I don’t tell many people about my plans for early retirement (except for this anonymous-for-now blog), but those that I do always have the same two responses:
- What will you do when you retire? Won’t you get bored?
- Isn’t that really risky in this economy?
The short answer to the first question is “No!” but I’ll elaborate on that another day.
As for the question of risk, most people see it completely backwards. No job is safe. Even the best performers can get cut when their entire team or organization is eliminated or the company closes down. Even in the best economy and working in the right industry, you are at the risk of poor management. I currently still work, receiving promotions and raises, yet I know that my office could close tomorrow. And when that happens, it won’t matter that I’m a top performer. The US has almost 10% unemployment – many of those people were top performers in their field. The reason they are still unemployed isn’t because of their performance, it’s because they are specialists at something no longer valued – at least not in this country.
Instead, my choice of extremely early retirement is the safest route of all. I will have my money work for me. My dividend and bond holdings will pay out more than I spend each month. And the payout will rise faster than inflation, which means I can let that money compound or increase my standard of living (I will likely do the former). That money will keep coming in because I’m diversified – how many corporate workers can say that their income is diversified?
I’ll also be building many useful skills in retirement. I’ll be learning gardening, motorcycle and bicycle maintenance, carpentry, plumbing, real estate, and many other skills. I’ll also still have my engineering degree and experience. If things change and I need/want more money, I can always go back to work. Whether it’s electrical engineering or bicycle repair. Again, my skills will be more diversified than the common worker.
Because I have time to stop and look around, rather than working 50+ hours a week, I will more clearly see the economical changes and invest wisely. Unlike the common corporate worker that is mindlessly investing 10-15% of their income into company stock and mutual funds inside their 401K, hoping to retire by 65.
When people ask me about the risk of early retirement, I usually shrug it off with a smile and don’t go into the details. Mostly because they don’t want to hear it, and want to passively believe their path is the correct one. Most people don’t realize that safe is risky. How about you?