“I never want to retire. I love my job and can’t imagine quitting just to enter a retirement full of isolation and boredom like my grandparents did.”
Ever heard anyone say this? This sentiment makes perfect sense on the surface. No one wants to grow old, obsolete, isolated and bored.
But is this the best approach to your life and how you run your finances?
Even if you love your job and never want to leave it, you should still be saving for retirement and financial independence.
Here is why:
You may find work fulfilling today, but there’s no guarantee that feeling will remain until next year or next decade. As your life changes you might find that work becomes less enjoyable. Other interests and pursuits may prove more interesting than showing up to your nine-to-five.
Alternatively, your passion for your career might remain solid while your working environment changes. The career you enjoy today may be radically different in another decade. Technology and corporate demands alter the workplace, and not always for the better. What might be an enjoyable career helping people or doing novel research and analysis right now could degrade into a bureaucratic morass of checking boxes and shuffling paperwork.
Instead of banking on working forever, the better approach is to have a backup plan that goes beyond “get another job and hope it’s better.”
Name Your Terms at Work
Hate your boss? Think you’re receiving assignments below your pay grade? Worthless coworkers slacking off and forcing you to pick up their workload? Being asked to do unethical or questionable things?
There is a solution. Make your job optional by saving up enough to live on indefinitely. That’s quite a lofty goal but one that enables you to name your terms at work and walk away if you don’t get what you’re asking for.
Financial independence is the ultimate solution to the workplace woes that many employees face. Being able to walk away from a job when you want gives you the key to ask for whatever you want. You can ask for more interesting assignments, a flexible working arrangement, better benefits or anything that would make your time on the job better.
Most people work because they have to. Food, shelter and transportation aren’t free, after all. But imagine a utopia where you are freed from the burden of working in exchange for life’s necessities.
That’s financial independence.
Even though you might choose to work forever, having the ace of financial independence up your sleeve lets you make life decisions based on what’s best for you and your family instead of being forced to work to cover your basic needs.
You may need to take time off to care for an aging parent. Perhaps you find a second calling in life that doesn’t pay very well, such as nonprofit work. Maybe you finally nurture your inner actor, singer or visual artist and want to pursue that passion full time. If you have financial independence, you can do any of this tomorrow if you want.
Start Planning Early
Whether you want to work forever or think an early retirement sounds swell, it’ll pay off in the long run to aim for financial independence. It opens doors to live life on your own terms without the need for a job and all of the time constraints and stresses that come along with it.
When it comes to planning for financial independence, starting early is key. That is why it’s important to get on the path to financial independence well before you begin to think working forever isn’t for you.
Here are three steps you can implement in your own financial life today if this financial independence thing sounds appealing to you.
- Focus on expenses — Cutting expenses will free up some cash to allow you to invest. Pay attention to the big expense areas of food, housing and transportation first. Can you reduce your grocery bills or dine out less? Could you downsize your home or avoid moving to a more expensive house when you get a raise? Do you have to routinely replace your perfectly operational car with a brand-new one?
- Invest — When you start saving, you want your assets to work for you and grow over time. There are many approaches to investing, but the key point is to get your money invested. Growing wealth long term is about time in the market, not timing the market.
- Think about taxes — Tax-savvy planning ties in to the first two bullet points of focusing on expenses and investing. By reducing expenses enough to permit investing, you can thereby afford to contribute to a 401(k) and an IRA. The amount you can contribute to these tax-advantaged savings plans depends on your age and marital status. Regular 401(k) and traditional IRA contributions are tax deductible, meaning you can potentially save many thousands in taxes by taking advantage of these retirement savings plans.
Whatever your age or life goals, you can benefit from planning ahead and preparing for your financial independence.