Jacob from Early Retirement Extreme and Mr. Money Mustache from Mr. Money Mustache have recently been talking about the “Internet retirement police”, self-appointed folk who call out bloggers for calling themselves retired, when, according to these people, their lifestyle doesn’t fit into the pre-approved notions of what they consider to be “early retirement”, or just plain ol’ “retirement” in general.
That got me thinking, because we often use the same word to mean different concepts, and “early retirement” means different things to different people. Jacob breaks down “retirement” into the following categories:
“Retired”, as in “put out to pasture”
This is when we’re just too old and tired to do anything productive, so we spend the rest of our days watching TV, playing golf, or whatever else we can muster. This is probably what the reality of “retirement” was for most people in ages past, but it seems like an old-school definition to me and not one that I personally look forward to.
Will this type of retirement still be a reality for people going forward? There are incredible advancements being made in technology and medicine right now, and I firmly believe that, barring a major world war or something of that scale, most younger people today will live to see aging “cured”, and death by senescence will become obsolete. There will still be fatal accidents, crime, and stuff of that sort, but those are different problems, and I believe that we’ll find solutions to those problems as well. There should be no reason that a young person today would find him or herself forced out into the pasture due to plain old age, and by young, I also include people in their 30s, 40s, and heck, maybe even in their 50s. Technology moves fast these days.
“Retired”, as in “free from the corporate grind”
Not everyone loves their job, and many of us would love to be free of the 9 to 5 corporate grind so that we can spend more time with our families and focus more of our attention of the things we really want to do and on the things that actually matter to us.
This is definitely a version of retirement that I definitely aspire toward, and one that I’ve been able to achieve for myself in the last year. I am now my own boss, and I now answer only to my customers. It’s a great amount of freedom, and also a certain amount of responsibility as well, as I am now directly responsible for pleasing people or making them unhappy. This is no longer “somebody else’s problem”, like it was when I worked in a corporation. At the same time, I love having the ability to just take off at a moment’s notice and head somewhere else in the world, without having to ask someone for permission. All I need is a laptop and an Internet connection so that I can keep up to date on things.
I agree with some of the “Internet retirement police” that this version of retirement is not necessarily passive, since at this stage, we might still be obligated to exchange time for money, and we still need to work in order to produce. In this sense, we’re definitely not retired in the sense that we can just goof off all day. However, does that really matter? So long as I have the energy, I definitely enjoy being able to produce and add something to this world, and I enjoy it even more with the opportunity to do it on my own terms. If someone wants to call themselves “retired” in this sense, I will congratulate them on making it out of the rat race, and wish them the best of luck going forward.
“Retired”, as in “I can do what I want, when I want, and how I want”
This is the best version of retirement in my eyes, and it means true financial independence, without the need to trade a significant amount of time for money. It of course depends on what we actually want; wanting to fly around in a private jet will require a heck of a lot more passive income than, say, just wanting to be able to travel around Southeast Asia for a few months!
So, what counts as passive income? Does writing a book acount? Managing a website? Now that I’m wrapping up a 300 page book, I would definitely not consider a book as passive income, any more than I consider my business to be passive. To me, passive income is more about things like index funds or real estate property with low overhead. These investments are bought with money, not time, and they ideally don’t take much time to manage. If I had enough investment income to cover my current lifestyle and then some, then I would definitely consider myself to be financially independent. I’m not there, yet!
How much money does one need to reach this level? It all depends on your life style. If you go for a more extreme version of early retirement, you might be able to get away with $10,000 – $15,000 in income a year. The important thing is that you find the number that is right for you. There will always be grammar police, “retirement” police, and others out there seeking to impose their own standards on you, but what really matters the most is your own standards, and what makes you happy.
Dear reader, what does “early retirement” mean to you, and what steps are you putting into place over the next few years to get there? I’d love to hear from you.
