Buying Freedom

Jonathan Clements

IF 20-SOMETHINGS ASK me for financial advice, I suggest getting a job right out of college and saving like crazy, so they quickly get themselves on the fast track to financial freedom.

If 60-somethings ask me for advice, I advocate a phased retirement, seeking part-time work in their initial retirement years and, if they enjoy it, perhaps keeping it up into their 70s.

Yeah, I know, I sound like a real killjoy. My advice raises an obvious question: Is there ever a time when we should cut ourselves some slack and not have a job?

Let me start with this: If you have a burning passion—perhaps to establish yourself as an artist in your 20s or to commit yourself to religious study in your 60s—you already know what you need for a fulfilling life. Everybody else’s opinion, including mine, is of little import.

But what if you don’t have a calling? It’s worth keeping five key ideas in mind:

First, in crass economic terms, adult life is about using our human capital—our income-earning ability—to amass financial capital, so one day we no longer need to rely on our human capital. This “no longer relying on our human capital” is what non-economists call retirement, and it often takes three or four decades of saving and investing to accumulate enough.

Second, beyond paying for retirement and other goals, it’s desirable to amass money because it provides a sense of financial security and it gives us the flexibility to lead our life as we wish. If we sock away a moderate amount of savings early on, we’ll remove one of life’s biggest stressors.

Third, most of us aren’t very good at anticipating what our future self will want. Maybe our greatest desire will be to retire early. Perhaps, in our 40s or 50s, we’ll want to swap into a career that’s less lucrative but more fulfilling. Or maybe we’ll be happy to persevere with our current job. It’s hard to know what we’ll want, which is another reason to save diligently starting early in adult life. The larger our nest egg, the more options we’ll have.

Fourth, our focus often shifts as we grow older. We become less motivated by the prospect of pay raises and promotions, and more focused on doing what we personally care about. With any luck, once we have a better handle on what we really want, we’ll get the chance to pursue those passions more fully during a second career or once we’re retired.

Finally, most of us enjoy striving toward our goals. To be sure, we imagine that the greatest happiness will lie in achieving those goals. But in truth, it’s the striving that offers the great pleasure. This pleasure is captured by the notion of flow, those times when we’re engaged in activities that we’re passionate about, we find challenging, we think are important and we feel we’re good at. At such moments, we can become totally absorbed and lose all sense of time. We should design our life—including our retirement—so we enjoy frequent moments of flow.

The five ideas above help explain why we should save early in life to prepare ourselves for later, when we might want to change how we spend our days. But that still leaves one question unanswered: Why, come retirement, should our days necessarily involve working part-time?

The short answer is, it isn’t necessary. Unless you don’t have enough saved, there’s no need to work part-time in retirement. But I think it’s an idea that deserves more attention. Today, retiring as early as possible is considered a badge of honor, and continuing to work later in life is viewed as somehow offensive to the whole notion of retirement.

But as I’ve argued before, there are all kinds of reasons—financial and otherwise—to continue earning money through our 60s and into our 70s. It can feel good to be a productive member of society, plus retirement can be a whole lot less financially stressful if we still have a little money coming in. What about those savings we earlier amassed? Even if we keep earning money, we’ll likely still find plenty of uses for our savings, including travel, helping family members, supporting our favorite charities and perhaps paying long-term-care costs.

I’m not saying that working part-time in retirement is the right choice for everybody. But if there are activities you find fulfilling, and you can make a little money doing so, why not?

Jonathan Clements is the founder and editor of HumbleDollar. Follow him on X @ClementsMoney and on Facebook, and check out his earlier articles.

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