Early Retirement Reality vs Assumptions

Every day people are reaching their financial independence goals and their hard-won FIRE  freedom. If you are one of them or soon will be one of them, then that is when you have the Early Retirement Reality vs Assumptions issues to understand. For some who are looking forward to their new adventure there are two general areas that can cause concern and even confusion when their early retirement reality clashes with their assumptions.

Getting to this place of early retirement means finances are most likely the easiest to master. There are financial planners and online resources that can be used to fine-tune your plan.

A post-retirement plan is needed to figure out:
  • How much is needed after your retirement to keep in your emergency funds.
  • Your investment allocation.
  • What sustainable withdrawal strategy to use.
  • How much is your monthly cash flow amount.

There are two general areas that can cause concern when early retirement reality vs assumptions misses the mark. Finances is one of them but it is the other one related to what we will do in retirement that can cause the biggest mismatch in our expectations.

That being, now that you are no longer spending hours at work, how will you spend all of that free time that financial independence-retire early (FIRE) will be providing you?

After years of being a successful ambitious income earning, super-saver and go-getter, your financial assumptions may be the closest to your retirement funding reality. The harder of the two early retirement realities to reconcile could be what to do with the time you used to spend while working.

Before actually pulling the trigger on early retirement it is far too easy to make general assumptions about our new free time based on all of our pre-retirement day dreams.

Early Retirement Reality vs Assumptions: Your New Lifestyle Cost

Will your lifestyle cost less, the same, or more after early retirement?

Reaching early retirement normally means that there was a sustainable budget and a certain amount of frugal living that had to occur throughout your FI journey. As long as that same mindset is aligned with your early retirement lifestyle assumptions then there will be limited surprises here.

My wife and I created our early retirement lifestyle while we were still working. We simply added to our retirement budget enough to cover a little more travel and some for inflation projections. We could see what our new early retirement budget should be.

Obviously some costs will go away or be much less while other costs, as in our case travel will increase. It is important to honestly look at how much your monthly spending will be after your retirement.

Costs that traditionally decrease. Or will they?

Job/Career/Work related costs. No more having to buy work clothes. Suits, ties, dresses, overalls, steel-toed boots, tools, uniforms, etc. However we all have to eventually buy clothes for ourselves. What is your honest retirement clothing vision? Lots of recreational related or sports specialty clothes or equipment? Shorts, t-shirts, and flip-flops? It is now time to get real with yourself.

Work Commuting Costs. No more bus/train passes or fares, parking fees, and a big reduction (for most people) in fuel and auto maintenance costs. Perhaps even a reduction in the number of autos you have thus reducing car insurance costs too. But if you are planning on increasing your travel and that is by way of your car or RV then these auto related cost may stay the same or be even higher.

Eating Out. Having more time in retirement means more time to prepare your own meals and eat healthier. If your busy working lifestyle included much more eating out then there can be a big savings to your budget in this area. But if you are planning on a lot of travel then this may not be the case.

Utilities. For many of us while we were away all day at work we seasonally turned our home’s heat way down. On the flip side we turned our air conditioning temperature setting way up. If now we will be home most of the time, our utilities may need to be looked at as whether there will need to be a change in our utility budget.

Having more time to look for and use discounts

Many early retirees are already discount seeking pros. It comes with living frugally to get to financial independence. However my wife and I found that once we retired we became even better at it.

Another area that we can take advantage of discounts was in last-minute and happy-hour deals. Flexibility in our travel and other activities can be a new money-saving advantage to the early retiree.

Early Retirement Reality vs Assumptions: What to do with all your hard-won free time

Those that reach early retirement are usually an ambitious lot. They are most likely not the type of people who envisions a retirement of watching TV all day or parking their keister on a rocker for the next 30 to 40 years.

I can bet many of you reading this are saying, “I know exactly what I want to do once I retire.” The reality of this issue may surprise you at how unprepared you are about your assumptions.

The non-financial aspects of early retirement are as important as all the financial ones. It is what we retire to that makes for a happy, healthy, and enjoyable life. It takes an honest assessment of what it is we want to do in our retirement with all of our free time.

