The Real Reason We Want to Retire Early (But Shouldn't)

Wanting to feel good is part of human nature. But, what makes us happy and why? Freedom of choice, free enterprise, free ice cream? Actually, an unexpected treat does bring us joy! There are also treats we purposely work for, like freedom from, well, work.

Financial independence provides the freedom to retire. But, is a job-free life actually more satisfying? One of the greatest challenges of financial independence is conveyed in the term itself: it can be so focused on personal finance management that the magnitude of independence is undervalued. The data becomes the happy place instead of leading us to a real happy place.

While the science of happiness may seem like a topic best left to psychologists and self-help gurus, this growing community focused on quantifying and maximizing wellbeing can offer valuable insight for adopting a better retirement plan.

<<GRAPHING HAPPINESS>>

Back in the 1970s, Richard Easterlin cross-examined responses from thirty surveys of subjective happiness with data on wealth in the respective countries. This study—which showed that happiness stops increasing with earnings after a certain point—introduced what is known as the Easterlin Paradox and formed the foundation for happiness economics.

Subjective as it may seem (or actually be), the point is that money is only one source of capital needed to live a richer life. And, as more studies have been published over the past few decades, there is a striking pattern that gives a shape to human happiness over our lifespan.

A recent analysis of seven surveys, including 1.3 million people randomly sampled from 51 countries, emphasizes a universal phenomenon referred to as the u-curve of wellbeing. This curve trajects that we are happiest during our youth up until our 20s, and then do not exceed that initial level of happiness until we reach our 60s. In other words, being middle aged is not the best of times for many of us. Thank you science for validating that!  

 A compilation of results of seven different studies emphasize the u-curve of happiness takes a serious dip during our middle-aged years.

A compilation of results of seven different studies emphasize the u-curve of happiness takes a serious dip during our middle-aged years.

 <<GETTING TO THE BOTTOM OF HAPPINESS>>

On any given series of bad days, the infamous midlife crisis is an easy scapegoat. And, some now say we can legitimately blame our blues on the realities of approaching fifty. Across different nationalities and diverse cultures (and even species!), data shows that the overwhelming majority of us experience our lowest point around midlife. But, while graphical evidence seems to indicate the slump is correlated with age, a closer look helps us realize that the stress of a typical middle-age lifestyle might really be the major determinant of our happiness crash.

 Dreams of early retirement began at a young age

Dreams of early retirement began at a young age

Consider this common life story: we start making our way in this world all bright-eyed and bushy tailed (or bushy headed like me). Growing up and into our 20s, we are exhilarated by our ambitions. The future will be great once we we’ve got that exciting job, beautiful family, nice home in the cul-de-sac… Then, in our 30s and 40s, we begin noticing we aren’t as happy as we thought we would be.

The pressure of keeping up with the Joneses hurls us into our 50s with the stress of career and parenting and trying to balance spending with saving. Somewhere on the way to eventual retirement, we start to feel disconnected from what gives us a sense of purpose.

Another study reveals a strong inverse correlation between happiness and stress. And then there’s the not-so-surprising fact that personal finances and jobs are leading causes of angst. These are inter-related revelations we can act on!

We have to understand what our stress costs us. Promotions, bigger paychecks and buying everything we (think we) want might can give us a quick happiness high but actually become killjoys over time. Just as Easterlin pointed out in the 70s, return on earnings has its limits.

Once we reach a level of financial security, there is a reorientation of the inputs that give us happiness. This can help explain why seniors—despite the challenges of aging—still report greater happiness than their 50-year-old selves. Aha, this is making total sense! Aha, this is making total sense!

There is a feeling of liberation that comes when professional expectations ease, kids are grown and savings accounts are sufficiently funded. The unshackling from common mid-life stressors provides a freedom to reconnect to our purpose, to the people we care about and to discovering new experiences.  

Considering all of this together, it becomes obvious that the late-life upward slope of the u-curve of happiness correlates to (traditional) retirement. So, why are we waiting until later in life to pursue what gives us greater satisfaction?

<<(RE)CALIBRATING OUR HAPPINESS CURVES>>

Scientific evidence validates why we want to (and should!) focus on reducing stress and gaining happiness today. While retirement calculators gives us a path to financial goals, life is a more complicated data set to compute. Fulfilling freedom is only partially a numbers game.

Taking mini-retirements as planned periods of rejuvenation and personal development is a strategic move to defend against our statistical likelihood of a midlife crash. Intentionally eliminating meaningless things and stressors creates time and space to live life to its fullest at every age.

In an era of epidemic work burnout and information overload, a mini-retirement offers an opportunity to deliberately maximize what our personal and professional satisfaction. Sometimes you need to spend money to make money and, in life, you need to do less to create and experience more.

So why not build your version of financial freedom to take a purposeful reprieve from the rat race and rebalance your stress and happiness curves today?

We’d like to know: where do you consider yourself on the u-curve of wellbeing?
What has been your greatest struggle or triumph trying to find happiness with freedom?