For most people, to retire means to stop working. It means that at the age of somewhere around 65 and working for all of your life, there is this certain point that marks that you have contributed an amount to society that allows you to say “it’s enough”. From there on, social security is taking over and you receive a monthly payment that reflects your contributions over the years.
It is calculated by a formula that no one truly understands. All we know is that it’s based on your education, your social security contributions over the years, inflation, government subsidies and support, and many many other factors. To put it short, until receiving your first notification of what you will actually be entitled to, you have probably no idea what your number will be. In fact, I am not sure about the US but in Germany, it is highly recommended that you spend a week or two to double-check every single number in this first statement as there are frequently mistakes in it that can mount up to significantly different amounts.
I don’t believe in this system. And I don’t recommend it.
By this, I don’t mean that I don’t believe in its existence. Obviously, it’s there and plenty of folks are being taken care of by it. What I don’t believe in is it’s efficiency, reliability and future prospects of it.
It would be too much of a topic to discuss the purpose of social security systems, but when speaking about retirement, it is obvious that being risk-averse and trying to cater to all equally on a non-personalized scheme, social security is poised to deliver the absolute minimum of what’s possible to its participants. Furthermore, with an ever-increasing population, rising costs, inflation and stagnant wages, the system is by far less secure that our governments want us to believe. As a result, some countries are pulling up the retirement age to 67 or 69 years, freeze raises and plenty of other tricks to adjust the calculations in order to reduce total payments.
So, while social security is by nature designed to barely be able to support a very basic lifestyle, relying completely on social security and calling everything off on the official day of retirement may have even much more dramatic effects.
Working is a good thing.
Let me start off by saying that working is not a bad thing but to put it a little more into perspective: Working in a regular job, happy or unhappy doesn’t really matter, gives you much more than just a mood and a salary.
Brain activity, actual social interactions (meaning in real life and in person with real physical contacts and conversations), planned-out time throughout the day and among the most important ones, having less time to spend money, are seriously underestimated benefits of a workplace. It’s a fact that without activities we get… well, weird. Our brains and bodies basically degrade, we get socially detached and we tend to spend more money to “do stuff”.
Consider never to retire but embrace change
Talking about escaping the rat race and early retirement comes almost hand-in-hand so defining retirement and early retirement is important. As for my idea, retirement should be nothing else but a change, and early retirement an “early” change.
I never intend to truly stop working in the sense of being active. Retiring for me means to stop being active in order to have to make a living. Instead, the goal should be to embrace activity as a mean to create, develop and improve ourselves or our surrounding without having the financial pressure in the back to be required to do so in order to get through the day.
As Confucius once said: “Do what you truly love and you will never work again”. Unfortunately, most of us require to do things that generate cash in order to ensure our families are fed, we have a roof over our heads and our children can visit schools to become the next generation that we all hope for. At the same time, some jobs may offer much lower benefits than others, thus restricting our choices. Financial independence can lift those restrictions. This is what for me freedom is and what early retirement is all about.