This is the second part of the Financial Independence Series:
Retirement, often seen as the golden ticket to a life of relaxation, is actually a unique journey for everyone. It’s not just a destination you reach one day; it’s more like a vast spectrum, offering various flavors and approaches to cater to your individual desires. In my last post, I talked about how “retire early” is the flashy part of FIRE (Financial Independence, Retire Early), but there are plenty of ways to interpret retirement. So, let’s dive into four distinctive retirement styles that are far from your standard retirement fare, each giving you a different perspective on what it means to retire.
1. Mini Retirement: Embracing the Joys of the Present
Imagine shaking up the old-school idea of retirement, where you clock out at a specific age and that’s it. Mini retirements are all about tossing that concept aside. Instead, you take extended breaks during your working years to chase your passions, explore new places, dive into projects that set your soul on fire, or just take a break to recharge. I have met someone who does this every few years, and he considers it an adult summer break. Whether it’s a year-long adventure around the globe or a few months to pursue a creative project, mini retirements are about making ample time for the present. Mini retirements however do take some planning as you likely will be leaving your job unless you have a very flexible one. It also means that you will need to go back into the job market when you plan to return to the workforce. These are scenarios that take lots of planning to make sure you get back into your career in stride.
2. Multi-Stage Retirement: Phases of Fulfillment
Multi-stage retirement is a bit like the gears in a car. Retirement isn’t just an “all or nothing” affair. You can start with slower in the beginning, pick up speed in retirement by gradually reduce your work hours, move to part-time gigs, and eventually ease into full retirement. This style is perfect for those who want the flexibility to fine-tune their retirement, ensuring they’re not just financially ready but also emotionally and mentally prepared for each new phase. Going from 0-100 in a car may not be enjoyable for everyone. Although I can understand that it will be for others! This one resonates with me as I have a feeling that I can’t just cut off work cold turkey. Retiring in stages may help me mentally retire without worrying if I have enough.
3. Coast FIRE: The Art of Financial Momentum and Lifestyle Freedom
Now, here’s an approach that’s all about creating financial momentum in the early stages and riding the wave of compound interest toward a more relaxed life. Coast FIRE (Financial Independence, Retire Early) is like finding the sweet spot between financial security and leisure. Coast FIRE works the best when investing earlier to give yourself more time for compound interest to take effect. Here is an example to show someone has a goal of $1 million dollars to retire. If you save $12k per year and invest and get 8% return, you would get $1 million dollars after about 27 years working your job. However, if you saved $12k per year and only invested 10 years, you would have $173k dollars. If you didn’t put in another dime into your investment after 10 years, it would take another 23 years to reach $1 million dollars. Now in this scenario you worked 6 years longer, but you were coasting for 23 of those years… To some that might be worth it.
4. Barista FIRE: The Pursuit of Financial Freedom with a Side of Passion
Lastly there is Barista FIRE. Barista FIRE is like saying, “Hey, I’m going to accumulate enough savings to cover my basic living expenses.” Or maybe even just the majority of your expenses. Then, you can step away from the traditional grind and embrace part-time or lower-paying, less stressful gigs, or pursue something you’re truly passionate about. It’s not about the big bucks; it’s about finding a sense of purpose and satisfaction in your work. The reason why Barista FIRE is called that was because people would quit their full time office job after saving enough to become a Barista. Some did it for the extra money and health insurance while others might have enjoyed the experience.
What Are We Planning On Doing?
As I’ve journeyed through life, I’ve learned that true financial freedom, to me, is all about having the freedom to do what I truly love. I love playing video games, but the thought of being tethered to playing games for 40 hours a week to pay the bills just doesn’t interest me. The idea of restarting my career after a long break also doesn’t sound interesting. I barely want to go back to work after a 2 week vacation let alone after months of being away. Mini retirements are definitely off the table.
Then there’s Coast FIRE, all about taking it easy and coasting through life when you’ve started your snowball that is compounding. But let’s be real, I’m not a coasting kind of person, especially when I haven’t quite hit my financial goals.
So, here’s my game plan: I’ll keep grinding it out full-time in my current career until I’ve stacked enough chips to cover my most basic expenses. It doesn’t mean I could cover my current expenses as it wouldn’t include the amount of traveling I would like. However, once I’ve nailed that, I’ll step back and weigh my options. Maybe I’ll dive into a passion project, something like that Barista FIRE vibe. Or maybe I’ll wade into the Multi-Stage Retirement idea and dial down my hours a notch.
But here’s the kicker, the road ahead has more twists and turns than a rollercoaster. It’s not etched in stone, and I can change my mind along the way because, priorities have this funny way of shifting. In a few more years, when the decision time rolls around, I’ll go with the flow and see what feels right at the time.
So, in the world of retirement, there’s no one-size-fits-all solution. In fact even within these categories that I laid out there are many ways to implement them. It’s all about crafting a plan that aligns with your financial situation, lifestyle, and personal goals. As you can see, each style has its own rhythm and might hit “full” retirement at a different beat. Sure, going all-in and making bank as quickly as possible can help you retire sooner, but you might miss out on some epic life experiences. Retirement isn’t just about hitting a certain age; it’s about living a life that brings you joy and fulfillment, on your terms. So, which retirement style speaks to you, and how will you compose your retirement symphony?