Self-employment: the New Retirement

Ukiyo-e_museum_owner_and_sign

This is actually from the Wikipedia page about Self-Employment…

A recent article from Ashley at Saving Money in Your Twenties got me thinking about the relationship between “early retirement” and “self-employment.”  Because when you talk to most people about early retirement, they picture the usual geriatric, shuffleboard scene.  And they assume you are lazy, and want to spend your days doing nothing.  Of course it makes no sense to want to play shuffleboard.

We are not talking about shuffleboard, or Prancercising, or anything like that.  We are talking about lifestyle design.  Most personal finance enthusiasts I know (or at least read) tend to follow up the usual “I want to retire early!” statement very quickly with “But of course I would want to keep working in some manner.”  It sounds contradictory, but I believe it is generally true.

Try thinking about it from the other direction.  You’re at your current job.  Maybe your job stresses you out, but say you generally like your job enough.  What would it take for you to feel like your job gives you the work/life balance that you really need to be happy?  Working from home?  Fewer hours?  Flexible hours?  Want to be able to watch your baby while working, or take 2-hour bike rides and not just on weekends?  I can tell you that being able to work from home with fewer hours would take me very far toward an optimized work/life balance.  I know some people at my own company who have worked out a working arrangement like this.  It is a very soft form of retirement, perhaps from the typical 9-5.

Maybe you want to do your same type of job, but your employer does not offer reduced hours or telecommuting.  That is where self-employment comes in.  I think many people just want to be able to work on their own terms, once they have enough money in the bank to cover the income delta of doing so.  For many this comes in the form of self-employment, because many corporate jobs come in a one-size-fits-all.  This is another type of retirement: retirement from corporate work.

But then you may want to do a totally different type of work for different reasons.  Sometimes people pursue self-employment because their corporate jobs are not really what they want to do.  Many of us choose college majors and careers based on good income and likelihood of impressing our parents.  But if you have established independent wealth, you might be able to pursue another meaningful occupation of your time for which income was a prohibitive factor before.  And if you are wealthy enough to pursue the work “for which money is no object,” then why would you work for anyone but yourself?  This is yet another type of retirement: retirement from your previous career.

Pursuing any of these paths, with financial independence as a prerequisite, I think is retirement of some sort.  You aim to design your lifestyle and find yourself in a level of “retirement” because you have more of your time to yourself or do not have to answer to a single boss.

But what about people who just want to retire early to be able to do absolutely nothing for decades?  I suspect most of these folks would get antsy anyway.  Even if you are wealthy, I think paid work is usually more satisfying than even volunteer work.  Because at least you know you can still make money, just in case.  Or it might make sense to work part-time for the group health insurance.

Just achieving a level of financial independence that allows you have lifestyle options that suit you is what we talk about when we talk of “early retirement.”

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2 thoughts on “Self-employment: the New Retirement

  1. 1) hilarious wikipedia find! I want to set up shop like that!

    2) thanks for the shoutout 🙂

    3) I like your different definitions of retirement. I think I’m going for two of them– “retirement from the 9-5” and “retirement from corporate work”. I think you’re right that most people (at least in the PF world) probably would never want the shuffleboard/prancercise type of retirement. I want to work and be a productive member of society, but I want to do it on my own terms!

    • Yeah I think it would almost be a little dangerous to save up “your retirement number” and then just quit your job and walk off. Seems like insufficient planning that would lead you to sit around wasting time. I would prefer to have an “at least part time work” plan in place.

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