Retirement is a word I have been hearing all too often since our move out to the country last year.
- “So like, are you guys retired now?”
- “I wish I could live the Good Life like you guys.”
- “Some of us have to work for a living you know…”
Apparently people think there are two ways to live one’s life: enduring the daily grind, or being retired.
Honestly, I want to say I wish I retired with this move. But the truth is, I don’t know that I ever will want to retire. Not in the traditional sense, anyway.
What is Retirement
Most of us were taught that adult life is roughly divided into three phases:
- Going to school so that you can get a good job
- Getting a good job and working hard at it to eventually bring down your cost of living (read: paying off your house), along with creating some form of passive income (ie. employer/government pension and/or personal retirement fund)
- Retiring and living off said income, so that you can finally be free to do nothing but whatever it is you actually want to do in life (which very well might be nothing by then)
This basic, three-phase plan is how most of our grandparents lived out their lives. It is also how many of our parents lived or are living out their lives now. It makes perfect sense that we would be taught to do the same thing. And as a result, most of us are in fact attempting to do the very same thing.
The Problem with Retirement
Unfortunately, the world doesn’t really work the way it used to.
By that, I am referring to the fact that the employer/government provided pension plan is becoming less and less of a possibility these days. There are of course some exceptions still out there, but there is no question that they are becoming fewer and far between. Honestly, I am afraid of where that trend will lead to by the year 2040, around the time when I am sixty five.
Not to mention the fact that paying off your house (or owning one at all!) is becoming less and less of a reality for many.
And so our generation learned the habits of the previous generation who lived by a different set of rules. One where you didn’t really need to know about how to save up for retirement, your employer did that for you. And it was relatively easy (or even possible!) to eventually do away with the largest portion of your cost of living.
This all puts us in a bit of a bind today. Most of us aren’t getting employer-provided pensions, ever, and most of us have no idea how to save and invest for ourselves either. Not to mention the fact that you may never own the house you are living in.
Another reason I’m not particularly a fan of retirement is, it can sometimes be associated to no longer contributing to society. You are done contributing. You already paid your dues, and now it is time to do what you want to do. Payback time. This association is clear, the way I hear many people ask me the aforementioned questions.
And the last thing I will mention, which has always been a major issue with the three phase life plan, and hopefully most people already realize this, you end up spending your healthiest years doing what you don’t necessarily want to be doing, in hopes that one day you can actually do what you want to be doing.
Which for a number of reasons, might never come.
Financial Independence is the New Name of the Game
Don’t get financial independence mixed up with retirement. Retirement means you don’t work. It might even mean that you can’t work. Even if you want to.
Financial independence on the other hand means you don’t have to work if you don’t want to. But you probably do work sometimes. In some form.
Just like retirement, there are two sides to financial independence: spending less to live, and earning money, some of it likely passively. The difference is, with financial independence you choose to work when necessary, in order that your spending needs are met.
For me right now, I would call myself “financially-less-dependent-than-I-used-to-be”. I am certainly not making more money than I used to. But I am making more of it passively than I ever have before.
Much more importantly, I have brought my cost of living down to an all-time low. So if I want to spend three months working on an idea without getting paid for it (yet), I just need to buckle down and stop drinking pints at the pub while I do it. On the other hand if I want to take off to Asia for the winter, I will need to pick up a temporary contract somewhere along the line so that I can fill that gap as necessary.
Moving forward, the goal is to continue to live cheaply while working on ideas. Until I have enough of them working for me that I no longer need to pick up contracts when I want to go to the tropics because it is cold here. And then I will be truly financially independent.
And then I will really be living the good life.