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You’ve worked hard, did all the right things, and can retire now if you want – because you achieved financial independence (FI)! Should you retire? How do you know that you are truly ready? Even if you are certain, what do you do next? There are a whole host of questions that come to mind, either because I’ve worked through them in recent years or because others often ask them of me. My aim here is to touch on a few of these items, some of which could (and likely will) be their own post at some point
I’ve checked the box on FI – should I retire?
As I’ve written before, a key milestone in the decision making process about retirement is when you achieve financial independence – that is, when you are able to fund your expenses through the end of your life without your career income. See my linked post for the math behind that decision. But just because you’ve achieved FI doesn’t mean you should retire. That’s a very personal and impactful decision (though not irreversible!) and one that warrants sufficient thought. If you love your job and feel fulfilled by it, perhaps you’d like to continue on a bit longer. Saving even more for retirement, having more money in the vacation fund, or putting a down payment on that RV you want for when you do retire, all become that much easier if you don’t stop working right away. FI simply means that you now have the freedom to retire when you are ready. It’s an important distinction.
A related note: many people choose to “ramp down” working once they nearly achieve FI or once they reach it, to maintain some income. You may encounter terms like “barista FIRE”, in reference to leaving your primary career for an “easier” job or perhaps one that’s part time (like working at a coffee shop, hence the name). This is certainly an option and one that could mean you still have employer-sponsored healthcare in the US. That’s a handy way to delay or eliminate the expense of out-of-pocket health insurance premiums, something my family has elected to pay given that I am no longer working. There is no “best way” to proceed here – you need to choose what works for you and your family.
I’m ready to retire but have no idea what I will do when I stop working!
First , to quote a favorite book of mine: “Don’t Panic!” This sounds to me like a great time to start brainstorming. This is a pursuit best started at least a year before you leave the workplace. If you don’t have any idea of what you will do in retirement – no bucket list, no clear list of hobbies or volunteer opportunities you’ve been setting aside for years, you are in luck! There are few things more rewarding to start thinking about what you are going to retire to once you stop working. Some people have a very clear idea of this and will skip reading this section entirely – and that’s great! But the rest of us need to spend the time on this key point. However, don’t feel like you need to architect an amazingly detailed plan with a clear timeline and a stack of accompanying spreadsheets (but I totally approve of using spreadsheets to capture your brainstorming!). Start high level in your thinking. Are there things you used to enjoy doing but stopped and don’t know why? Are there trips you and your family always hoped to take but never seemed to put it together? This is a rewarding line of thought and one that it’s great to engage your partner or family in as well!
Yes, I’ve got a long list of interests but is that really enough?
OK so you have some ideas but you don’t have a precise master plan i.e. “I want to live in my cabin, fish each morning, volunteer at Habitat for Humanity three afternoons a week, and take three, two-week RV trips each year”. My opinion: that’s totally OK! I’ll be honest – this is a big one for me. I did lots of brainstorming over the period of a year before I left my last employer. I have a ton of interests, many hobbies I’d abandoned or wanted to try for the first time, and a long list of trips my family would like to take. I’m a 25+ year homebrewer (beer) and have often dreamed of opening a small brewery and tasting room in “retirement” – this is what most people assumed I’d do once I left biotech. However, all that thinking hasn’t produced anything concrete – and I’m ok with that! I knew I’d have plenty to do at the new house, have a few interests I wanted to explore that could generate income, and of course wanted to make some progress on those hobbies! Additionally, I’ve always had the thought that I’d eventually start a small business on my own. I tried talking through this “decision” with colleagues once my impending departure was known, but without much success. Admittedly, I got frustrated with the confused responses I was getting and in the end my messaging simply became “I’m leaving this field and am not sure what I’ll do next. It will be something for myself, likely part time”. Quite honestly, I wasn’t really comfortable expressing the lack of certainty I had about my next steps even though I was OK with it. Most importantly, both my wife and I were on the same page. So why care what others think, right? Your retirement is for you and your family!
Retirement is the freedom to spend your time how you want! That might mean you have a very specific plan and it may not. Either way, you don’t want to take this leap without thinking through it. There are too many articles about post-retirement depression or people who return to work not because they wanted to, but because they weren’t really sure what else to do with their time! I recommend that you think through these things and have a plan for at least a good starting point once you retire. Be sure to give yourself the space to do this thinking! A family trip a couple of years ago comes to mind, where during a free afternoon I went off on my own with a notebook. I sat outside, had a couple of beers, and brainstormed. Having some vacation time under my belt really cleared my head to think through this weighty topic! That afternoon led to some fruitful conversations with my wife, some more research, and then a few more brainstorming sessions. The process continues today! But I’m much more comfortable with my lack of certainty now. Heck, I’m more apt to feel overwhelmed by all the things I want to do each day rather than concerned about not having a detailed plan! That’s a really great problem to have, and I feel fortunate to be in this position.
I’d love to hear your thoughts in the comments!