“What Does ‘Early Retirement’ Mean to You?” was included in the following carnivals:
Yakezie Carnival at Making The Life You Want
Y and T’s Weekend Ramblings at Young and Thrifty.ca
Carnival of Retirement at Midlife Finance
Carnival of MoneyPros at The Savvy Scot
Finance Carn. for Young Adults at PF Carny
Carnival of Financial Planning at Making Sense of Cents
To me early retirement is being financially independent and being able to make money in ways that I enjoy.
Definitely being financially free, no debt obligations whatsoever.
Retired in my book is doing what I want to do when I want to do it.
I’m 16 years away I think, 9 more years on the mortgage, 7 more years of saving after that. The goal is mid-50s while I still have my health.
I could probably retire sooner but I will miss out on many of life’s adventures beforehand while I’m young.
Nice post 🙂
Mark
To me early retirement is the ability to cover all of my normal expense plus enough to take advantage of opportunities as they arise. I’ve found building websites to be the best way to do this since all you need is an internet connection and your laptop. However no matter what vehicle you are using to make this happen you will always have to manage something. Whether its a rental property, an investment portfolio, or even a website. The real question is how much do you really want manage.
Early retirement to me means continuing to be a professor because I want to and to pretty much get my consulting practice on autopilot so I can walk away from it. I am definitely shooting for the type of lifestyle where having freedom and a little security is going to be my paradise.
Retirement for me just means my finances are something I don’t worry about. I really enjoy working so I doubt I would give it up if I hit 40 and had enough money to live one. It’s just a point where money becomes less important!
Early retirement means I can do what I really want to do. It does not mean I will stop working, but it means I will be able to focus on things I really want to work on.
I’m retired as in free from the corporate grind. I’m still working for myself, but that’s all right. I’m enjoying it. Someday we’ll be able to do what ever we want to do.
““I can do what I want, when I want, and how I want””
Exactly, its all about freedom. For me, I may continue working or I may not. The key is that I’ll be in control of my life with no reliance on a job for income.
I “retired” from the corporate world at 29. Since then I have been writing for travel websites and fixing up a house in Guatemala that I hope to turn into a guest house. Early retirement means being able to do all that without worrying about whether I will be able to cover the bills or fly back home when I want to.
For me, retirement is being free from financial obligation and enjoying the rest of your life without having to think too much of you responsibility in your family because you know they are well-settled as well.
Great thoughts, everyone. For me, early retirement will mean having the freedom to adventure without worrying about paying the bills. Getting out of the rat race is part of that, and acquiring savings will be an even bigger part. Here’s to the dream. 🙂
I think it’s a bit disingenuous to call yourself retired if you still have to work meaningful hours and rely on that income to support yourself. You’re just “self-employed”, not retired. It’s a hairy edge when you have a working spouse too. Perhaps now your spouse is making enough to support the family, but are you really “retired”? If they lose their job, you’re no longer retired – you gotta get to work! My vision of retirement is that I don’t need any money I’m making online any more; I’d saved enough and have the fixed income to support me til the end.
I see things in much the same way. There are different “levels” of financial freedom, and while being out of the rat race and working on your own terms is great, it’s not the same thing as being retired or being completely financially independent. On the other hand, if you use a more narrow definition of “retirement” to mean “retired from the office”, then I suppose it could work, so long as you’re able to keep up the income. That’s not the best version of retirement for me, though. 😉
In my opinion, early retirement is as simple as retiring before you thought you would. Many of us dream of the day we get to free ourselves from the corporate grind, but rarely do anything that can help us achieve that goal. The sooner we actually take steps to make our dreams a reality the better off we will be. If I had $20 million sitting in the bank, I wouldn’t show up to my job tomorrow, but I wouldn’t be a lazy bum either. I would consider myself retired, because that’s how we use the word in the United States, but I would be up pursuing my dreams every day. Projects that would actually help make the world better off because I was a part of it. But all that would start at around 11:00 AM, after my morning round of golf!
Forget what other people define as retirement. Once you’ve got enough money to cover your expenses, you can choose to live your life however you want! I know I’m shooting for something close to your third example, but I may or may not still work for fun. It’s up to me and me alone to decide how I will spend my time.