Ask a 20 or 30 something about their vision of retirement and they often shrug. They can barely make ends meet now – how can they try to envision themselves in 40 years? Conventional wisdom suggests that they should save as much as they can. If they save enough, they might be able to retire early! Soon, that conventional wisdom will be labeled as outdated. It does not reflect the changing situation of current retirees and especially the mindset of Millennials who value work life balance much more so than other recent generations.
This post will explore some of the more creative ways someone can retire.
- Semi-retirement. Currently, the most popular alternative. This approach suggests that someone could retire in their mid 50s and work part time doing a fun job until they are ready for full retirement. This is a very common option for many of our clients who have started consulting businesses or have turned a hobby into a side job. In many cases, these semi-retired individuals are working well into their 70s doing something they love.
- Our traditional view of working one career for 45 years may be changing. A very small but rising trend is to take a 4-5 year sabbatical every 15 years of working a full time job. In this case, the individual is enjoying “retirement years” much earlier in life. Working years are broken into three 15 year full time chunks of time and are sometimes delineated by different careers each time. Perhaps, someone takes a few years off to get an advanced degree and reenters the workforce as a consultant or as a teacher.
- Short Sabbaticals. An alternative to the above is to take a year every ten years and work on a reduced schedule. This gives the individual flexibility to travel or do something they love without having to give up their career.
- Extreme Retirement. This is the traditional retirement approach taken to an extreme. In this case, the individual (or couple) in their late 20’s or 30s is saving 70% of their income every year with the hopes of retiring in their 40s. They are taking frugality to the highest level and this concept is starting to turn into a movement.
In all of these cases, planning becomes crucial. The status que and conventional wisdom is tossed out the window and is replaced with a truly customized plan for the individual. If any of these options resonate with you (or someone you know) make sure a financial planner is engaged early in the process to ensure the right plan is in place.
A little bit of forethought early in one’s life mixed with the correct planning can have a tremendous impact on one’s life.