Early Retirement Decision


Last month I decided to do what most people said couldn’t be done. As an aside, what great motivation proving people wrong is. I decided to retire early. Retirement is an interesting word for me because when I tell people I’m retired I feel the need to explain to them what retirement means to me. Retirement doesn’t mean that I’ll never work again, it means that I don’t have to work for income. It’s a subtle but important distinction because reading about other people who retired extremely early, many of them end up starting some sort of small business or work part-time in retirement. Maybe instead of telling people I’m retired I should say I’m an independent consultant or an endowment manager. Or maybe since I’m writing this on my blog I should tell people I’m a blogger.

I have been planning to retire early for many years. I finished paying off my mortgage a few years ago which significantly cut my living expenses. Along the way I have continued to save a significant part of my income and measure my progress towards financial independence. Now that I have saved enough and invested in a reasonably diversified portfolio, the time came to decide if I really wanted to retire early.

Work Just One More Year Trap

In thinking about retiring early I kept thinking that I could work just one more year. This pattern of one more year could last forever and is really not deciding at all. Or maybe it’s what the rock band Rush wrote in their song Freewill:

If you choose not to decide, You still have made a choice

Eventually I decided that at some point I needed to act or I would just keep delaying. “If not now, when” is a phrase I like to describe this.

What to do with all this Free Time in Early Retirement

Glacier Bay AlaskaAnother interesting concept about early retirement is many people rightfully think about what they will do with all their free time in retirement. As if, somehow not being able to fill your day is a worry. Similar to the work one more year issue above, the free time issue will always be there regardless if you retire at age 40, 50, 60, or 75. For me coming to this understanding was key. After being out of the workforce for a month now, I can honestly say that having too much free time is not an issue for me.

Health Insurance

Lastly a concern is what to do about health insurance. Most people mistakenly ask what to do about healthcare. But it’s really health insurance that is the concern. As with most expenses, health insurance is really just a matter of having enough income in early retirement to pay for it. And then at the magic date of 65, medicare kicks in and this cost decreases significantly. Because I’m relatively healthy, a high deductible, low monthly premium health insurance plan is great for me to mitigate the risk of something catastrophic happening like my automobile accident from years ago.

Looking back over the last month, I’m glad that I decided to retire early. I look forward to what the future holds for me. Who knows, at some point I may decide to rejoin the workforce, but now that is the farthest thing from my mind. I hope this post helps other people understand that extreme early retirement can truly be done and maybe to help shed some light on questions people have about early retirement and my thoughts on how I answered those questions.

Further Reading