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My friend has some early retirement thinking to do

Early retirement - difficult decisions

I was talking to a friend who's struggling with a difficult decision.

She has a good job, a job that pays well. The problem is that she doesn't like it, and it's been that way for a number of years. I guess that actually makes it a bad job.

She's seven years away from being able to retire with a full pension. Alternatively, in two years she can retire on a reduced pension amount.

The decision she's wrestling with is whether she should:

  • Work two more years and take the reduced pension, which she associates with cutting back on some of her lifestyle, or

  • Suck it up, work for seven more years to get the full pension so she can maintain a similar lifestyle to what she now has?

She also told me her plans for some home improvements. She'd like to make the kitchen, dining and living area open plan and also build an extension to increase her living space.

Of course, I can't say what she should do, only she can make that call. But I do have a few thoughts based on my own experience that may be worth sharing with her.

Now is important

I've spent a lot of time during my life thinking and worrying about the future. While that's sensible in many ways, it's important to also think about the present. When I look back, I probably should have done more things during the journey to where I am today.

After all, the present is certain because it's happening right now, whereas we don't know what the future may hold. For sure, pay attention to what's ahead, and don't be reckless about providing for it, but making the most of the now time is as, if not more, important.

For my friend, being unhappy in a job for the next seven years sacrifices an awful lot of now time. It definitely seems worth seeing how she could make the two year plan work, if not even sooner.

Decide on priorities

Early retirement decisions - decide on priorities

Most of us have many things we'd like to do, but not enough time or money for all of them. We have to prioritise, decide which ones are more important to us.

For my friend, the open plan living would really suit her, and I feel she'd get great enjoyment and value from this.

But I'm not sure about extending the living space. Her child is grown and will leave the nest soon, so with less people is there really a need for more space? If it were me, I'd think about whether the extension money would be better used to accelerate the early retirement option.

Making smart decisions about our priorities can make a big difference both for our present and future enjoyment.

Work options

Spending two more years in a job you dislike is tough. Seven more seems unimaginably so! Surely there must be some other options.

My friend is getting close to being able to retire early, so her financial plans seem quite well advanced.

Perhaps she has more financial flexibility than she realises if she thinks outside of her current reference points. Maybe there are alternative work arrangements that can provide an income to fill any pension gap.

Would her employer agree to a part time role? Is quitting her job for freelance work a few days a week an option? Perhaps even a change in career direction? There are various options which we often don't consider, simply because they're outside of our norms, or because we don't see other people doing them.

I'm not saying these will work for my friend, but they're worth considering just in case one of them hits the spot.

Giving up the salary is scary

It's incredibly difficult to give up a good salary - I remember it almost feeling akin to giving up my oxygen supply! Of course, the reality is that they don't remotely compare, and it's a reminder to keep things in perspective.

I stayed too long in my job thinking we couldn't survive without my salary. Eventually my job started getting me down and, in hindsight, I realise that staying with it was too big a compromise.

I attached too much importance to the salary and what I thought it meant in terms of security. It was only after I got past this thinking that I started to appreciate the choices that I had, and the importance of making the most of the present time.

I suspect my friend is still in the scary stage of salary thoughts. Yes, giving up the salary is scary, but having done it, the reality wasn't nearly as scary as I had built it up to be.

It also helped once I figured out that...

It's possible to fix things later

Hopefully our math is OK, but if we haven't got the money sums quite right, we can still fix it later. This realisation that I can earn in the future (if I need to) helped me eventually cut the salary safety cord. It's not my plan A, but realising this let me make my early retirement decision and maximise my "now" life.

I'm confident it won't be needed, but if I did have to earn in the future it's probably from working just one or two days a week. That possibility (which is all it is) seems a fair trade to secure happiness now.

This thought process may not be for everyone, but I think it's worth my friend at least considering this logic.

Less money doesn't mean less happiness

I'm sure this is a cliché, but it's true. Of course we need a certain amount of money for the essentials, but we quite possibly don't need as much as we think to have an enjoyable lifestyle.

My friend is already thinking about reducing from a two car to a one car family. We did the same, and any inconvenience was tiny, although the money we saved was huge. There are many other changes that can be made that save money without compromising lifestyle.

Our £35 ($50) accommodation in Bali

Today I'm writing this from the balcony of a cottage in Bali, the first stop on our four months of travelling. When I worked we'd probably have paid upwards of £150 ($211) per night, but now we've chosen somewhere for £35 ($50) for two people including breakfast (see picture). It's great, and I'm not sure what we got for the extra money we used to spend. The next place we're staying costs £17 ($24) a night including breakfast.

Pre early retirement, I didn't keep track of my costs in the same way I do now, but I'm convinced that I now spend less while having a better quality of life. More money is not as closely correlated to more happiness as people tend to think.

And finally

I hope my friend figures out the best choice for her and her family. It's their decision, but if I can give them any help, perhaps by just giving some support or alternative perspectives, then I'll be very happy to do so.

The difficulty with early retirement decisions (or indeed any age retirement), is that it's not something we've done before. I've found the experiences, advice and support of other FIRE bloggers massively helpful in my early retirement journey so far, and perhaps I can pay a little of this back with my friend.


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