Spending time traveling

I mentioned above considering plans for travel as it relates to an early retirement financial reality-check. It also comes into play for how we spend our time. Most people can’t travel year round nor want to. Take the time to set a realistic vision of how much of your time you will be spending in this activity.

Staying social and connected to your family, friends, and community

Many early retirees find that their social network was mostly work related. I sure did and it took a concentrated effort to increase my circle of friends in my community. Make a plan to be social by going to places where you can meet new people and stay connected or reconnect with those you are already close to.

Consider volunteer opportunities, joining clubs related to areas of your interest, or any other activity that allows you to get to know your community neighbors to enjoy a fuller life. The most priceless experiences we can have are those we share with people we care about.

Have a plan to live an active life

Staying active can offer multiple benefits. It not only allows us a way to spend our time in a positive way but also gives us better health. Some of our activities can also add to our social life if we choose to participate in team or group activities.

Plan to have a varied active lifestyle. If all you do is golf 7 days a week it may become less enjoyable over time. If you don’t already have multiple hobbies then investigate and add new hobbies. Variety will allow you to never say you are bored in retirement.

Early Retirement Reality vs Assumptions- Staying activeStaying active doesn’t have to cost money. My wife and I go hiking on the trails near our home 5 to 7 days a week. It is amazing how much better we feel afterward. That and how much we miss it when we are not able to get out there.

Think of ways to move. A bicycle to cruise around on is both fun and healthy. There are many low or no costs ways to stay active.

Aside from physical activity make a point to keep your brain active. Make curiosity a priority and always learn new things. Plan to dedicate time in your day to research and investigate new things and any concepts that peak your interest.

Pursue your interests and passions in an encore career or start a business

I always intended to retire early and often and I took on a couple of opportunities I was interested in learning and doing. I then retired again once I felt I was done. But I am still always keeping an open mind towards any new opportunities.

Even taking on a part-time job can add to your social life, allow the flexibility you need to travel and be fun to do when you choose a retirement job. One that is aligned with your interests, skills and passions.

In Conclusion

It is easy in our enthusiasm and excitement when we retire early to overestimate or underestimate our financial and what we are retiring to readiness assumptions.

Early retirement is a wonderful event in one’s life. There is plenty of time to sit back, take a deep breath, and do some honest assessments of the best way to take advantage of our rat race freedom.

How about you? Are you ready to deal with and reconcile any Early Retirement Reality vs Assumptions gaps?

6 thoughts on “Early Retirement Reality vs Assumptions

  1. Great post, I’m still a while away but this is really helpful. I’m working through what I’m moving towards, rather than just away from something (even though I enjoy my job).

    1. Thanks for the comment PE. I thought I had it all figured out when I retired the first time. My social situation was worse than I assumed. It took quite a bit more effort on my part to reconcile that. I am very happy I did it. I think everyone who retires will find some kind of gap. its a matter of getting as close as possible with our readiness assumptions and acting on the gaps between that and the reality once we are there.
      Tommy

  2. These are all really good points. It’s really important to keep these things in mind when you are coming up on your retirement years. Considering the costs beforehand and planning ahead will certainly make the process much easier when the time comes. Nicely said! Thanks for sharing your tips!

    1. Thanks for the comment Morgan. I think everyone who retires will at first find that there are things that were missed in their retirement lifestyle planning. Hopefully with some assessment and an action plan it will quickly reconcile their assumptions with their reality. For myself, my release from the rat race was such a happy occasion that correcting my missed assumptions was a welcome part of my new early retirement adventure.
      Tommy

  3. Hii
    Great post!
    All tips really beneficial in order to know the reality of early retirement.It is true that early retirement is a wonderful period in one’s life.So,these points really help us out in order to plan the retirement in the best way.

    Thanks,for sharing this valuable information with us.

    1. Thanks for the comment Henry. I am happy to hear that you found the post to be of value. It’s amazing how after years of careful early retirement planning and execution there are things that weren’t considered or were missed. Sharing what my wife and I have discovered in our early retirement is what this Leisure Freak site is all about. Thanks for stopping by and your comment.
      Tommy

Comments are closed.