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The Early Retirement Fantasy: Why the Reality's Not Worth It

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Retire by 30! Become financially independent in five years! From magazines to books to websites, tips for ways you can begin your retirement early are available in abundance. It's certainly an appealing idea. After all, who wouldn't like the idea of no longer having to spend the majority of their days working for The Man, sitting in a cubicle, eating tuna fish sandwiches for lunch. (Actually, I'd probably still eat tuna sandwiches even if I were retired.)

All of these authors and supposed gurus claim their advice will make it possible for anyone to retire early, even if they aren't currently bringing in a huge income. And the common answer for us middle-classers who aren't bringing in massive paydays is budgeting -- extreme budgeting. For example, some will suggests that all you have to do is find a way to live on 25 percent of your income and save the other 75 percent.

In theory, such an extreme lifestyle choice may seem doable, even desirable, if the result is retirement at age 35. But if you're considering trying to take that path to early retirement, here are a few reasons you might want to reconsider.

It's Not Sustainable

One of the pitfalls of extreme budgeting is burnout. When my husband and I were paying off our student loans, our budget was tight. And we found ourselves hating that budget because it had no wiggle room. That said, even then, we were by no means practicing extreme budgeting. We found it essential to factor in $20 a week apiece in personal spending money, a short and inexpensive yearly vacation, new old clothing when needed (hello, thrift shops!), and eating out (which usually meant takeout) once a month. Those small splurges kept us on track to continue saving. With extreme budgeting, there is no room for anything but the bare necessities, which is a plan that's generally set up to fail.

You're Not Living in the Present

Because the demands of extreme budgeting mean you'll be living on so little, what will you be living for in your day-to-day life? Sure, maybe you'll be able to retire 15 or even 25 years early, but think about those 10 to 15 years of never spending your money on anything. Is it really worth it to not go on a real vacation for 15 years? Is it worth it to not buy gifts for your spouse's birthday or Christmas or anniversary, for years and years? And if you have children, is it worth it for them to not be able to experience any extracurricular activities or sporting events because of the costs involved? It's one thing if you really don't have the money to enjoy as many of life's simple pleasures as you might wish, but inflicting that on yourself is like taking your quality of life, crumpling it into a little ball, and throwing it in the nearest garbage can.

Life After Retirement: It Doesn't Get Any Better Than This

OK, so let's say, despite all odds, you're successful in your quest to retire at age 30 -- OK, 40. Congrats! Now what? The retirement nest egg you've built didn't have the extra decades to benefit from compound growth that the accounts of those retiring in their 60s enjoyed. So that tight budget you've been living under the last 10 or 15 years? It will just continue, with the only difference being that you won't be going into the office each day. And most of those who claim to have "retired early" continue to find ways to earn money post-retirement, even if the work isn't full time. Otherwise, their quality of life would plummet, even with the extreme budgeting they have to continue.

Maybe you'd be able to claim that although you're still earning money with your labor in your "retired" state, you don't have to work if you don't want to. Well, yes, but would you be able to support the kind of life you want otherwise?

Add it up: While extreme budgeting in the name of achieving of early retirement may sound appealing, the reality is that the drawbacks far outweigh the benefits.

If you really hate working to the degree that you'd consider extreme budgeting for 15 years worth it, maybe the real answer is to find a different job or career. Better yet, if what you really hate is working for someone else, spend your free time finding a path toward working for yourself. Extreme budgeting and early retirement shouldn't have to be the only option. You can do better.

 

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