If you push through the vitriol inherent in some of the anti-early retirement propaganda that permeates mainstream media, you eventually make your way down to a few arguments against the concept of retiring early that do make sense.
In this post, I’m going to take the top three most common legitimate arguments made against early retirees, such as myself, and try my very best not to be an asshole in my response. Think I can do it?
The top three legit arguments against ER
“Once the recession hits, let’s see how many are still retired.”
I’ve heard this one a lot, and the premise behind the irritating remark is actually pretty darn sound. When the market is great, it’s easy to be retired, isn’t it? In fact, my wife and I increased our net worth by nearly $50,000 during the summer of 2017, and nearly the same during the summer of 2018, by doing virtually nothing that generated any serious income. The stock market is just insane right now.
It’s hard not to make money in this economy.
But, what about when the next recession hits, forcing early retirees to live off of their savings – like, for realsies? What happens then? When the market taketh away, rather than relentlessly giveth, things aren’t quite as rosy and fine.
Or, what if we fall on hard times, develop health issues or need cash quickly? Do we take out quick loans and call it good?
My reply: You’re right. A recession will be the catalyst that will try to poke holes in your plan of early retirement. There are no two ways about it – if your finances aren’t sound, a recession will reveal your shortfalls, and it probably won’t be fun. But, nearly every early retiree I’ve ever met admits that early retirement is a risk.
Let me say that again: We admit that early retirement is a risk. We know.
We know that the shit might hit the fan. We know that a powerful recession could send us back into the workforce to shore up everything we lost. Most of us recognize that risk and have willfully accepted it hook, line, and sinker.
But, we also have something exceptional going for us.
Early retirees, in general, are incredibly creative people. We know what’s worked for us in the past, and we sure have made our fair share of mistakes. The vast majority of us know what “enough” means to us, and we are willing to adjust those parameters if things get tough.
For example: Right now, going out to eat weekly might be important. But in a negative economy, restaurant spending may not look quite so attractive. Or, we might drive less to save on gas or cut back on our costly alcohol consumption, or [insert discretionary spending here].
And boy, we sure do love our Tequila. And bourbon. Oh, beer too.
In other words, we adjust. Things may not be as rosy during a recession, but that’s the cost of doing business in the world of early retirement. Just because something is a risk doesn’t mean we shouldn’t take it. It does need to be a calculated risk, though – I admit.
But, nothing ventured, nothing gained.
And if things get REAL bad, we might find ourselves back in the workforce, and this brings us to the next argument against early retirement.
“There is no way you’ll get your same job back after years of sloth.”
Depending on the type of work we did before retiring early, it’s true. The longer that we’ve been out of the workforce, the greater the chances of that resume gap inhibiting our ability to regain similar work.
But, here’s a dirty little secret:
The last thing that I’d want is to jump right back into the very same nonsense that I tried so hard to escape from.
I don’t want my old job back. Like, not even a little bit.
My reply: There is any number of ways to generate income without doing exactly what we did before. For me, I worked in information technology for 12 years and I am in no hurry to get back into that game. It paid well, but I didn’t enjoy it. During my accumulation phase, though, it worked well.
But even if you’re forced to generate income in early retirement, you still aren’t re-opening that accumulation phase again. You may be shoring up some shortfalls in your budget, but hard-core wealth accumulation probably isn’t necessary – provided we saw the writing on the wall far enough ahead and didn’t run our savings completely dry.
There are a whole ton of jobs out there that need to be filled, to include seasonal work. You might be working for minimum wage, but it may also be a job that you actually enjoy. No, I’m not talking about flipping burgers at your local McDonald’s. I’m talking about working at a visitors center, or as a tour guide at a local national park, or helping one of your favorite local shops keep up with demand during the holiday season.
Or, perhaps your entrepreneurial spirit will finally show (or get ramped up!) with a side hustle that generates income. The more work that you put into those side hustles, the better they tend to do. If you need the income, put more work into the things that bring in cash.
The bottom line is early retirees probably won’t need to rejoin the workforce doing exactly what they did before retiring. Our economy is rich with jobs that most people who work full-time or want a huge salary would never consider. There is a lot out there – more than most of us realize.
We just gotta look.
“Inflation will eat away at your spending power!”
Again, that’s true! Over time, inflation reduces how much we can buy with each dollar that we spend – with some things (more on this below). Meaning, the stuff that we bought this year will probably be more expensive years down the road. As a result, we may be spending more money as the years progress if we keep buying the same stuff, right?
