Conquer 3 Critical Early Retirement Challenges by Redefining ‘Retirement’

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For the first decade of my adult life I was saving diligently while coasting through life with vague ideas that someday I could retire early. As my wife and I reached our mid 30’s, we paid off our home and saw our investment balances building. We realized early retirement may actually be a possibility.

I got more serious about planning and dove deeply into the world of early retirement blogs. Many of these blogs simplify retirement planning down to basic concepts and rules of thumb. These guidelines were extremely helpful in the early stages of planning.

However, as we got closer to the retirement decision, we found ourselves with three big challenges that could not be answered with rules of thumb and oversimplifications. We needed to start making real decisions.

Getting any of these decisions wrong could legitimately derail our retirements. It became obvious to us why pending retirees get stuck in “one more year syndrome”. The fear and anxiety of taking the leap into retirement is real.

Challenge 1: Paying for Medical Insurance

One challenge we faced when planning our early retirement was figuring out what to do about medical insurance, which we have always obtained through our employers.

Many in the early retirement community are planning around the Affordable Care Act (ACA). I’ve written how the ACA is currently a viable option for early retirees with very generous subsidies available for those with low recognized incomes. However, we did not feel comfortable planning around this system for 20+ years until Medicare eligibility, considering the law is under constant political attack and it remains uncertain for even next year.

Another popular option among early retirees is using Health Care Sharing Ministries (HCSM). We would consider using a HCSM, but I learned they come with their own unique challenges and risks. Due to their religious origin and exclusion of others who do not share their beliefs, they are not an option for everyone. This may also make them a political target, so there is no guarantee for their long term viability.

Planning for future health insurance costs while retiring in our early 40’s requires predicting over two decades into the future with at least reasonable accuracy. Even that requires an assumption that Medicare will be available and similar to today when we reach age 65. At the same time, we cannot confidently estimate our cost to within a few thousand dollars one year into the future due to political risks and personal health risks ultimately out of our control.

Challenge 2: Uncertainty About Having Enough

We began our retirement planning around research that supports a 4% “safe withdrawal rate”, also known as the 4% rule. Using the inverse of the 4% rule, we simply need to save 25X our current annual expenses to determine our retirement needs.

This is a great place to start planning. However, as we got closer to making the actual retirement decision, we found big problems with this rule.

Even eliminating the uncertainty around health care, our spending is not constant as is assumed by the 4% rule. We have always saved roughly 50% of our income by living off of one of our salaries and saving the other. However, we never lived on a budget.

Some years we were naturally more frugal than others and we saved more than 50%. Other years, we would splurge and spend thousands of dollars on a purchase or experience that we valued. We loved this feeling of living with an abundance mentality.

Conversely, we tried to live our lives around a set budget as we got serious about retirement planning, and we found it made us much less happy. Our wealth grew faster than ever. Simultaneously, we started to feel stressed about money for the first time in our lives.

Also, the 4% rule is a generic guideline that assumes that we all are blindly starting our retirements at the same time and under the same economic circumstances. However, as we approach our desired retirement date and financial goals, we can eliminate these assumptions.

Our goal was to retire by a specific time, no later than 2018. We know what economic conditions are right now. Unfortunately for us, those conditions are not favorable for investors looking to start drawing down investments.

Stock market valuations sit near all time record highs. Interest rates sputter along at near record lows. Sequence of return risk is substantially greater for those beginning retirement in today’s economic conditions.

Challenge 3: Figuring Out How to Be Happy

The financial issues of early retirement were substantial. However, the biggest challenge of retirement planning was more existential.

What do I really want out of life? What will make me truly happy and fulfilled?

Early on in my planning process I got caught up in the fallacy that early retirement was the solution to all of life’s problems. I simplistically assumed that a lack of time was making me unhappy, so retiring would create more time and thus make me happy.

The reality of going through the retirement planning process made me realize that quitting work could simply mean trading the devil I know, work dominating my time, for new devils. Without careful planning I could be introducing potential financial stress I had not previously experienced combined with lack of day to day purpose.

Asking More And Better Questions

Like most people reading this, I originally found my way to this website looking to answer the question “Can I Retire Yet?”. While that question is valid and important, it is not the only one.

Solving our challenges required first asking more and better questions. Here are just a few of the additional questions I began asking myself and discussing with my wife:

  • Just because I can retire early, does it mean I should?
  • Why do I want to retire? Why does anyone retire? Where did the concept of retirement even come from?
  • How will my life be better if I retire? How will it be worse?
  • What are the positive aspects of my work? What will I miss about my job? How can I “throw out the bathwater, without tossing the baby”?

Defining Retirement

Wikipedia defines retirement as “the point where a person stops employment completely.” Merriam-Webster defines retirement as “withdrawal from one’s position or occupation or from active working life”.

