In past years, the outlook for retirement looked something like this: work for 3 or 4 decades, clock weekday hours at the office, put money in a retirement account along the way, then retire in your 60s or 70s.
But younger workers often focus on an optimal work-life balance, and their financial choices reflect more lifestyle design than retirement focus — finding income to enjoy life now, developing alternative income sources, and hoping to transform their lives outside of the traditional 9-to-5. The goal isn't so much early retirement as it is financial independence.
Working into retirement years to enjoy more freedom earlier on isn't for everyone, but it can be one way to get what you want out of life. The key is to figure out what type of lifestyle you want to live and create a plan that allows you to live that lifestyle sooner rather than later. It's a lifestyle plan that millennials have embraced, introducing possibilities and inspiration for those younger and older.
Making smart investments (and living frugally) early on
Peter Adeney — the Canadian founder of the popular website Mr. Money MustacheOpens a new window in your browser. — “retired” early in Colorado after spending years living a lifestyle about 50% less expensive than most of his peers. He invested his surplus income in, as he put it, “very boring conservative Vanguard index funds and a rental house or two.”
By investing in a diversified, yet conservative portfolio—while living frugally for a few years — Adeney was able to create the type of cash flow that allowed him to make use of passive income later on.
Today, Adeney has a fresh take on retirement. While he still runs a business, his decades of frugal living and conservative investments give him plenty of time to also engage in passion projects and spend time with his family. He participates in charity work and fills his days with activities he finds meaningful. Adeney’s also put on financial retreats for others who want to follow in his footsteps and lead what he calls the “Mustachian” lifestyle.
Working overtime, then enjoying freedom
At 32, Robert Farrington quit his corporate job to launch The College InvestorOpens a new window in your browser. — a financial education website. Once he had saved enough and the business was generating income, Farrington left the traditional workforce.
“I did most of this [upfront] work in my spare time, as a manager at a local retail location," Farrington said. “It required some sacrifice of time, but in the end it paid off.”
Farrington continues to run the business, but he does so on his own terms. He can afford to hire others to help him with big projects, and he sets his own hours.
Unlike previous generations that waited until far later in life to spend time outside of the office, Farrington's entrepreneurial prowess gave him the freedom to live as many retired people do: at his home in San Diego with his wife and 2 children, able to travel as he likes.
Downsizing property, upgrading adventure
Once she paid off $38,000 in student loans and her online marketing business took off, Michelle Schroeder-Gardner quit her financial services job. Now, Schroeder-Gardner runs her blogging business from, well, anywhere with a Wi-Fi connection. Even though her earnings are comfortable enough to enjoy a lavish lifestyle, she and her husband choose to keep it simple.
Rather than maintaining a home base, Schroeder-Gardner and her husband (and their dogs) travel North America in an RV.
For the couple, downsizing the house meant an opportunity to live a different kind of retirement adventure.
“When we made this decision, we downsized a lot,” she wrote on her blogOpens a new window in your browser.. Yet despite what many would consider a sacrifice, Schroeder-Gardner and her husband see the decision as a way to get more out of life.
“Being frugal is not forced upon me, and it's become a natural part of my day-to-day life.”
The many paths to financial independence
It's possible to retire early using an extreme savings approach, like Adeney, or by building a location-independent business like Schroeder-Gardner or Farrington. Thanks to a multitude of remote or freelance economy work options, it's possible to work your own hours, from the comfort of your home or care.