Most of us in our late 20s or early 30s have this universal feeling, “I will work until I attain the age of 40, save enough money by that time and then retire rich.”

Seems like a reasonably simple plan especially for those who start on this plan early in their careers, right?

I disagree.

I think this “work till 40, save aggressively and retire early” is a flawed proposition. Please allow me to explain.

When we start earning more, we also get used to a better style of living. Not only that, by having a lavish lifestyle, we continue to be at the same happiness level. Our mind gets so adapted to the new comforts and luxuries that we cannot live without them. Behavioural economists often refer to this effect as the hedonic treadmill. Riding the income ladder makes us vulnerable to the inflated lifestyle which prevents us from breaking free.

For most people, the understanding of financial freedom is always a little fuzzy and keeps changing with a change in circumstances and financial status.

It’s a big mistake to attach a large number (ranging from 25-50 times of current annual expenses) to financial freedom. As a result, two things happen. Either that number is so big that we struggle to make any meaningful progress in the first three to four years and lose motivation. Alternately, as our financial status improves, the earlier number starts looking too small given our changing life patterns.

The above two reasons are good enough obstacles to our coveted “retiring rich” dream. That is why only a few manage to retire at forty. And just fewer among them realize the most counterintuitive aspect of retiring early, i.e., retirement isn’t all about quitting the job (work) and chilling out. The reality is that most people who retire early experience a void in their life. The happiness of leaving a day’s job and having all the time in the world appears really thrilling at the start. Like all other short-lived pleasures of life, this initial euphoria of retirement will die down. Sooner than you’ve expected.

Why does that happen?

You quit your job, travel the world for a while, and then eventually get bored. Our mind gets used to everything after a while. So everything that you fancied — exotic vacations, new house, new car, new gadgets — looks like a mundane routine.

Happiness is a journey, not a destination. Hence, drawing fixed and definite targets to achieve financial freedom often turns out to be illusory. Instead, it is far more realistic to choose a lifestyle which is happily spent doing what you really like. In doing so, even if it takes you a little more time to be financially free, you’ll have a lot of fun along the way. And because you have so much fun, you do not check every day or year whether you have become financially free or not.

Why do you think the billionaires like Warren Buffett and Charlie Munger haven’t retired? Are they still working for money? I don’t think so. They are still working because they love what they do.


The prime consideration for evaluating any retirement plan shouldn’t be about when to retire and with how much money. A more important question to ask is — what we want to do in our life which brings satisfaction to self and livelihood for dependents?

For us in SSIAS, the primary quest is to live a fulfilling life through our research and investment in the stock market.

Leave a Reply

Your email address will not be published. Required fields are marked *

six + 16 =