The Real Meaning of Early Retirement / Freedom

When talk about early retirement, I come across many books and internet articles on how to achieve this financially.  As a matter of fact, finance is only part of the equation.

Here, I would like to share what is the real meaning of early retirement (at least to me):

1: Am I wanting to have early retirement and why?

A: YES, YES, YES.  I have been planning for this for years and I finally achieved this at the age of 40 financially.  Why?  This is because I would like to have more time to do what I like to do which I can't do so when my time is sold for living.  When I was an full-time employee, at least 8 hours of my day are sold.  Therefore, beside full-time job, I did not have sufficient time for myself as I would be occupied by other tasks in my life (sending/picking up kids to/from schools and/or tuition classes, settling bills and other family matters etc) while I still need at least 6-hour resting time every night.  My life was busy but created no value as I could not enjoy it at all.  Routine tasks had been making me felt so dull.  I could only enjoy my life if I become the master of my time.  That is the motive of me for early retirement.

2: What was the first thing I looked into after I decided to have early retirement as my target?

A: This is a dull process but effective.  My first step was to begin to record my income and spending, up to every single cent.  Day by day, month by month, year by year.  It is very dull indeed but this is the only way to know my sources of income and spending nature.  I need simple but basic facts before I plan for my early retirement.  From this bookkeeping, I could also get my personal inflation rate and estimate my future inflation confidently.  Years of recording will able to tell me my spending pattern as well as personal inflation trend.  These are important figures to be utilized for retirement planning.  My confidence on the accuracy of my early retirement plan becomes higher after years of bookkeeping.

3: What other financial aspects do I look into?

A: I care about my children's future as well as family medical needs.  Therefore, when I started to accumulate retirement , education and medical funds.  I started all these when I was young.  I started off with ASW (a unit trust fund from ASNB without upfront fee) at the age of 25.  Since then, I built up my money and investment skills by investing heavily on relevant books, journals, articles, seminars etc.  Instead of following blindly on what were told, I study and digest in order to create my own money formula.  I always believe that each of us is unique.  You could refer to what the others are doing but what suit them does not necessary suit you.  I am glad that my investments strategies are giving me a very good return.

4: What other aspects do I look into?

A: Money is only part of my early retirement formula.  How much retirement fund is required is very much subject to an individual's spending and inflation trend.  My experience tells me that cutting cost will be easier than creates extra income.  So focus on you needs with less wants is the rule of thumb.  Beside money, I also look into my health as it is more valuable than money which I can't assign a value to it.  Without good health, my life will be meaningless no matter how rich I am.  Therefore, I control my diet and exercise regularly.  Beside that, I also keep my mind at ease so that I could feel relax which creates less burden to my body.  By having a healthy body, I will not only feel happy but also create less hassle and burden to my family.  

5: Do you buy insurance?

A: Yes, I buy H&S insurance for my family for any unforeseeable medical needs.  I also have life insurance in view of my kids are still young.  However, I don't buy insurance as investment as the cost of investment is just too high.  Instead of buying endowment plan, I invest directly in stocks and REITs or even FD that give me better return (due to low investment cost).

6. What is the real meaning of early retirement to me?

A: Instead of saying retirement, I prefer to put it as I AM A FREE MAN.  I have option on working or not working.  I am the master of my time which I could decide what I want to do.  I am not talking about sitting in front of TV for whole day but doing somethings that creates value to me.  Things such as teaching stock investment, writing blog to share my financial knowledge, gardening (plant trees, flowers, fruits, vegetables, clear weeds etc), reading books (at home or library), studying another language (currently I am studying Japanese just for the sake of interest), stock analysis (this is what I very fond of), helping my wife on her housework....(the list continues).  Sometime, I worry I don't have enough time for me.

So beside money, think about how to create values to your life when YOU ARE A FREE MAN.  Life is short, play hard.