My reply: We can’t control inflation, but we can control where we spend and keep our money. Historically, the stock market produces capital gains in excess of inflation, though there have been periods when inflation out-paced the market. Over the long term, the market holds its own.
Believe it or not, not everything is affected by inflation.
Seriously, it’s true. That computer or mobile device you’re using to read this post costs pennies on the dollar compared to relative technology years ago. As technology advances, things actually get cheaper.
And, that’s not all.
According to U.S. News, for example, housing has matched inflation over the past 17 years, making your dollar today nearly equal to your dollar back in 2000 – when spent on housing. And, your dollar will go even further if you aren’t buying a ridiculously big house, too.
Furniture costs have fallen about 12% since the year 2000, while the cost of your TV is down more than 80%.
A few other items of note since the year 2000:
Large appliances have matched the rate of inflation, while small appliances like toasters and coffee makers have dropped nearly 30%. The cost of clothing has sunk around 8%, new cars around 3% and cameras about 64%.
Food is also cheaper than it’s ever been.
Of course, everything hasn’t fallen in price over the last couple decades. In fact, much of the stuff controlled by the market increases in price over time.
But, that doesn’t mean we can’t control the way we spend our money. Items that we can afford today may climb out of our budget in the future. And, that’s okay. Competition in our economy helps ensure that there are, more times than not, alternatives to the things we may have bought last year.
Inflation does exist, but it doesn’t affect everything equally. As an early retiree, we should pay close attention to how far our money goes and adjust our spending accordingly. Inflation bites, but it doesn’t have to bite hard.
Smart early retirees don’t spend money on the same ol’ stuff because “that’s what we’ve always done”. Instead, we spend money on things that make the most sense NOW, based on a combination of price and value. And, the fewer things that we buy in general, the less effect inflation will have on our lives.
Of course, things like homeownership help with inflation due to rising equity in our homes. Stashing our emergency funds in interest-bearing savings or money market accounts, rather than a checking account, can also help our money grow along with inflation.
Oh, and one more!
Okay, here is a bonus 4th argument I hear quite a bit:
“I’d be so bored if I retired early”
If your job is the only reason you’re alive, then I would agree – don’t retire because you probably will get bored. But, early retirees have other interests to pursue outside of their [former] 9 to 5 jobs. Whether it’s hiking, woodworking, photography or anything else, most early retirees aren’t exactly hunting around for things to do. We lead productive lives.
Most early retirees retire TO something rather than FROM something. It’s not just that we hate our jobs or don’t want to work. Instead, we’d rather be doing something else. We would rather spend our time on things that we actually enjoy; things that bring a genuine smile to our faces.
It’s a beautiful thing to wake up every morning with a genuine smile.
Edit: Oops! There’s healthcare, too
If you take a look at the comments section below, you’ll notice that I forgot to mention one of the most critical and expensive elements of life: healthcare. It’s tough for me to provide an answer on this issue because it will depend heavily on your situation. Recent healthcare regulations provide subsidies for those with low incomes (which includes early retirees).
Those subsidies can drastically reduce the cost of healthcare.
If you travel full-time like my wife and me, however, most healthcare plans quickly get much too expensive. We need to be able to see any doctor at any time. We just can’t do the one doctor thing. It doesn’t work for travelers.
My wife and I use Liberty Health Share to provide our coverage. Health shares aren’t technically insurance, but they are also exempt from the Affordable Care Act’s healthcare mandate. At hospitals, you’re treated like a cash-paying patient and, therefore, can see any doctor that you wish at any time of the year. They’ll even provide prescription discounts and cover pre-existing conditions after a certain number of years as a subscriber.
We pay about $300 / month for both of us combined.
My wife and I are still young and healthy, so a health share works for us. But, it may not work for you. As I said before, I cannot answer the question of healthcare for you because health is a dynamic and deeply personal issue. But, subsidies reduce the cost of health insurance, and health shares are an alternative to traditional insurance that might work for you.
Boom, there it is. The top three arguments against early retirement (that are legitimate) and how I address those concerns. What other arguments have you heard, and how do you respond to them?
This post was originally published November 2017 but has been updated and revised using the Revise and Republish strategy.
Steve is a 38-year-old early retiree who writes about the intersection of happiness and financial independence. Steve is a regular contributor to MarketWatch, CNBC, and The Ladders. He lives full-time in his 30′ Airstream Classic and travels the country with his wife Courtney and two rescued dogs.