all wish we had started earlier with regular investments, don’t we?
Even the best investors want a “start over” button to push when we know we could have made smarter, more focused, and disciplined decisions decades ago.
So opening an investment account for your children, teaching them the value of money and why investing today is by far the best choice for their future and yours too, since this “start over” time machine button does not exist.
Final Thoughts
Financial independence is closely related to the concept of early retirement — quitting your traditional job/career when the amount of money saved is large enough that the interest from it will support all your monthly expenses. This doesn’t mean stopping working, but having the power of choice to stop doing what you don’t like just for the money. Do other activities that give you pleasure and don’t necessarily generate income.