Personal Finance

I'm in my 30's and set to retire on track with a 2.5% withdrawal rate on my 401k. However, I'm worried about what life will be like without my job

Joey Frenette

Published: November 15, 2024 9:34 am

Some fortunate young Millennials are embracing the FIRE (a buzzy acronym for financial independence, retire early) movement. With the stock market blasting off to new highs on the back of the artificial intelligence (AI) boom and Donald Trump’s recent presidential win, many who stayed invested in spite of the worries have been richly rewarded. But just because one is well-positioned financially to retire early and in comfort doesn’t mean it’s time to drop everything and hand in a resignation notice to one’s employer.

Indeed, being financially able does not necessarily mean you should hit the early retirement button, especially if you enjoy (or at least don’t mind) your job and are fully aware of the opportunity costs of retiring early versus sticking with a career for a while longer. If you’re a Millennial retiree contemplating an early retirement, you should know that the opportunity costs of exiting the workforce are high. In the case of a Reddit poster in their 30s, they’re on such fantastic financial footing that they could retire early and comfortably (so-called “fat” FIRE).

However, there is some lingering doubt about whether they should hang up the skates in their 30s. With an outstanding 2.5% withdrawal rate on their 401(k), their doubts really have less to do with money and more to do with what they’re going to do for the rest of their life in retirement. The good news is that someone retiring in their 30s doesn’t need to stay retired forever. If they get bored or discover new passions that could make them additional income, they can jump right into a semi-retirement.

Key Points About This Article

• Early retirement doesn’t have to mean sitting around and doing nothing all day.
• If you’ve got financial freedom at a young age, you can chase your passions without having to worry about dollar signs.
• Also: Are You On Track to Retire? Take This Quiz and Find Out ^(Sponsored)

Early retirement doesn’t have to mean doing nothing.

Whether that entails freelancing with knitted goods on Etsy (NASDAQ:ETSY), working part-time at a chill, low-stress job (so-called barista FIRE), or just volunteering in the local community, there are more than a handful of ways to find purpose and meaning after one has left their career. Further, if one has any regrets about leaving behind their career and fat paycheck, they can always jump back into the workforce at a later date. Indeed, taking some well-deserved time off is never a bad idea if one is keen on joining the FIRE movement.

When it comes to this fortunate Redditor in their mid-30s, they seem more worried that an early retiree lifestyle won’t be right for them. Indeed, it certainly isn’t hard to imagine many early retirees returning to work simply because the lifestyle was not right for them. And it’s perfectly okay to retire a number of times throughout one’s life. In any case, entering retirement is a major decision and one that’s sure to give many second thoughts about the endeavor.

As nice as “chubby FIRE” sounds on paper, it may not be right for everyone, especially those who just can’t envision sitting on the beach every single day without professional goals in mind. In any case, perhaps prospective retirees in a similar scenario could try a “demo version” of early retirement by arranging a part-time schedule with their current work. If that’s not possible, perhaps retiring for a year or so may give one a better sense of what to expect for the rest of their lives.

The bottom line

Retirement, especially early retirement, will not be everyone’s cup of tea. In any case, having an immense amount of financial freedom (think the option to retire early) to leave one’s work behind may lead one down the route of their true passions. In the meantime, though, I’d urge soon-to-be early retirees out there to not rush things. Take some time to understand your expectations and the change in lifestyle to come. Afterward, you may be able to make the transition more easily and with less doubt.

Remember, early retirement does not have to be permanent. It may be the start of a new chapter in one’s life, whether that entails a career shift, freelancing, volunteer work, hopping aboard the entrepreneur bandwagon, or something else entirely.

As always, chatting with a financial adviser is advisable. Additionally, talking with a loved one who knows you best may be able to help you transition into your ideal early retirement, whether it’s a partial one, a temporary one, or anything in between!