Why you should think twice about retiring early

A lady named Lisa wrote to me this week, prepared for a big debate.

“I think you’re wrong about early retirement. I heard you say that retirement is not a 50-year-old’s project. I am planning to retire before 50 (along with my husband), and I can’t think of a better lifestyle where I’ll be responsible for my own time to spend with family, learning new things, exercising, travelling, volunteering and possibly working if I feel like it,” she said.

“I truly believe there is much more to life than the corporate 9 to 5 grind. I just don’t understand why anyone would say it’s a bad idea.”

Retiring early is a goal of many, but opting for a semi-retirement where you get the best of both worlds might be a better plan.Credit: Simon Letch

I couldn’t resist probing. Lisa is 46 and hates her busy professional job. She told me that every Friday she feels excitement as the week comes to a close, then, on Sunday afternoon dread creeps in for the week ahead. Her three kids are in their mid and late teens. And she’s starting to reconsider her own sense of why.

Lisa’s situation is really, really common. She could change jobs, but she fears her industry is more of the same. So, at 46, the only light in the tunnel she and her husband can see is aiming hard for an early retirement and putting their foot to the floor trying to get there.

They’ve been saving one of their executive salaries almost fully for two years to reach for it. But I challenged her. Maybe she wants to embrace her prime time instead, and use that money as a buffer to reinvent herself.

Save like a young person planning to go to Europe for a gap year.

Most people like Lisa who aim for retirement in their forties or even early fifties find that when they get to early retirement, it isn’t what they are looking for at all.

They enjoy the first big holiday and maybe the first year or even two, where everything feels fresh and new, then, they look around and all the other 50-year-olds are busy and there’s no one to play with.

And while they’ve spent those years relaxing, overcoming burnout, they haven’t grown their knowledge, purpose and passions. They fill their time with travel to keep up the excitement and realise that travel is expensive if you do it constantly. Then they get bored, lonely, even a bit stale, and go looking for work.

The alternative is to recognise that they are in a classic midlife transition, at the bottom of what scientists call the U-curve of happiness that arrives commonly between the ages of 47 and 55. They could embrace it, recognising where they are at and working through the process of releasing their feelings of burnout and re-seeking their sense of purpose.

It might mean using some of their savings to take a midlife sabbatical, or even a gap year, investing in developing their skills and knowledge, spending time looking for things they are (or can get) passionate about and getting ready for this exciting next stage of their life. Not all of us need to have a midlife identity crisis to kick it off, but many of us do, without realising it.

The science of happiness says that many people feel a fundamental shift in their motivations in midlife.

First, our expectations of life change. We find we’ve achieved many of the goals we set for ourselves early in life (or we declare them unachievable or undesirable). Then we realise that the constant climb up the hierarchy of corporate life may not make us as happy any more, and we want to change gears and shift our goals towards our own happiness and fulfilment.

Scientists say that this is when our brains change. We become better at balancing competing emotions and react more strongly to positive signals than negative signals. So, we are less motivated to prove things to others or meet expectations, and more motivated by feelings of joy. This is why midlife is when most people reprogram themselves to become more community and/or family oriented.

If you feel like Lisa in your midlife, know that you are not alone. In fact, you are downright normal. And it’s time to start contemplating how you’ll tackle your midlife gear change. Here are a few simple steps to work through:

Identify skills you have that you love using. You can identify them simply by thinking about the times in your day, week or month when time disappears. What are you doing and what skills are you using. This usually points to things you excel at and enjoy.

Consider your passions. Contemplate what you’re passionate about, or what you wish you had time to become more passionate about. It might be the environment, caring for the elderly or saving injured wildlife. It could be a passion for our beaches or an interest in your health and longevity. Understanding your passions gives you purpose and direction.

Explore your values. Think about moments when you felt fulfilled and content in your work or other activities. What values were being respected during these times? This might include integrity, compassion or creativity. Alongside this, it can be helpful to consider what you won’t tolerate. For example, you might realise that you value respect and collaboration because you dislike working with condescending or dictating people.

Then, look at the decisions you’ve made in life so far and whether they align. What underlying values influenced those choices? Were you chasing money over passion? Has your motivation shifted? This helps you recognise consistent patterns in what you prioritise and whether re-prioritisation is in order.

Now, here comes the money bit. You can’t do any of this easily if you aren’t in good financial shape. So there are a few important steps to take before you leap into action, and they’re all about building your financial confidence and saving enough to buy you space to change gears.

The first thing you need to do is build your budget so you understand your household’s burn rate and how much you can afford to save to get ahead. Then, set some of those life-changing goals so that you can move from career burnout into your prime time of life.

Next, batten down with those goals in sight and start saving. I want you to save like a young person planning to go to Europe for a gap year. Save up enough to afford yourself that midlife sabbatical, new phase of education, or a step backwards into a role that pays less but rewards you more.

When you hit the financial target, start living it!

Retirement is not your only escape. If you have the potential to live well into your nineties (which most 40- and 50-somethings do), it’s better to do that having found your passions in midlife.

PS: I wrote back to Lisa. She agrees. She’s burnt out and has not given herself permission to explore her skills, passions and values, and that’s what she’s going to do next, using the money she’s saved for that early retirement.

Bec Wilson is author of bestseller How to Have an Epic Retirement. She writes a weekly newsletter at epicretirement.net and is the host of the Prime Time podcast.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making financial decisions.

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