Early Retirement Or Better Work Life Balance : Which One Is Worth Achieving?

Individuals have always aspired to retire early. And such aspirations would definitely continue to exist in the future. But most of the time, we aspire for early retirement without verifying the need for it. A lot of the time a better work life balance may actually be what we are looking for.

So we need to understand which one among these would serve us better. But what factors are to be considered when making this decision? And what are the implications of choosing one option over the other? The answers in today's blog post.

The Underlying Reasons

When asked why they would like to retire early, some people may offer reasons such as :

1. I have a hobby which I am passionate about. I want to be able to devote more time to it.

   
   

2. I want to start, monetise and scale up a business of my own.

Such reasons show that the person offering them has a clear purpose in mind. Working towards it would be enough to fulfill them. Such people can therefore consider early retirement a lot more seriously.

Another set of reasons offered to this question include :

1. I'm desperate to free myself of the corporate rat race.

   
   

2. My boss/team/work environment is extremely toxic. It's getting to be too much for me to take.

3. I don't have any reasons as such. I just like the idea of retiring early.

Early retirement is not an aspiration for such people. It is merely a vague desire or an escape route. Stepping into early retirement would most probably leave them feeling unfulfilled over the long term. It may therefore benefit them to prioritise a better work life balance.

Approach To Life Post Retirement

Early retirement makes a lot more available time each day. This is because our working hours turn into leisure time. We must therefore have a clear plan for what we would do with all that extra time. For most of us the plan centers around one activity (say going on vacations or pursuing a hobby). But this simply isn't sustainable. Our plan must translate into a daily routine we can follow consistently. Retiring without this may leave us feeling unfulfilled even though we can financially afford early retirement.

Those who have a clear plan for their time can safely step into early retirement. Those who don't can consider delaying early retirement until they figure one out. A good way to do this would be to take a sabbatical for a year or two. During the sabbatical, we can simulate the post retirement lifestyle we may have imagined in our heads. If we find it to be sustainable and fulfilling we may transition into early retirement. If not, we may consider working until we figure out an ideal plan.

Implications Of Pursuing Early Retirement

Aspiring to retire early is natural. But pursuing early retirement comes with challenging implications. They can be understood through concept of Zero Real Returns. It shows that achieving early retirement requires us to save anywhere between 2 and 3 times our annual expenses each year. This needs to be done consistently for at least 15 years. This is assuming that the individual begins accumulating around 30 and wishes to retire at 45.

Achieving this demands a significant degree of discipline. It may also require significant lifestyle compromises in most cases. This may be very hard to do for most people. We must hence introspect honestly and decide whether we are willing to meet these demands.

Improving Work Life Balance

I tend to ask all of my clients who aspire early retirement the following question.

Would you still want to retire early if your job were less stressful and more flexible?

And the answer invariably is no. This is a clear indication that they don't need to retire early. They need a better work life balance. It is definitely not easy to dictate the pace and stress levels in most jobs. But we can definitely make a conscious effort to do so.

We must actively find ways to create leisure time for ourselves. This may require us to decline additional assignments beyond a point at work. Declining additional assignments may mean that our professional growth is affected. But professional growth is never worth compromised physical and mental health.

We must also look to keep adding new skills and qualifications to our arsenal. This would help us demand a better income and boost our professional growth. Getting promoted a few times would allow us to delegate work assigned to us. This would reduce the burden on our shoulders. It would allow us to work at a more relaxed pace. Here are a few more things we can do to improve work life balance.

The Last Word

Early retirement is a perfectly plausible aspiration to have. But Early retirement would be rewarding only when we have either or (ideally) both of the following :

1. Mastery over the art of spending time with ourselves

   
   

2. A clear, sustainable plan for what we will do with our time on a daily basis post retirement

Stepping into early retirement before reaching such a point may leave us feeling unfulfilled post retirement. Achieving a better work life balance would give us purpose and keep us engaged until then. In the meanwhile disciplined investing combined with a conscious effort to improve work life balance will most likely do the trick.