Should you stop working if you become financially independent? – A wealth of common sense

A reader asks:

I have an existential question for you. I am quickly approaching retirement age and have a non-boastable level of wealth. Most experts (including my advisor) would say it’s enough money for financial independence. This means that my wife and I no longer have to work. We can do what we want, when we want, if we want. But that sounds boring. What should I do every day, play golf? I like to work. It gives me a sense of purpose. I don’t feel like sitting on my butt all day and doing nothing. I have more fun growing our savings than spending it. Is there something wrong with me? Is it possible to somehow rewire my brain to enjoy our money or get off the hamster wheel?

Most personal finance experts will tell you that financial independence is all that matters.

You spend less than you earn. Live below your means. Create a big pile of money. And once you have that big pile of money, you can do whatever you want, whenever you want, without restrictions.

The problem is that there is no one to help you decide what you want to do, especially if work and financial independence are your main priorities.

This is a first world problem, but something that many retirees will have to deal with in the coming years.

One of the reasons retirement can be such a challenge for some people is because it is still a relatively new concept. Until about the twentieth century, the retirement plan for the majority of the population was that you worked until you died.

In 1850, less than 3% of the population was 65 years or older. In 1940 this was only 7%. Today this is closer to 20% of the population. It is predicted that by 2050, nearly 25% of the US population will be at or nearing retirement age.

In 1880, more than three-quarters of men over the age of 64 were still active in the labor force (and 81% of all 70-year-olds).

Most people simply could not afford their pensions. Of those who did retire, half lived with their children.

If you were 20 years old in 1880, you could expect to spend less than 6% of your life in retirement (2.3 years). If you were 20 in 1990, you can expect to spend a third of your life in retirement.¹

So much free time is still relatively new.

Some people spend their entire lives in jobs they don’t like, hoping that one day they can retire, play golf all day and relax in the sun.

But others find purpose and fulfillment in their work. Relationships can make you happier and many people forge friendships at the office. Work can also keep you motivated.

Researchers tracked Shell Oil employees who retired at ages 55, 60, and 65 over a thirty-year period, from the early 1970s to the early 2000s. They found that those who retired early at age 55 had double the mortality rate of those who retired at age 65.

Part of the reason some people retire early is because their health is declining. But they also found that lack of social and cognitive engagement also played a role. Over my years in wealth management, I’ve heard many stories of people who lost their way in retirement and felt like they no longer had a purpose.

Working longer can have its benefits, even if you are financially independent.

Obviously, working too much can also be harmful if it causes too much stress or forces you to miss more important things.

Work can be part of your financial independence. As with other aspects of your financial plan, you only need a few rules to guide your actions so they don’t become all-consuming.

Here are some work rules I would set in this situation:

• The no-asshole rule. Only work with people you like and respect.
• The no-stress rule. Don’t continue working if it stresses you out all the time. You are not rich if your work causes constant worry and anxiety.
• The no rule. Financial independence should make it easier to say no to invitations, projects, and events you don’t want to do. When you’re younger, sometimes you have to suck it up. That shouldn’t be the case if you work voluntarily.
• The no-regrets rule. Don’t continue working if it means missing out on family matters. No one ever says it I wish I had worked more hours on their deathbed.

Can you rewire your brain this late in life? Probably not.

Retirement doesn’t have to be 18 holes and sitting on the beach all day. You can still find ways to keep your brain active. The typical retirement dream is not for everyone.

But you have to look for ways to bring a little more balance into your life.

Work on the things you enjoy and then find other ways to spend your time.

I talked about this question in this week’s Ask the Compound:



Brian Jacobs of Aptus Capital was on the show this week to discuss questions about options-based ETFs, buffer ETFs and more.

Further reading:
How to be happier at work

¹These statistics come from The evolution of pension by Dora Costa.