A better path to early retirement

Over the last year, I’ve started reading a lot of “early retirement” blogs: a category that has an oversupply issue in common with digital nomad blogs, but also a common desire to look at the normal way of doing things and say “sod that for a lark”.

The gist of the standard early retirement method is this: instead of saving 10% of what you earn, aim for 50% or more. Invest it in the stock market, and in 10–15 years you’ll have accumulated enough that you can live off the return on your investments. (You can play with the maths here.)

Using this method you can be “retired” by the age of 35 or earlier, which is pretty impressive – and a damn sight better than getting to 60 and wondering why you’re still broke. For me though, there are three major flaws:

  1. Unless you really like your job, you’ll spend at least half of your waking hours during the prime of your life doing something you’d rather not be.
  2. It’s possible to retire in a decade with a “good” amount of income, but not a lot lot. There’s only so much you can speed things up by getting pay rises at one end and making your own soap at the other.
  3. When you do retire, you have to build a whole new life from scratch. Many bloggers report a retirement crisis where they struggle with a lack of purpose, and have no idea how to fill their days.

It won’t come as a major shock that I see building a business – especially as a digital nomad – as a better option. For, as it happens, three reasons:

  1. You can make a lot of money without really sacrificing anything. In order to make $200k in a job, you basically need to pledge 24 hours of every day to your employer. A smart business owner could eventually (with skill, luck, and after a lot of hard graft) make that by working just a couple of hours per day – then double it the next year. Add the location independent aspect, and you can travel and design your ideal life while you’re at it.
  2. As a digital nomad, the requisite frugality takes care of itself: a lot of “normal” expenses (like car payments) go away, you become more naturally attuned to spending money in ways that increase your happiness, and you’re less susceptible to “status” spending.
  3. There’s no retirement event at which point one life ends and another begins. Once you reach the point of “got all I’m going to need”, you can work on your business less, or apply the skills you’ve developed to charitable causes, or do anything else you like.

The downside, of course, is uncertainty: in the early years, rather than seeing your savings grow in a predictable fashion, you might be burning through them as one venture after the next fails to take off. But through every seeming failure, you’re still gaining skills far beyond what you’d develop in most jobs. And like a reverse tortoise-and-hare scenario, when it starts working you’ll quickly zip past the point you would have reached if you’d stayed on the career track.

You’ll need to keep the faith and have a tolerance for picking yourself up and starting again, but I’m convinced that it allows for the ultimate having and eating of cake: creating a situation that allows you to retire early, while living a life you’ll never want to retire from.