Choose Early Retirement And Give Up These?

The re-opening of economies after 2 years of pandemic-enforced shutdown has seen a sudden resumption of activities, causing acute personnel shortage across industries. Air-travel, transport, horeca (hotel, restaurants, catering), retail, events, manufacturing…almost all sectors are experiencing the same fate. 

To keep the ball rolling, existing staff are asked to put in longer hours and take on more workload. Do you hear that – the collective groans? In fact, a rebellion – quiet quitting – is trending amongst corporate workers. This mentality probably resulted as a protest to being overworked and under-appreciated.

Covid pandemic has strengthened the notion that ‘you work for your personal life’, not the other way round. It has also provided the pause for many to rethink their life, priorities and the changes they need to make. This has upended the employer-employee relation where companies have been calling the shots and dictating the rules of the game since mass employment took hold from the start of the industrial age.

The Pendulum Swings

Now the scale is tipping towards employees, giving power back to them to design the life they want. It is in this light that many are thinking of calling it quits and take early retirement. The idea of kicking off one’s heels and hanging up the business suit for good is appealing. Liberation at last from the workplace and everything unpleasant associated with it: stress, back-stabbing, politicking, unfair treatment, long hours. No more meetings, project deadlines, annual evaluation, asking for permission to go on holidays. Ah, what bliss!

But wait, let’s not throw the baby out with the bath water. 

Work Has Its Benefits

The term ‘pleasure of work’ does not exist. Try googling it and you’ll be surprised at the dismal outcome. Despite not ‘google-lised’, there are benefits associated with work that should be considered before you throw in the towel.

• Time value: The moment you stop work, your time no longer commands value as it is no longer paid for. Sitting around at home on an off-day, goofing around in the park over the weekend or sightseeing on vacations. These times are paid for when you are employed. How cool is that?

On the contrary, the work of a housewife or househusband in the name of equality, has no financial value because it is not paid for. The hours rendered in taking care of the children, fetching them to-and-from school, house cleaning, grocery shopping, planning and cooking the meals etc, these do not attract any financial payment. Unpaid time just seems less valuable. 

• Insurance: Companies take on medical insurance to cover employees. This is a biggie as medical costs as well as hospitalisation are costly, and increasing. When you are employed, not only are medical procedures covered, income is also assured during recuperation period. This means all expenses and other obligations continue to be covered despite being out-of-action. Once you quit, these benefits end and you need to cover such expenses yourself. 

• Pension/Social Security: As long as one stays employed, pension and/or social security are being built up. Pension/social security payout is the most relied upon retirement income for many, and may be the only source of retirement income for some. It follows naturally that the longer you stay in the workforce, the more pension/social security you will amass. 

Note that pension income is only accessible from specified retirement age, ranging from 62 to 67 years depending on the country and respective company policy. So you need to figure out what income to tap on before you reach the permissible withdrawal age to cover retirement living. 

• Bonuses and commissions: The sweetest of all employment ‘rewards’ has got to be bonuses and commissions. These are always eagerly looked forward to as they represent recognition of contribution and token of appreciation. These are like a form of profit-sharing and depending on seniority and pay-out scale, can be significant making up to 40-50% of total income for some. 

• Perks: The other non-financial aspect of being employed are the paid time-off (maternity/ paternity, sick, study, marriage leave etc), company car, dental benefits, subsidised gym membership, access to company holiday apartments, business class travel etc. While some of these are mandatory (maternity/paternity, sick leave), others are offered as goodwill and a tool to attract and retain talent.

• Mortgage and loan eligibility: Despite changes in the employment landscape to encompass gig workers, freelancers and self-employed (eg influencers), financial institutions still depend on fixed employment income to assess financial credibility. This is a pet peeve for new economy workers. Access to funding for big ticket items such as housing, car or as temporary bridging funds is essential in our modern society. This is the primary reason why it is important to open an overdraft account before you quit and not to pay off your mortgage before retirement. 

• New skills and technology adoption: The business world is at the forefront of social and technological changes. So it endows the best environment to learn new skills and to keep up with latest technology. Many such skills and technology usage are valuable on personal front as well,  increasing your personal value, at company’s costs. 

• Social status: Because work consumes such a big part of our lives, it has become our identity for many people. And society at large grants that status and unspoken recognition based on the assumption that the bigger the title, the more important the person is. 

