What is keeping you from a life of financial independence?

My goal has always been to work for ten years and then have enough financial freedom to do whatever I want to do. Whenever I tell people this they seem to be rather incredulous and sometimes say things like, "sure, you could try." Even though I am quite young, I have met enough people to see what keeps them from quitting their jobs and living a life of financial independence. Here are a few of my observations over the years.

1. The places they live - I have met a handful of people who are tied down to their jobs because of their mortgages. There is also a couple I know that could retire right now if they just sold one of their houses and invested the proceeds in government bonds. However, many people toil on to feed their houses not realizing that they could live in so many other nice places. Oftentimes, the location of our homes is based on our jobs, and places with an abundance of jobs generally have higher costs of living. Once the need to live close to work is eliminated it is easy to find a cheaper place to live. Another observation I have is that people generally have bigger homes when they have kids, but once the kids are grown up and gone they do not downgrade their homes. Having two to three rooms that are never used is an extravagance in my opinion.

2. The societal norms - When you try to break away from the norms of society you will get naysayers. Unfortunately a lot of financial advice we get in America is based on this notion that we should retire at age 65 and collect Social Security. When I say that I want to retire when I am 35 I feel that some people think I am a lazy and crazy weirdo. Even though there is no law that says you can retire only if you are 65 I think a lot of people subconsciously believe that is the right and normal thing to do. There are laws that state you can collect certain government sponsored benefits at age 65, but that should not prevent you from living the life you want before arthritis sets in. I think many people are just a bit afraid to step out and be different.

3. Pure and simple greed -
Some people I know just want more and more every single day. If their greed is never quenched then they will never be free from working. Here in the Silicon Valley there are many multi-millionaires or even billionaires who could retire in the blink of an eye, but quite a few of those I have met still work 12 to 16 hour days. I just do not understand that mindset because it seems that they do not have much time to enjoy all that money. It may be that they enjoy working, but I think a lot of people just cannot stop working because they feel the urge to accumulate more wealth.

4. Insufficient funds - Most people including myself fall into this category. Basically we still need a bit more in our nest eggs before we can comfortably live in our retirement. I think a small retirement fund is an issue that is by far the easiest to pinpoint. The problem is that many people I know do not try to do resolve the issue at all. If one wants to retire early, he or she needs to start saving early. It is a very simple concept, but many of my peers feel that retirement is so far away that they do not need to save. The truth is that we all could be financially free so much sooner if we start saving earlier.

5. Familial responsibilities - I do not have kids yet, but I know they are pretty expensive. I respect those who start and support a family, and it is a huge financial burden. Family is only a problem when people use it as an excuse to why they cannot succeed. I think a family that works together towards financial independence can achieve it. A real life example is the cheapest family in America . This is a family of seven that never had too much income, but still managed to save quite a bit of money. If more people treated their family as their strength rather than a burden I believe they can achieve their goals even faster.

I could go on, but I think all of the rest of my observations have to do with people who are kind of stubborn and do not really want to change their lives. It is curious to me that some of them say that they want to retire early, or even right now, but take absolutely no action. I think what most of them need is to change their mindsets and believe that it is possible to achieve financial independence, and start doing something about it right now. So what about you? What is your one big obstacle before you are free of the daily grind?

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Catherine Shaffer's picture

I never want to retire! I'm going to work until I keel over. I would say that one big obstacle to retiring at 35 is that you need to fund not the usual 20 years or so of retirement, but forty or FIFTY! That's a pretty big nest egg. It means you have to accumulate enough wealth to live off the interest only--forever. For ten years, it's a challenge!

I will say the smartest thing I did financially in my twenties was to buy a house. We made a great deal of money from the equity in the house, and banked much of it when we traded up to a larger place.

Catherine Shaffer

Wise Bread Contributor

Guest's picture

i agree that retiring early is wonderful, i did it myself. one thing i caution you about though is having a plan. i assume you do because you sound like you have your stuff together, but believe me if you don't there will be problems. retirement is not like a vacation, it is a lifestyle. you are young. your friends are not retired. the other retired people are older. just a few things to think about. good luck!!!

smiles, bee

Guest's picture
Minimum Wage

Off the top of my head I can think of three things to facilitate relocation.

Multiple streams of income and a freelance lifestyle keep you from being stuck in one place.

Living below your means - specifically, buying less house than you can afford - allows you many more options when considering lifestyle changes.

For example, if you own less house than you can afford, and are at least several years into a mortgage, it's likely you have the option of relocating AND keeping your home. Since your mortgage payment is based on a historical purchase price of X years ago, and rents are based on current prices, you can probably generate a positive cashflow by renting it out. If you relocate to a distant area, just have a good property manager handle the details and send you checks. Of course, you could just sell the house and use the equity to buy another one, or start a business, etc. The important thing is that you have many options.

Guest's picture

I would love to retire early! That is my goal. I think for a lot of people they just wait to win the lottery and never do anything to get there themselves.

I think it's better to get rich slowly (over 10-30 years) then to hope for a 1 in 1,000,000 chance (or less) that you will win money.

