One persistent conclusion researchers have found is that retirement can actually lead to premature death. For example, one study found that for men, “one additional year of early retirement causes an increase in the risk of premature death of 2.4 percentage points.” A cohort study of thousands of Shell Oil employees found that “embarking on the Golden Years at age 55 doubled the risk for death before reaching age 65, compared with those who toiled beyond age 60.” Another study from Oregon State University found that “healthy adults who retired one year past age 65 had an 11 percent lower risk of death from all causes.” And an analysis of U.S. Census figures by Cornell University “reveal a clear correlation between premature death and premature retirement, according to an analysis by Cornell University.”
I, for one, am not at all convinced that this has to do with retirement per se. I think it has more to do with the aimlessness that can come from retirement. Indeed, the facts that men are more greatly affected, and, generally speaking, are slightly more likely to be the primary breadwinner (especially for those who are at or above retirement age) would lend at least some credibility to this claim. It would seem that giving up a major part of one’s life (in this case, a career) without replacing it with something worthwhile can be very detrimental.
Retirement can be done right in my opinion. But if you just retire because you’ve hit the age of 65 and now you’re eligible for social security or whatever… well, that could be very bad. On the other hand, if you have a plan for those golden years and spend them traveling, working for (or starting) a charity, taking on a less stressful job in something you genuinely enjoy, or something like that, I think retirement is probably not just OK, but actually a good thing.
How to Analyze a Real Estate Deal
Deal analysis is one of the best ways to learn real estate investing and it comes down to fundamental comfort in estimating expenses, rents, and cash flow. This guide will give you the knowledge you need to begin analyzing properties with confidence.
What Does Retirement Have to Do with Financial Freedom?
The answer should be fairly simple: Isn’t a comfortable retirement pretty much the same thing as financial freedom? Yes, retirement comes later in life than does what most people mean when they say “financial freedom,” but a comfortable retirement still means you don’t have to work anymore — or worry about money anymore.
The problem though, is what good is financial freedom if there is no purpose to that freedom?
While freedom is great, and it’s fundamentally important in a political sense — freedom of speech, freedom of assembly, freedom to protest, freedom of the press, freedom to start a business, etc — those types of freedom are not what we’re talking about here. What we’re discussing is the freedom to do whatever you want. And such freedom, taken to the extreme, is just libertine irresponsibility writ large.
Think about how much “freedom” we lose by some of the biggest and most important events in our lives:
- Going to college
- Getting a job
- Starting a business
- Hiring an employee
- Getting married
- Having children
The type of freedom we’re talking about here is at odds with responsibility. But a life without responsibility is rather empty. Quitting, bankruptcy, and divorce all grant a certain type of “freedom.” And while these things may sometimes be necessary, they’re not exactly something to aspire to. I don’t have any kids right now, but from what I gather, they tend to reduce your ability to “do whatever you want.” At the same time, children can be immensely gratifying, and, well, having them is sort of a requirement for our species to continue to exist.
Of course, you’ll probably say that I’m taking this to the extreme. This is not what you mean by “financial freedom,” and I fully accept that. But I’m doing this to illustrate the point that this is the wrong perspective to take. After all, what do you mean by financial freedom? What you probably mean is that you want to get to the point where money is no longer an issue. Where you don’t have to worry about the bills, and you can take your family on whatever vacation you would like, and you can take a week off work, and all the rest.
Those are great goals. I agree. But would you stop doing what you’re doing if you could check each of those boxes? Would you stop investing in real estate or being an entrepreneur? Maybe you would, and that’s fine. But what would you do instead? If you don’t have an answer to that question, then financial freedom is a hollow goal. Idle hands are the devil’s playground. And in addition, according to research, make us quite unhappy.
What We Should Aim For Instead
One of the most important things I’ve come to realize is that there is simply no “there” to get to. If your goal is to become “financially free,” how exactly will you know when you’ve reached it? And what are you going to do in the meantime? Are you going to hate life until you’ve reached this goal? Then sit around doing nothing becoming less happy and more likely to die if and when you do reach it?
Of course not. But then why should we have the goal of becoming financially free in the first place? This is the state of “pre-success failure” I discussed with regards to why systems are better than goals. “Financial freedom” is a goal — and a vague one at that. Instead, we should design our life so that we are as happy as possible right now. Money and “financial freedom” are great, but they won’t make you happy if you hate what you’re doing. Indeed, studies show that after you reach an income of $75,000 a year, income and happiness are virtually uncorrelated.
Furthermore, there are no guarantees in life. What happens if things just don’t work out? Or what happens if they do, but then later things fall apart? I’ve seen very successful businessmen driven into bankruptcy. If “financial freedom” is your goal and you rely on it for at least part of your happiness, what happens if you lose it?
Changing Your Mindset
Gaining financial independence is great. But in my opinion, it shouldn’t be your goal. This is important for the same reason that living healthily should is important — but losing 20 pounds shouldn’t be your goal. A goal like that focuses your energy on what you don’t have, and is more likely to make you miserable. Instead, you should create systems and habits, build positive relationships, and align your life with what will make you happy and successful. And happy people are more productive and likely to succeed. So ironically, if you become so obsessed with reaching financial freedom (or whatever goal you set) that it reduces your happiness, it will actually make you less likely to get there.
I think real estate investment is a very good path. But of course, it’s not the only one, and nor is it for everyone. A good path will often (although not inevitably) lead you past financial freedom. Indeed, you probably won’t even be quite sure when you passed it. I asked my dad once when he felt like he’d reached that level, and he struggled to even fit it into a five-year window. So work hard, but always remember to enjoy the path and not obsess over the destination.
Have you reached financial freedom?
Do you agree or disagree with my thinking? Share your thoughts below!