Save For Retirement Is Essential, Not Sufficient: The Concept Of Financial Freedom

Young people in their late 20s or early 30s think they have come up with the perfect financial plan. Work till the age of 40 and save more money during that time and retire rich. This is a simple and common strategy. I will introduce a few reasons why it is not the right.

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First and foremost, when we become independent, we live our lives in different ways. Some change their lifestyle and some fulfill their needs. We get used to it to new comforts and luxuries. Hence, climbing the ladder of income makes us vulnerable to an excessive lifestyle.

Idea Of Financial Freedom

Secondly, our perspectives of financial freedom are limited and keep on changing in tandem with changes in circumstances and financial status. The blunder we all make where it pertains to financial freedom is attaching 25-50 times of current annual expenses). This is a huge number. We struggle to make meaningful progress in the first three to four years and lose motivation.

The above two reasons are good enough obstacles to our coveted ‘retiring rich’ dream. That is why only a few manage to retire at the age of 40. But even those few people have no clue about the most difficult aspect of retiring early. We think quitting our job and chilling out is easy, but we realize that it is not so only later. Most people who retire at an early age experience a void in their lives. The happiness of quitting a job and having all the time in the world appears to be thrilling at the start. However, that dies down soon. Why? Because, eventually you get bored. Our mind gets used to everything after a while and everything just looks like a mundane routine-exotic vacation, new houses, cars, gadgets, and everything else.

If you are drawing fixed and limited targets to achieve financial freedom often turns out to be illusory. Rather, choose a better lifestyle that keeps you happy—doing what you love to do. If it takes you a little longer time to achieve financial freedom, you will enjoy it along the way.

So, you do not have to check every day or every year whether you have become financially free or not. What about Warren Buffett in his 90s? He has not retired yet. Does he work for money? Of course not!

Because he loves what he does, as simple as that.

What will you do after retirement if you enjoy what you do or relish the process?

It should be something that makes your life more fulfilling and also pays your bills. So, saving for retirement is essential but not sufficient.

Technology and the internet have opened up a lot of opportunities for us. Rather than dreaming of retirement obsessively, a good way to approach your life is to figure out how you can reduce your 100-hour work week to 80, then 60, 40, and eventually 10-20. Having a balanced life with proper attention to health, wealth, and wisdom does a much better job than being obsessed with the notion of “I will work until I attain the age of 40, save enough money by that time and then retire rich."

Finding the answer to the definitive question as to what we want to do in our life to bring satisfaction to self and livelihood for dependents rather than when and with how much money; should be the prime consideration before we start evaluating any such plan of retirement.