Why Financial Freedom Can Be Highly Overrated—And Not Necessarily Lead to Happiness

by | BiggerPockets.com

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.

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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.

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Related: At Age 26, I’m on the Brink of Financial Freedom: Here’s How I Did It

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?

Related: How Much Money Do You Need to be “Rich” and Is It Worth 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!

About Author

Andrew Syrios

Andrew Syrios is a real estate investor in Kansas City and a partner in Stewardship Properties along with his brother and father. Their company owns just over 500 units in four states.

17 Comments

  1. Angel Gutierrez

    Allow me to chime in on “retirement” during your “golden years” as you say. I have been blessed and extremely fortunate to have been able to “retire” at the age of 42 or maybe it was 44?(I’m 53 this year).

    Here’s what I learned from being retired and hanging around a lot of “retired” folks that are actually IN their golden years. Retirement is boring. There! Said it. I’m fortunate enough to have been able to experience “retirement”at an early age. I’m glad I didn’t have to wait until I turned 70 to find that out.

    My favorite uncle (Leonard) was deadly afraid of retirement and being in the union for 100 years… his mandatory retirement came at 66. The reason he was “concerned about retirement is because most of his friends that had spent a lifetime on their feet in the construction trades didn’t make it two years after “mandatory retirement”. The all dropped dead from just sitting around doing nothing and getting fat and drinking too much and then Poof! Gone! My uncle was afraid of the same happening to him.

    He came to work with me for about 4 months to learn the house business. I found it ironic in that it was “he” that taught me the construction trades when I was a kid. By the way…. he was a VERY Kool dude!

    My uncle and aunt then travelled EVERYWHERE buying little junker houses and selling them to pay for all the trips they took and the expenses along the way until he got sick and sadly passed away at age 77. I was there to say goodbye to my favorite uncle. He thanked me for teaching him the freedom the house business provided and I thanked him for ALWAYS being that Kool uncle to me and my brother. I miss him to this day.

    Retirement works like this and ONLY like this…..:

    “You’ll never work a day in your life doing what you love to do… whatever that might be.”

    Happiness is a brutal choice not everyone will agree with. But it’s YOUR choice. Do what you love NOW and make those choices now before your time runs out because it will… for ALL of us.

    Nobody here gets out alive…..

    In the infamous words of another friend of mine from the late great Master Gunnery Sergeant Harris Chuck as he said them to me and turned my world upside down for the better…

    he said to me ,” if at the end of your life … you can look back and honestly say to yourself that you lived it YOUR WAY…. you won!”

    I hadn’t realized it until Harris chuck pointed it out to me, but I’ve been living “my way” since 1992. That was the year I got laid off my last job and have been doing my “own thing” ever since. So much for being a “smart guy.”

    Harris Chuck was a prisoner of war for 8 years and had been written off for dead. Those years were stolen from him and never to get them back. After retirement from the U.S. Marine Corps, he spent the next 25 or so years driving a semi-truck around the country he had spent his entire life defending… he had never seen it before… until he had to quit because of his vision loss. He passed away at 96 years old 4 years ago. He was healthy as a horse but his heart was tired. The last time I spoke to him just before he passed away… he told me he had won and was “damn proud of it.”

    Words of wisdom for all ya’ll…. If you haven’t already….. use the house business as a vehicle to finance and get you to where you want to go or be. It’s worked for me so far… make it work for you!

  2. James W.

    Boredom is no reason not to want to be financially independent.

    Most people would want to be so, no matter who tells them it is boring.

    Yeah it may or must be boring, but then they can find something fun to do.

  3. Roxanna Pifer

    I think your article comes from a position that not everyone shares. I come from a family of poverty and addiction so financial independence is extremely important to me as I have never had the safty net of family beneath me.
    As for my FIRE at 49 I am not bored but certainly more relaxed. Being able to spend my time volunteering with the Red Cross has made me more happy than paid employment ever has.

