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The 3 fears of early retirement: Losing money, community and identity



  • There is a "dark side" to early retirement, according to Kristy Shen and Bryce Leung, authors of "Quit Like a Millionaire."
  • People usually have three common fears of retiring early, they said: running out of money, loss of community and loss of identity.
  • Using specific savings strategies, attending conferences and meetings, and traveling around the world, they were able to overcome all of these.
  • Visit the Business Insiders homepage for more stories.

Getting through a day of work can be challenging. But getting out of work can also be challenging.

Take it from Kristy Shen and Bryce Leung from the Millennial Revolution. The two former computer engineers quit the job of 31

millionaires to travel around the world. In their book, "Quit as a Millionaire," they said they first needed to overcome the three most common fears of early retirement: running out of money, losing community, and losing identity.

"Fear is necessary to survive," they wrote. "But the point of life is not to hide under your bed and never take any risk. The point of life is to take the leap, but to bring a parachute – just in case."

This is how they tackled the "dark side" of early retirement.

To avoid running out of money, they were strategic about their savings

The easiest way to run out of money under early retirement is to empty out your investment portfolio over the first five years by selling shares to a down market, according to Shen and Leung. To deal with this, they suggest using a cash cushion – a reserve savings fund you can deduct to avoid full portfolio withdrawals over the years.

They also propose to have a return shield, which is a combination of dividends and interest from ETFs – a collection of investments such as stocks and bonds – that can be delivered as cash without selling any assets.

Read more : 8 people who retired before the age of 45 reveal how the decision changed their money habits

Unexpected health services and inflation can also run out of money, they said. But traveling has helped them avoid inflation, since there is one effect per country. They also bought overseas insurance, which is cheaper than domestic insurance plans if you are an American who retires abroad.

"Our experience, after retiring for three years and undergoing a market crash in year one, has taught us that the fear of running out of money is exaggerated," they wrote. "Not only has our net worth grown by $ 300,000, our spending continues to decline. We're safer and richer than when we left."

They made friends at conferences and meetings

Early retiree Tony went back to work a year and a half after retiring early, in part because he missed social interaction. In a podcast featuring fellow Brandon from The Mad Fientist, he said that hopeful retirees must prepare for how to build human connection as they leave work.

Shen and Leung put it simply: When you work, colleagues are your social circle. And others may not understand your decision to retire, they said.

"The confident will be happy for you," they wrote. "The unfortunate will blame you for invalidating their own path."

"The longer you are a pensioner, the more confident you become," they continued. "And if you lose friends by choosing another path, those friendships weren't worth keeping in the first place."

But you also get a new community by joining the FIRE movement. It opens up opportunities to meet new people – something Shen and Leung said they barely had time to do when they worked. Since retiring early, they have gained genuine friendship with people around the world from FIRE-related conferences and meetings.

John from ESI Money also suggests joining a club or gym and volunteering to meet people and socialize.

Read more : What 8 people wish they knew before they retired in their 20s and 30s

Early retirement allowed them to build a better identity

"For some people, what they do as they do is, "John wrote. "When the job is over, they don't know who they are anymore."

He said that to get through early retirement, people need to find new activities to replace the time and meaning they got from work. These could be recreational activities (hobbies, travel, etc.), volunteering (church, nonprofit, etc.) or vocational (a part-time job that helps them feel productive again), he said.

As Shen and Leung put it: "Lose an identity, build a better one."

Being financially independent, they said, doesn't have to be about quitting your job and traveling the world – it's about choices.

"Becoming financially independent is about shaping the life you want," they wrote. "Once you've built a portfolio large enough to cover 4% of your spending each year, work is an alternative, not a mandate. If you want to retire completely like us and travel around the world, do it. like your job, keep working on a more flexible plan. "

They recommend getting rich and then following your passion so you don't have to worry about when or where your next payout will come from. If your passions lead to failure, it will only hurt emotionally, not financially – if, that is, you have a portfolio to trust that pays your expenses, they said.

They added: "There will always be concerns when you go against the norm. But just as it experienced the danger during a turbulent flight, they are most in your head."


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