After many discussions about what we wanted our lives to look like, we realized we didn’t need to accept society’s definition and expectation of retirement any more than we accepted society’s expectation that you work 40+ hour workweeks until age 60 or older to reach retirement.

Ultimately, I realized that all three of the biggest challenges we faced had the same solution. We needed to redefine retirement on our own terms.

Looking Outside of Traditional Retirement Planning

Learning to be a better investor, tracking your spending, and understanding how economic and political conditions affect you are all important aspects of retirement planning. However, no matter how hard you work on it, how much you read, or how many times you “crunch your numbers”, you can never accurately predict all of the things that would be needed to provide a secure retirement.

Traditional retirement planning can only take you so far. If you want to retire early, you need to develop a robust strategy with flexibility. I found incorporating ideas outside of, and even critical of, traditional retirement planning to be very useful. This led to even more and better questions.

I began reading books like Tim Ferriss’ “Four Hour Work Week” that contain many ideas critical of retirement.“(Retirement) is predicated on the assumption that you dislike what you are doing during the most physically capable years of your life. This is a nonstarter—nothing can justify that sacrifice.” Even in my case where I liked aspects of my job and at times found it fulfilling, it had become drudgery. This book introduced me to ideas like “lifestyle design” and “mini-retirements” as alternatives to traditional retirement. It challenged me to question my assumptions that I need to have $X in the bank to start living the life I really want. How could I start living a life more in alignment with my values as soon as possible?

I also read books about finding purpose and meaning in life. Probably none is better than Victor Frankl’s “Man’s Search for Meaning”. Frankl survived deplorable conditions in Nazi concentration camps. He credits his survival, and the survival of others in the camps, to finding meaning and purpose in day to day life in the camps. He personally accomplished this through helping and serving others and constantly dreaming of reuniting with his wife from whom he was forcefully separated. This challenged me to ask myself how he could find meaning and purpose while living in these horrible conditions while I was struggling to do so living a “successful” American lifestyle. What did I need to find happiness and fulfillment?

I realized that part of the answer was to re-examine the role of work in my life. I re-read a book that was very influential when starting my career and that I regularly have given to students who have interned with me over my career, Dan Miller’s “48 Days To The Work You Love”. A key takeaway on my second time through this book was the difference between having a job and a calling. Miller writes: “A job should not define who or what you are. You should be able to leave today and it not change the overall purpose or direction of your life. Your calling is a much larger concept than what you do daily to create income. Work opportunities can come and go—the direction of your life should remain constant.” What is my calling in life?

Redefining Retirement

Darrow provided his definition of early retirement early on in this blog’s existence. It contained a key idea that was central to our challenges. “When you look at the numbers, and the futility of predicting future economic cycles, I think it’s very difficult, and not all that beneficial, to design a life with no work at all. For me it’s more about financial independence and choosing my own work.”

The solution to all of our challenges was to redefine retirement on our own terms. We needed to develop our own plan that would give us more flexibility with our time while continuing to allow us to live with a feeling of security and abundance that we value. Part of our plan is continuing to do work when it is rewarding, challenging, and/or fun, while fitting into our desired lifestyle and moving us toward our longer term goals.

Simply changing our definition of retirement to incorporate paid work allowed us to overcome challenges that seemed insurmountable with traditional retirement planning. Incorporating a plan to make even small amounts of income drastically changed the math in the retirement planning equation, allowing me to retire sooner and with less anxiety and stress. Doing meaningful work can also provide purpose to day to day life and increase opportunities for social connection.

I am sure there are people reading this who will challenge me and say that I’m “not really retiring”. Let me agree that I am not allowing anyone else to define how I will live my life.

The simple realization that you do not have to live by anyone else’s definition of retirement gave me the courage to leave a “good job” at 41 years of age to pursue a path that I find more interesting, challenging, fun, and in alignment with my personal values. What is holding you back and how can you redefine retirement to make the goal attainable sooner than you may have imagined?

[Chris Mamula used principles of traditional retirement planning, combined with creative lifestyle design, to retire from a career as a physical therapist at age 41. After poor experiences with the financial industry early in his professional life, he educated himself on investing and tax planning. After achieving financial independence, Chris began writing about wealth building, DIY investing, financial planning, early retirement, and lifestyle design at Can I Retire Yet? He is also the primary author of the book Choose FI: Your Blueprint to Financial Independence. Chris also does financial planning with individuals and couples at Abundo Wealth, a low-cost, advice-only financial planning firm with the mission of making quality financial advice available to populations for whom it was previously inaccessible. Chris has been featured on MarketWatch, Morningstar, U.S. News & World Report, and Business Insider. He has spoken at events including the Bogleheads and the American Institute of Certified Public Accountants annual conferences. Blog inquiries can be sent to Financial planning inquiries can be sent to]

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