I’m often interested in the meaning of words, phrases, or concepts. Semantics, nomenclature, whatever you want to call it, I find it interesting how much variability there is in what we all mean when we say different things. Think of words like “capitalism” or “feminism” – these probably mean something different to every person who uses them. People proceed with the belief that these things have an absolute, concrete and unchanging meaning (the meaning that person uses), and people are then surprised when we have big disagreements.
Retirement is another word that everyone seems to have their own idea of what it means and assumes that everyone else is using it the same way. With a view to history, the way we think of retirement is an intensely modern notion. The Reformed Broker put this quite colorfully when he wrote “You know what your retirement plan was a hundred years ago? You fucking died.” My father talks about when his grandparents got their first old-age security check. They didn’t believe they were going to actually receive it until the check cleared. When it did they felt like they’d won the lottery. It’s amazing that something so firmly entrenched in our society started within living memory.
Most Common View
The typical person would probably define retirement as something like “sitting around in your undershirt, watching daytime television and not having to work for the rest of your life”. If we want to be more high-minded about it, we might say retirement is “an acknowledgment from society that you’ve done more than your fair share of work and should have your basic needs guaranteed”.
The “working until you die” quote above references how people viewed “retirement” over 100 years ago. In short, no such thing existed. Everyone was expected to work to the best of their ability for as long as possible. Once a farmer was too old to work the fields, he would help train his grandsons, repair equipment, or work the family booth at market. Part of the social contract was that inheritances came with the obligation to care for elderly and infirmed relatives who could no longer take care of themselves.
Early retirement can take a few different forms. It could mean someone who was a good saver or who got a buy-out package from their employer retiring at 59 or 62 instead of 65. It can also mean someone who comes into a large sum of money, perhaps a lottery, inheritance, or selling a business, and doesn’t have to work for the rest of their life.
Philip Greenspun wrote an article on early retirement which deals with the last of these possibilities. He created a company during the dot-com boom and made enough off of it that he never needs to work again. In the article, he discusses some of the challenges in this new lifestyle. Part of the article I particularly enjoyed is where he discusses people expecting him to buy things like a private jet, assuming he can afford it since he’s retired early. He draws their expectations back to earth by asking them if the older people they know who are retired can afford private jets? There’s a difference between not needing to work and being able to afford any imaginable luxury.
Extreme Early Retirement
Your Money or Your Life, Early Retirement Extreme, and Mr. Money Mustache each presents a philosophy of extreme savings that allows you to “retire” far below the average age. I suspect each of the three would agree with the statement “the majority of Americans would be able to retire within 5 years if they were willing to make radical changes to their lifestyle”.
There is a lot to unpack from each of these philosophies, and there are important caveats, but I feel like each is doable. This is obviously different from retiring at 65 or winning the lottery. Yet, it’s still called retirement.
Changing The Work You Do
Some would call no longer having a 9-5 job retirement. My Ph.D. supervisor once said that she would have liked to “retire” when her daughter was born and be a stay-at-home mom. Telling a stay-at-home mom that she doesn’t work is a good way to get punched in the nose. Similarly, some people will leave their corporate job, do something more fulfilling, and call it “retirement”.
Derek Foster wrote a series of Canadian investing books, starting with Stop Working: Here’s How You Can! which advocated buying blue-chip dividend paying stocks and retiring off of the payments. He sold the books under the banner that he is Canada’s youngest retiree. Some commentators wryly note that he’s working really hard publishing books for someone who is “retired” – he’s up to 6 books since retirement and actively promotes them, going to libraries and bookstores. He also now sells a video series where people can find out about his recent trades and thoughts on various investment concepts.
Radical Self Sufficiency
There have been books, such as Charles Long’s “Living Without a Salary“, Dolly Freed’s “Possum Living” and Amy Dacyczyn’s “The Complete Tightwad’s Gazette” which each advocate techniques for dramatically lowering your living expenses to the point that you don’t need to work a full-time job to pay for them.
What Can We Do With All This?
Some might argue for a new collection of terminology to describe each of these situations. Some early attempts at this include findependence, FIRE, mustachians, conservers, ERE, etc. None of these have any meaning beyond the group who discusses the ideas, making them next to useless in my opinion. It would be great to have a term to use in these situations that would be understood by your mail carrier or your spouse’s cousin at a wedding but, unfortunately, there doesn’t seem to be anything like this in the popular vernacular.
What do you envision for your “retirement”? What term do you use to describe it?