Financial porn like this Time article about early retirement makes me grind my teeth. Like other porn, early retirement websites like the one described sell a false narrative about living an impossible lifestyle.
Early Retirement Stories Don’t Check Out
Let’s look at how the narrative in this Time article doesn’t add up:
First, the couple described earned more than $100K a year. Most households don’t gross $100K a year, which makes these massive savings impossible. According to the U.S. Census Bureau, the median household income is around $55,000. It’s easy to save and invest massive amount of money if you’re making twice the median income. So, this story is available only to the top 10 percent at best.
Second, this couple didn’t retire early. They went into business for themselves. They publish a blog that earns them nearly the median household income. That’s nice for them, but they aren’t retired.
Third, while amassing their nest egg, they lived in very affordable housing on a biking route to work. That’s a two-headed unicorn for most people these days.
Fourth, for tax purposes this couple “lives” in Washington state, one of the few states with no income tax. Great for them, but not available to most people. I use quotes here because they actually reside and work full-time outside of the US.
I could go on, but hope you’re seeing the plot holes in this narrative. Even this recent New York Times article acknowledges the privilege behind many of the early retirement websites current in fashion.
Early Retirement Is No Walk On The Beach
One early retirement blogger, who goes by the handle Financial Samuri, opened up to MarketWatch about the sometimes-difficult transition in leaving the community, identity, and purpose of paid employment:
“I’m an extrovert who enjoys constant human interaction,” he told MarketWatch. “Losing the constant camaraderie of colleagues, competitors and clients was the most difficult to deal with. So much of my social network revolved around my job because I consistently worked 12 hour days.”
[He] didn’t give in to the doubt though, and feels that his perseverance has paid off. Not a day goes by that he and his wife are not thankful for retiring early, he said. “There’s always another dollar to be made, but never another second to create,” he said. “Once you have enough money to live comfortably, having more money won’t bring about any more happiness.” Still, he acknowledges this lifestyle isn’t for everyone.
The One Useful Part
Still, stories from early retirement websites contain useful bit of advice. The Time article rightly points out that nearly two-thirds of U.S. household spending goes to three expenses–housing, transportation, and food. This couple correctly focused on these big expenses to save big money. If you’re looking to keep more of what you earn, look at these three categories. Buy less car and house then you can, and don’t buy more food than you can eat. (The U.S. Department of Agriculture says that the country wastes 30-40 percent of the food supply. Imagine if you could cut your monthly food bill by 30-40 percent and invest the difference.).
I’m all in favor of frugality and investing and financial independence, but don’t torture yourself with this type of financial porn.
(Image courtesy of PxHere)