There is an unspoken social recognition, even admiration, for corporate stature often accompanied by unsolicited special treatment such as tip-top service, priority queue or best seats at the hottest restaurants in town. Imagine if you are the John Doe, head honcho of a bank or a top lawyer, the title and the work you do attract social recognition that is non-existent if you’re just a regular John Doe. I know it is not fair but hey, this is real life and the real world is not fair.

• Purpose and sense of achievement: Besides financial pay-off, work provides us with a sense of purpose and achievement. Humans thrive on purpose as it serves as a beacon in our life. There are many stories of people who went downhill physically and mentally after they stopped work due to a loss of purpose. Outside of work, how many of us have a chance to handle multimillion-dollars budgets and projects in a personal capacity? Having a purpose in retirement is equally, if not more, important in retirement. 

It is thus prudent to establish goals and purpose in retirement. Use the Retirement Canvas to plot out your goals, realistic timeline and finances so you can look forward to a satisfying retirement. 

• Structure and routine: Due to work, we develop a structure and routine that dictate how we spend our time. Going to office 5 days a week followed by free time during the weekend. Our entire working years are built around such schedule. This structure allows us to develop a routine in our life, which becomes the backbone of how we live and organise our life. Once we stop work, this structure crumbles, likely affecting our routine. Some people find the loss of structure unsettling as such monumental changes are not easy to adapt to. 

• Colleagues and Network: 1 of the biggest ‘misses’ I have from stopping work is colleagues, some of whom have become really good friends. Spending 8-10 hours or more daily tackling work issues, meeting deadlines with shared corporate objectives plus having lunch breaks together help groom meaningful and lasting friendships. There is something about shared experiences that lead to deeper connections. It comes from being ‘in the same boat’ and having been there, done that together. 

Sure, good friendships will continue beyond work but it will not be the same as priorities, schedule, pace of life and experiences start to diverge. Add to the fact that less time together striving for common targets will definitely dilute the relationship. Catching up over drinks after work and bitching about work issues build camaraderie like few other ways can.  

• Activities and vividness: Conferences, work trips, training, corporate events, business luncheons, networking events, friendships that spill over into personal life. Life tend to be filled with more activities while you are still working, hence more vivid. 

Stop for a moment and think of your favourite or best moments in life. There will inevitably be some associated with work. While work sucks at times, do not forget that is also brings wonderful moments that define our life, character and relationships. Some of the most amazing people I have met and incredible experiences I have had were due to work. Definitely added colours to my life.

Better Options

Don’t get me wrong, I am not dishing early retirement. Neither am I expressing regrets. On the contrary, I am a living example having left work at 48 (not that early compared to super young FIRE achievers) and enjoying every moment of it. Like many folks, I was disillusioned with office politics and being a hamster on a relentless corporate wheel.

Having been in retirement past few years, I just want to give a balanced perspective from the other side of the fence so you can weigh all aspects before making such a momentous decision. There are many articles and blogs out there trumpeting the joy and freedom of early retirement but there is always another side to the coin. You owe it to yourself to think through. Depending on age, it may be difficult to U-turn and return to work at the seniority you are used to.

Handing in the resignation letter just because you are fed up is not quitting on your term. It just means you blinked first. ‘On your term’ means preparing and exploring the many different types of retirement, especially if the cold turkey way does not serve your personal situation well.

The retirement book is being modernised with new chapters being added by generations after the baby boomers. Retirement will continue to evolve because of changes in society, work and life attitude, demographics, healthcare and technology. The younger generations, growing up in the Information Age, no longer treat work as the be-all and end-all like our parents’ generation.

Acknowledge your dissatisfaction and frustration. Turn this into a positive force by taking firm action to prepare for a better retirement, for example by building multiple passive income streams so you can fund and truly live your dream life.

Because every one of us deserves to live happily ever after, beyond work. 

It’s not how you drive, but how you arrive.  ~ Unknown (a golf saying)

 

Worth pondering,

Savvy Maverick

 

(Main image: Brooke Lark, Unsplash)

 

Disclaimer: The views expressed here are drawn from my own experiences and do not constitute financial advice in any way. Nothing published here constitutes an investment recommendation, nor should any data or content be relied upon for any investment activities. It is strongly recommended that independent and thorough research be undertaken before making any financial decisions, including consulting a qualified professional.