Some other reasons people don't "get there" are lack of drive, confidence and focus. It's so much easier to just give up if you don't see immediate results, especially if you don't have confidence in yourself.

Guest's picture

Regarding billionaires/multi-millionaires who slave countless hours each day - my experience is that in the main, it's because they're people who genuinely like what they're doing, they're really driven people, or they're people who don't know what else to do with themselves. I have known some who cashed out stock options, left with great fanfare, played golf (or the equivalent) for six months, then came back to work because they were bored stiff. I've known fewer still who were really "grounded" and had goals and a well-rounded life apart from their careers.

And yes, as you say, there are also those who've fallen into the trap of not ever being satisfied with the level of wealth they have. I've seen many people fall into the "millionaire lifestyle", sort of brainlessly buying a more expensive house and cars simply because that's their idea of what millionaires do. Unfortunately, that kind of behavior can become a kind of treadmill in and of itself.

As others have observed, I have no desire to be entirely free of work. Interesting work is a blessing. However, the advantage of having a stash of money is that one has more choices about one's work, both the nature of it and how hard one works at it. When one doesn't have to work for financial reasons, work can become more fulfilling and fun.

Guest's picture
mike k

i retired at 37. that was 2 years ago. all i've ever been was a bartender. i have no savings and yet i am not worried about my future. i have great cash flow. right now it's decent, but in a few years, it will be fantastic. i get paid every month for doing nothing, i just played my cards right. not bad for being comletely smashed every night in my 20's. i didn't even get serious until i hit 30. i must mention this...i made it AND i didn't steal from my job.

Philip Brewer's picture

Retirement, in the sense that most people use that word, requires a huge amount of capital--so much that it's very difficult to accumulate while you're young, even if you're well-paid and live frugally.

But I don't think "retirement" is really such a hot goal. What most people want, if you talk to them in some detail, is less drastic than that:

  1. They want to quit a job they hate.
  2. They want to have a schedule that lets them spend more time with their family.
  3. They want to have a schedule that lets them travel.
  4. They want to be free to do work that interests them, even if it doesn't pay well.

That sort of "retirement" is much easier to come by than the regular sort. In fact, if it weren't for the way health insurance works in this country, it would be easily within the grasp of any person who lives frugally.

Guest's picture
martha in mobile

I think when people say "retirement", they mean "freedom to choose how to spend their time". And that freedom to choose comes from having money; and having money comes from making choices about how one lives.

lghbob's picture

Really interesting replies.  Encouraging to hear positive people with positive thoughts... and fascinating to hear such a wide range of feelings about retirement.

Am just entering year 19 of a very happy retirement that started at age 53.

For my own part, retirement is a balance of being "free", and having to be somewhat... no.... a lot frugal. 

I'm mostly in agreement with Zin Lu's observations... Looking back, almost all of the points played a part in my decision to retire, and ability to stay retired.

On of the most interesting points was the cost of having children... While I wouldn't change it for the world,  having four children was a major expense... (I figure about $250,000 each in today's $$$).

The only caveat about early retirement, is the possibility of an upsetting major life event... health, wealth, or life altering.  With a basically stable economy since retiring in '89, the financial status has been surprisingly predictable, and the early planning is pretty much on schedule in a "macro" fashion.... though not exactly according to plan.  One can plan for "some" unexpected events, but that planning should be substantial.

Retirement early years are easy, since the ability to go back to work is there as a cushion.  As one ages, the inclination and ability to physically handle work (even mental work) seems to lessen.

A last thought about  Financial Planning.  I believe that many would-be retirees are put off, by the financial planning formulas that exist everywhere.   All that I have seen project income needs and expenses on the basis that the basic capital (nest egg)  should be preserved, and that one should leave that intact, and live off the income.  In order to have done that, I would have had to work an additional 7 years.   Certainly an individual matter, but a plan that "spends down" capital should be considered.

By the way... my own planning was not on a wish and a promise, but resulted from many, many spread sheets, and included highly detailed  budgets, expected costs. inflation, and income projections.  As we went along the retirement path, the planning gave a framework for guaging our progress, and helped in making any necessary adjustments.

Advice?   Go for it!

my opinion only

Guest's picture

I agree with Philip in that the idea of retirement in itself is not that appealing. However, the idea of having more freedom or more flexibilty to either work where we want or when we want so that we could travel more freely and more often, is very appealing. This couples with our desire to spend more time with family as a large part of our family live overseas. I also agree with the fact that healthcare is a huge obstacle in making this happen. The concept of healthcare being tied to your job limits your options and impacts decisions in so many ways.

Guest's picture
Dave W

I was kinda surprised to see that Xin Lu was the author of this (BTW, I really enjoy reading your articles).

I can retire now but haven't. The reasoning isn't because I love my job (I like it) but I think there are 3 areas that need to be contemplated.

