A few days ago, I read this great post on Len Penzo’s blog about two paths to retirement …
… a hardworking, straight-shooting early retirement vs. a slow, leisurely traditional retirement.
Len compared the two models to climbing a mountain.
You can either shoot straight up the face, gaining altitude quickly (but sacrificing some scenery during the climb), or you can take switchbacks, acclimate, enjoy a picnic, and eventually reach the summit.
It’s a beautiful analogy, but I think a few routes are missing. I’ve embraced a different style entirely.
Len’s blog post spurred me into thinking about the many models of retirement. I’m going to outline four styles that I’ve encountered. There are certainly more than four models; feel free to voice supplemental methods in the comments.
As a disclaimer: On this blog, “retirement” is different from “financial freedom.” In this post, I’m defining “retirement” as escape from the daily grind. “Financial freedom,” on the other hand, is sustainable wealth. The two are sometimes, but not always, correlated.
There are many ways to escape the daily grind, even before you’ve built sustainable wealth … as you’ll see below.
#1: Traditional Retirement
This is what the average person imagines when they hear the word “retirement.” Work until you’re 65, save 10-15 percent throughout your life, and retire with enough money to support yourself through your golden years. If you did it well, you’ll have enough disposable income to play a few rounds of golf and take a Carnival cruise.
#2: Early Retirement
This is similar to the above model, but accelerated. Earn a high income when you’re young. Save like a maniac. You’ll follow the same basic model (an uninterrupted period of work followed by permanent retirement), but you’ll quit your job in your 30’s or 40’s rather than in your 60’s.
The mini-retirements model is centered on retiring frequently. This model alternates periods of intense work with periods of complete rest. If quitting your job was a sport, the mini-retirements model would be “interval training.”
You might, for example, work for 2 years, save $30,000 during that time, then spend the next few years traveling. If you’re an entrepreneur, you could work two weeks per month, then take the next two weeks off. I’ve heard about others who work for 2-3 months, then take a month off.
This is precisely the model I followed when I graduated from college, worked for three years, and saved enough during that time to spend the next 2.5 years traveling the globe.
This model allows you to escape the workforce while you’re young. Traveling at age 22 is different than traveling at 35. It’s not ‘better’ or ‘worse,’ it’s just different. (If you become a parent during those intervening years, the experience is radically altered). This route allows you to experience freedom and escape at every stage of life, including your twenties.
This mini-retirement model has always been my preferred style, even before Tim Ferris popularized it in his book The 4-Hour Work Week.
#4: Permanent Semi-Retirement
People who are permanently semi-retired never level up to working 40 hours per week. That type of work schedule intrudes on their life too much.
Instead, the permanently semi-retired prefer to coast by, working part-time throughout their lives, but also enjoying ample leisure time which they can spend hiking, gardening, tinkering, and pursuing whatever hobbies capture their spirit.
Many of my friends fit under this category. One friend has never worked more than 25 hours per week, throughout the decade that I’ve known her. Another friend works “only side gigs,” two to three days per week, and stops as soon as he’s “cashed up” for the week.
When I lived in Australia, I spent two weeks at the beachhouse of a 40-something nurse who performed 2-3 house calls per week (one day of work per week), and spent the rest of his time surfing.
Escape the Daily Grind
In addition to those four types of retirement, there are two methods that people use to escape the daily grind:
Traditional- and early-retirement enthusiasts tend to favor the “quitting” strategy. They accept a 9-to-5 job, work hard, and quit when they’re ready.
Mini-retirement enthusiasts tend to prefer the “outsourcing” tactic if they’re entrepreneurs, or the “quitting” tactic if they’re employees. Entrepreneurship tends to be more conducive to this tactic, and the more work they can hand off to others, the longer of a break they can take from their daily grind.
Permanently semi-retired people, depending on their trade, either outsource their work or pseudo-quit (in the sense that they refuse to take on any additional work, beyond the minimum required to live).
Which Style Fits You?
None of these styles are better or worse than any of the others. I’m offering this breakdown so that you can live deliberately, choosing the style that fits you best.
I prefer the mini-retirements approach. I view my career as “interval training,” and I alternate waves of hard work with extreme leisure.
I worked hard from age 21 to 24, saving tens of thousands of dollars. Then I globetrotted, with zero responsibilities, from age 24 to 27. That’s an experience nothing else can rival.
By the time I returned to the U.S., I felt ready for some hard work. I busted my butt again from ages 27 to 29, accumulating six rental units during the greatest cheap-housing opportunity of a generation. Now that I’m on the verge of turning 30, I’m once again on the cusp of another major travel expedition. And I suspect this one will be even better than the last.
That said, I’d be remiss if I wasn’t also building sustainable wealth (passive income) in addition to planning frequent mini-retirements, or mini-escapes, throughout my working years.
Regular Afford Anything readers know how adamantly I emphasize shoveling money into 401k’s and IRA’s, buying rental properties, and creating multiple passive income streams. I encourage anyone in a “working” phase of life to prioritize these.
But I don’t recommend waiting until these are ready-to-roar before you venture off into some crazy adventure. Building sustainable income takes time — at least a decade — and your youth is precious.
(P.S. And to those of you who are thinking: “But I’m already old!” — No, you’re not. Each stage of life is unique. And you’ll never be younger than you are today.)
(P.P.S. If you’re a podcast listener, I also discussed this concept on the latest Stacking Benjamin’s podcast. Download it here.)