  4. Cindy Larsen

    Great article Andrew. You are right. Doing something you love is always time spent well. That is why financial freedom is import: so you have more time to do the th8ngs you love. It is sad to think about those people you described who retire, and have no goals or interests, and end up dying early. I can’t imagine being like that. there are so many things to do, and to learn, and to accomplish. financial independence can give you the opportunity to spend more with family, and maybe to help them with their goals.

    I don’t think young people today will fall into the “bored to death” retirement trap as easily as past generations though. Instead of the expectation of my father’s generation that they would work for one company all their life, and then retire, my generation is more likely to have several careers. My sons’ generation is likely to have any number of careers over their lifetime, some of them simultaneously. All of the millenials I know can’t even really imagine being tied to one job for life: the job that you eventually retire from. They don’t define themselves by their job, but by their interests and accomplishments. I think it is a much healthier mindset.

  5. Ben Leybovich

    Andrew, I don’t know a single person able to achieve retirement at an early age who actually does it and stops…

    The overachievers just play a game. Retirement, otherwise known as not needing to work for money, and an ability no do what you want, when you want, with whom you want, is just a metric of success in life. The work actually only begins once you get to that place 🙂

    As in REI, terms are everything. I’ll work unitl I can’t – on my terms only!

    I don’t have to work, but the thought of it never entered my mind.

    • Andrew Syrios

      I think we mostly agree Ben. The overachievers do just play the game and skip the retiring part of retiring. My point (which I think we agree on for the most part) is that your goal should be to find a career you would never want to retire from. Indeed, if someone hated real estate investment, I would recommend they stay away from it (or only do it passively at least). Build your life in a way that you enjoy it now and can build wealth. Don’t worry so much about hitting some threshold of being “financially free.”

  6. Joseph Walsh

    Comparing apples to beach balls, or something, here is the problem with the perspective. It’s the worst kind of correlation study, in that not only is the original a correlation (early retirement -> early death), this perceptive is correlating Financial Independence -> Early Retirement. To be fair, the author did point out that it’s not necessarily the case, or even that he subscribes to that. Here’s the real summary: Financial Independence means you COULD stop working, lack thereof means you CAN’T. I suspect more people might actually enjoy their current job, if they didn’t have the stresses of “needing” their job, even without the option of “doing something else that they really enjoy” instead.

    • Andrew Syrios

      I’m not correlating financial independence to early retirement, but merely using it as an example. I’m asking people to ask why they want financial independence? Of course, it’s a good thing to have financial independence and be able to stop working if you want to, but if you obsess with “getting there”, you’ll always be focused on the future and never truly enjoy yourself in the here and now. Find a way to “reach financial independence” that you enjoy and in all likelihood you will “get there” sooner than you would have if you just sacrifice your happiness to become financially independent.

  7. Naren Gunasekera

    My aim and why for FI is so I can pursue my passions of underwater photography and marine conservation and sustainable tourism without having to worry about the bills (at least the main ones). I’ve learned that I really enjoy leisure after hard work

  8. NJ Ram

    Your article misses a key point – “you cannot live forever”! While I am all in support of engaging the mind and body in some activity for the rest of whatever time you have on earth, you should never do this just to live longer. Face it, the more golden years you have, the worse your quality of life will become compared to your 30s or 40s. Think sugar issues and metformin, knee/hip/shoulder replacements, ED/vaginal atrophy, liver, kidneys, dementia…you will only give doctors and pharma companies a good life as they will take your “independence dollars” as their bonuses. It is much better to enjoy life today to the fullest and go fast…without numerous trips to physicians and hospitals. And you won’t have to worry about outliving your savings either. The best thing medicine can do for mankind is to either detect the “expiration date” of an individual or make a legally allowed “departure pill” easily available.

  9. Bobby Faiges

    Completely agree! Financial freedom isn’t a goal that will necessarily make you happy, but it will allow you to strive for other goals and provide you time to enjoy the things in life that really matter like friends, family, and health. In the end, the most valuable asset that any investor at any level or point in their lives has is TIME.

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