At age 29, we quit our jobs with a paid-off home, a reasonably well-stocked investment portfolio, and no plans to work full-time ever again. As financially independent early retirees, we’ve been praised for our prowess with money.

Collage of press screenshots

But in truth, the decision to retire early may have been devastating to our wealth.

Our $64 Million Purchase

We’ve always touted that the key to retiring early is keeping your cost of living low. In our early years, we only spent $18k – $26k per year combined. The rest of our income was invested.

The idea was simple: Every dollar we saved could be used to buy back time from our working careers. The more we saved, the earlier we could retire.

But in fairness, shouldn’t we step back and think about the reverse option, too? Time can be used to buy you even more money. There’s a massive opportunity cost to early retirement that nobody seems to talk about.

When we quit our jobs to retire early, I was pulling in about $90k/yr as a physics tutor, and Lauren was making closer to $84k/yr doing digital marketing — our highest salaries ever. Then, all of a sudden, we just threw them away.

Photo of money on fire

Now, our household expenses are still only ~$30k/yr in early retirement (or a little higher when we take a few months to travel). But if we’re being completely honest, the true cost of this work-optional lifestyle should include the salaries we gave up to obtain it.

Here’s some disgusting math: If we’d continued working our same jobs past age 29, received only tiny raises each year equal to inflation, and invested 100% of that extra income into a stock market index fund, we’d retire at age 65 about $64 million richer*.

The inescapable conclusion is that we’re paying $64 million to retire early. Doesn’t sound so frugal anymore, does it?

Is It Worth The Cost?

The point of this article isn’t to express regret, or to convince you that early retirement is a bad deal. I just like to regularly question my own beliefs. If you’re thinking about retiring several decades early, you need to believe that it’s worth an 8-figure price tag — because that’s what you’re really paying.

Here’s why I think it is worth that cost: If you were to find an ultra-rich, 65-year-old couple and offer to magically de-age them to 29 for the price of $64 million**, I can almost guarantee they’d say yes (especially since millionaires much younger than that already fork over millions just to try to stay young).

In short, excessive wealth isn’t worth much without an excess of time to enjoy it.

Maybe retiring early and freeing yourself from 36 additional years of full-time work isn’t quite as powerful as magically adding 36 youthful years onto your lifespan, but as I type this from the balcony of a hotel in Australia on a weekday at the tail end of a 3-month vacation, I’d argue that it’s pretty damn close.

It’s funny; most people think that we “early retirement types” are obsessed with accumulating as much money as possible, but in reality, we’re the most inclined to give up a chance at greater riches.

Besides, I’m not sure what we’d even do with an extra $64 million anyway. 🤑

Flexible Thinking Helps

In doing this little thought experiment, I wanted to be as critical of our own lifestyle choices as possible — but in reality, I’ve probably been a bit harsh.

For one thing, I don’t think Lauren and I would have saved up so much money in the first place without the prospect of early retirement to excite us. In truth, the very idea of early retirement caused us to get a lot richer than we might have become without that motivator. That’s a huge financial win all on its own.

And remember when I said that we threw away our salaries to retire early? Well, that’s not exactly true. Actually, we’ve each maintained a very small amount of freelance work during early retirement.

This work doesn’t pay anywhere near the $174k we were making before, but it has a much higher hourly rate of pay — and it’s a lot more enjoyable, particularly because we don’t have to do it every single weekday.

Taking on part-time gigs at our leisure has allowed us to keep our skills sharp while having fun and getting richer, even as we live a mostly “retired” lifestyle. Best of all, we don’t really need the extra money, so the work is optional. If we started to hate it, we’d just quit.

Traditional retirement feels rigid and scary, because when you leave your 40-year career at age 65, you may find it difficult to ever undo that decision. But when you quit a job in your 20s or 30s, you still have many decades of youth and opportunity ahead. If you ever decide you’d like to reclaim a piece of that hypothetical ~$64 million you gave up, you can just go make it!

On the other hand, if you’d rather just hang out on Australian beaches all day, that’s your prerogative, too.

— Steven

* Assumptions behind this hypothetical scenario: Our gross income would continue at $174k/yr combined from age 29, adjusted upward 3% each year for inflation, until age 65. Taxes would start at $33k/yr and also adjust upward with inflation. We’d live off of our existing investment portfolio (so its growth is not considered), which would leave all net income from our jobs to be invested. Our nominal investment return on this extra money would average 10.5% per year (approximately the US stock market’s long-term average). Social security benefits are ignored. Final figure of $64 million is measured in nominal dollars, in the year 2055 (age 65). If we adjust that for inflation, we get ~$24 million in terms of today’s money — still an 8-figure sum.

** Actually, you should offer it to them for ~$24 million, since that’s today’s inflation-adjusted equivalent of what $64 million will be worth by the time we’re 65.

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