Money: For some, the opportunity to gather more wealth is too great an attraction and they will work as long as they can to pad their nest egg. For others, the amount needed to live off a 4% return is staggering. I think most realize that there is a trade off and when they are at a comfortable place, they retire. Some are able to estimate a "critical mass" number and retire the day they hit that number. One of the benefits to living frugally is that it lowers this number quite a bit.

Medical: In some ways related to the above topic but medical coverage for you and your family is another reason to work. You can buy your own coverage but it can be a hefty expense. In my case, a few years will result in a lifelong medical benefit (til 65 when Medicare kicks in). Unfortunately, this benefit is disappearing in many companies and isn't guaranteed in those where it is still offered.

Mind: What are you going to do that gives your life a sense of purpose and meaning. I haven't really figured this one out at all yet. Some people are content to do activities they love, some volunteer, some return to education... I'm still working on this one and hope that in the final 3 years of so that I have left in my career, I find the answer.

Guest's picture

Hi Xin Lu,

For many, many years my own attitude prevented me from even envisioning a future that included financial independence! How I wish I had figured it out at your age (I'm 38 now, and just starting the journey to financial security).

I think at this point in my life, my mortgage is definitely something I need to look at as far as taking a chunk of money I could be using to increase my savings and investments. I just don't know yet if it would be best to sell and then rent, sell and buy an even tinier place (with a smaller mortgage), or stick it out until the market improves. That's my conundrum now.

I can relate to the blank stares that you get when you talk about wanting to retire early (and, retiring, to me, doesn't necessarily mean not working at all, just working because you want to, not because you need to). My family thinks I'm nuts. Granted, it will be a long, hard road, but I think it's doable, and I get my inspiration from people like you and the other commenters, who also realize that it won't be easy but it can be done!

Thanks for your post!

Guest's picture
Cindy M

I remember thinking the way you do. The older I get, the more I understand why the older folks I knew didn't even want to talk about retirement. I'm 53 now and don't know one retiree who is genuinely happy about having so much free time, it can hang heavy, even for those who can afford to do whatever they want. Yes, you can volunteer, travel, etc. But personally, the older I get the less brave I get. I look forward to maybe working half the hours I work but sure plan to keep on doing what I do after I reach my 60's and beyond. Move to another place? Maybe but yes, you get used to your own little neck of the woods. I have plans still, but the older I get, the less exotic they are.

Guest's picture

Get back to us after you've started having kids! Before you've had them you never fully understand how having children upsets all your best laid plans...

Guest's picture
Alex J

These commenters who have commented on how they never want to retire because it would be boring seem to be suffering from a failure of imagination.

I intend to retire at 40 (hopefully) at which time I will travel frugally, read books, be with family, volunteer, play poker and watch tv.

I don't need to be forced to work in a labor camp (no matter how nice a labor camp) just so I will have something to do. These people who can't think of things to do should try to recapture some of their childhood dreams and desires. It's never too late to live your life!

Btw: I don't think it's an accident that surveys of happiness consistently show that older people (aka retired people) are more happy than people who have to go to the labor camps every day.

Guest's picture

I like reading of your plans- we have three kids and my husband does love his job, I freelance and farm (and love both) but we have used frugality as a tool (for creativity and paying bills) in hopes that we some day soon will not NEED any job, just in case.....for those uncomfortable with the term "retirement", I suggest looking into the idea of "unjobbing". It is a good bridge between the ideas of working till you drop, or retiring early. Have fun!

Guest's picture

As a young kid still struggling to plan out the rest of my life, I'm really inspired by your article. But I'm still worried about many things. Is it logical to think that working for about 13 years will pay for rent, medical bills, groceries, gas, car payments, for about 60 years?! Being frugal is great, but that's quite a ratio...

Good planning and confidence are great, but do they pay the bills?

Xin Lu's picture
Xin Lu

Thank you all for all the comments.  I think my vision of retirement is not really a life of leisure.  I just want to do things without worrying about compensation. For example, I really like writing right now, and I used to make jewelry for fun.  These hobbies do not pay all of my bills, but I prefer doing them over my regular job.  I would also be open to working for a nonprofit and not be paid as much I as I do now.  I don't hate my job, and I rather like my company and coworkers, but I don't like the need to go to work.  As to the question of whether or not I can pay for 60 years of living with 10 to 13 years of work.  I can't say with 100% certainty that it would happen, but I believe it is possible. Another comment that resonated with me is that a lot of the financial advice out there tells you to keep all of your principal forever, and I too think that is silly.  The best and most optimal thing is for me to spend everything I have before I die, because I can't take it with me.


Guest's picture

Personally I plan to work for as long as I can. Maybe in the far future i could think of reducing my working days but frankly i cannot think of a better way to spend my days than working in my projects. (I'm an engineer)

I am making a big cushion for the case where i would be forced to retire but it is not an appealing idea to me.
Maybe I will change my mind once I am in my seventies but the words "early retirement" scare the @@# out of me.

Guest's picture

GIven its been 2 years since this post and I have a similar goal as Xin Lu's, I wondered if the goal was still the same and how Xin's progress is toward meeting it.