The Flip Side of early Retirement
Amar is a CFA Charterholder and CFP, having over 20 years of experience in IT and Financial Services. He is very passionate about spreading financial literacy and has authored four bestselling books on Personal Finance.
06 Nov, 2017
To retire at 45 is a fantasy that many professionals cherish. It truly sounds like the dream, doesn’t it? Even though there might be half baked information about the notion of retiring at 45, many people aspire to do so. I too thought so when I was 30. But now that I am 43 and actually have the opportunity to seriously retire if I wish to, I have a slightly different take on the matter, having helped many achieve their retirement goals and having gone through my own journey.
Try typing into a search bar- ‘What to do when you retire at 45?’. You will see page after page dedicated to ‘How to retire at 45’ and examples of how someone has done it and you can do it too. But despite this wealth of “information”, I couldn’t find a single credible source telling me what to really do if I retired. This is why I thought I could provide a fresh perspective on the concept of retirement and work.
Think about it for a minute. ‘What would you do if you retire?’. Most people, including me, would say that they would travel for a month or two, spend time with family and friends, do some philanthropic work, read, play sports and maybe end up watching Netflix.
Yet, I see more and more people dropping this idea of early retirement and continuing with their work. Hold on to the thought of continuing to work, we’ll revisit it shortly.
In the January-February edition of the Harvard Business Review, John Legere, CEO of Global Crossing, said: “In 2011, after 10 years as the CEO of Global Crossing, I sold the company and left the job. It was the first time in my adult life that I wasn’t working full time and I ended up getting divorced within the same month. Post the divorce, I spent some time self-actualizing and realised that the whole retirement situation sucked and wasn’t working for me”.
John is spot on in his analysis because I believe that often people do don’t too well when they aren’t working. People are born to work, and it is when we’re working that our mind remains engaged and degeneration is avoided. Our chief mentor at work, who is 72, joined us not because he needed to but because he wanted to. He said working with us in the last 2 years improved his health and sharpened him as a professional. In fact, his family and friends now tell him that he looks 10 years younger.
The key point I am trying to make is just retiring at 45 will not do you any good. There needs to be a clear reason for which you want to retire. Generally, people think that retirement at 45 is a great place to be in, but their wishful thinking doesn’t extend to the point of figuring what they want to do when they reach that place.
So, why do people feel the need or the want to retire at 45?
The common thread that I have seen in the many people who say this, is that they don’t enjoy what they are doing and that they are in it only for the money. With so many professionals burning out in their early 40’s, retirement seems like the only viable escape from their current reality. I agree that there are certain professions, like in the sports and entertainment industry, where people might have to retire at a certain age. But even these people don’t stop working but find alternative career options instead. The best in every profession work for as long as it is possible for them to. The brightest examples are Warren Buffet and his partner Charlie Munger, who by no means need to work, but continue to do so of their own volition and are at the top of their profession. Similarly, I have seen doctors, lawyers and others working full-time, well into their 70’s, not simply because they truly love what they’re doing, but because it keeps them healthy, alert and energized. Despite being at the top of their fields, they’re constantly looking to give back and make a real difference in the world.
Remember what I said about considering the idea of working longer and not retiring at 45? Let’s get back to that. I have a few key points to back my case too. These points might seem simple and difficult at the same time.
- The first is to find work that you don’t consider as work but is something you love and wouldn’t want to retire from. Some people might say that not everyone is lucky enough to do what they love. Fair enough. But, I always believe that where there is a will, there is a way.
- The least one can do in a seemingly hopeless situation is to seriously think about their need to retire and what they would do once they did retire. Introspect and write down your reasons for wanting to retire on a piece of paper, then share it with your loved ones and take their opinion.
- Take a look at your family situation, draw up a grid with each family member’s name, their age and understand what their needs might be at that time.
- Finally, write down a tangible financial goal that reads something like, “I would require Rs 2 Lakh per month post-tax starting January 2027”. To bridge the gap between where you stand currently and where you aim to be, seek the help of a financial planner to figure out what you would require for retiring at 45.
About a decade ago, a friend of mine (who is now 50) used to tell me, “I will retire at 45 and build a small bungalow on this plot of land that I am buying in Lonavala.” In response, I would often tell him that considering the difficulty he had in visiting Lonavala even for a weekend, he would probably never end up building anything there. It was impossible for me to accept that he would retire at 45, not because he couldn’t afford to but because he wouldn’t want to. My repeated non-acceptance of his plan led to a bet between the two of us on the matter, and guess what? To this day, Rajesh is trying to build that bungalow. He is not only enjoying his work but has also been desperately trying to sell that piece of land.
To quote the Dalai Lama “The ultimate source of happiness is found within oneself.” The true source of happiness for most of us would come from living a purposeful life, having meaningful work, loving family and friends, good health, new experiences, helping others and constantly learning. If one was to focus on this source of happiness, money is bound to follow. Thus, work towards being happy because the riches will be right around the corner.