Six Myths of Financial Independence and Early Retirement

Since my early retirement in 2020, I have noticed several misunderstandings about pursuing financial independence (FI) and retiring early that are frequently perpetuated by FI content creators and their guests. Here are six common myths regarding pursuing full FI and early retirement. While some of these might be true for some individuals or in very specific cases, they become myths when touted as general truths. It is time to debunk several:

1. I have to keep working because I couldn’t just sit on the beach (or couch) all day.

This work or do-nothing binary has got to go! It is frequently used to justify continuing to work when someone is fully financially independent and doesn’t need the money. The truth is––a life without paid work can be equally, if not more, fulfilling. I’m a proud early retiree and I rarely spend time on the beach sipping fruity drinks or sitting on my couch eating Cheetos. My life is well-balanced with full-time travel, quality time with friends and family, getting plenty of sleep and taking care of my health, hiking, reading, and learning––all with white space to breathe and just be. It has led to a life of contentment I never had when working 40-50 hours per week, to include when I worked my dream job. There are thousands of interesting hobbies to pursue that make for a happy and contented life. By not working my time is mine to control and I love it! 

2. I don’t want to pursue full financial independence with the ability to retire early, as I don’t want to live a life of deprivation or unhappiness to get there.

Frugality is the superpower of FI. Cutting back on spending does not mean that we have to live a life of deprivation or unhappiness––just the opposite. You don’t have to eat only beans and rice, sleep on a friend’s couch, or some other extreme deprivation. My favorite cutbacks enable me to save money while still enjoying the same or close-to-the-same goods or services. These are the “invisible” cutbacks––those that are not noticeable or barely noticeable with a little intentionality (Brad Barret, host of the ChooseFI podcast, frequently echoes this sentiment). I have found that happiness is usually found in time spent with family and friends, time in nature, and learning––most of which can be done without spending a lot of money. As modern-day philosopher Naval Ravikant explains, “Money doesn’t buy happiness – it buys freedom.”

3. Renting is financially better than buying.

For a short term, this is generally true, but for a long-term (~7+ years) buying a comparable home on a fixed rate mortgage and renting it to yourself is usually the better financial decision. This is due to the power of inflation. Over time rents increase at a far higher rate than home mortgage payments and maintenance costs combined. In addition, the owner gets to keep all of the home’s valuation growth despite only owning a fraction of the home. You can find a detailed financial analysis with spreadsheets in this rent vs buy post. When making a rent vs buy decision, run the numbers over at least 10 years. Financial advisors rarely advise investing in the stock market for less than a 10-year horizon. Likewise, we should not invest in buying a house unless we achieve a better result than if we rented. If you can’t do that, rent.

4. You must know what you will do with a specific plan for retirement before you retire or you’ll find yourself with nothing going on and you’ll get depressed. 

Spending time before retirement when I was physically and mentally exhausted working long-hours at my job and fitting in my every-day life chores around that, was not the right time to try out new hobbies or make new retirement friends. Forcing a new hobby into my already busy life, particularly one that would benefit from daytime hours and my full energy, would have added to my burnout and risk me resenting the new endeavor that I might otherwise enjoy. It is completely OK to not know what you want to do in retirement. Leaving work frees up an enormous amount of time and mental energy to explore and try out new things and meet new people. When I retired, I went to graduate school to study history for a year, then I pursued personal financial consulting, then I worked my dream job but quit after a year to travel full time (and this will eventually change again). I learned an enormous amount about myself after retirement because I had the time and resources to do so. I became a minimalist that changed who I am, started writing, and improved my Spanish. The key is that we don’t have to have it all figured out in advance. Protect what little white space you have in your life when you are working and know that retirement will provide ample time to decide what to do next.

5. Pursuing full FI and early retirement is a race.

It’s not, but I’m surprised at how often I hear it implied. Reaching FI actually takes time and is achieved at your own pace. Even with an impressive 44% savings rate it should take about 20 years. My wife and I, due mostly to poor investing, took 30 years after college to reach FI and we retired 15 years early. If you take longer or shorter it is OK. It is your journey based on your life. It is not a race with anyone as achieving FI is often dependent on how much you make in your chosen field of work and your life’s particular situation. While some may be happy spending their free time working side-hustles to earn more money, I didn’t, and you don’t have to either. Follow your own path. It took 19 years before my salary broke 6 figures and my wife’s salary as a public school teacher never did, but we are both separately fully FI. It just took frugality, investing, and time.

6. The “middle” is boring.

I have heard people who are on the path to financial independence extoll that the middle is boring. Meaning that after they have worked out a solid savings rate, optimized their spending, and automated their finances, that life becomes boring while they are waiting to reach early retirement which, as previously mentioned, takes many years. What? Boring? The middle IS life! This is the time to make and cash in on memory dividends. This was the time I enjoyed weekly family game nights, pancakes on Sunday mornings, frequent local camping trips, time reading books aloud together as a family, and taking memorable inexpensive vacations using home exchanges and travel points. This was the time I achieved a sense of accomplishment in my professional life. This was the time I coached my daughter’s soccer team for 13 years. This was the time I went for evening walks with my wife along the trails in our neighborhood. Sure, the time freedom I have in retirement is AMAZING, but I wouldn’t trade away any of the “middle.” Working doesn’t make the middle boring. Boredom is a mindset you don’t have to have. Minimalism can help.

There are many paths to reach financial independence and early retirement. Your path is your own, but it doesn’t have to be a race, it doesn’t have to be boring, and it doesn’t have to be a life of deprivation and unhappiness. Quite the contrary––it can be great! Life in early retirement is amazing, so unless working is truly what you value most, I recommend actually retiring when you get there. So many possibilities await you.