There are two things most financially-conscience people aspire to: retiring rich or retiring early. But which is better?
Many people who haven’t retired believe early retirement sounds fantastic, especially since so many are disengaged from work. On the other hand, who wouldn’t want to retire rich? However, to retire rich, you typically have to work for decades or get really lucky with an investment or career.
As someone who pseudo retired early at 34 in 2012, I can confidently say that retiring early is far better than retiring rich—assuming retiring rich means retiring much later in life.
I say this because, after more than 13 years on my retirement journey, I now have more money than when I first retired. Comparing what it was like to retire at 34 with the money I had to the money I’ve accumulated by 47, I can say without hesitation: I wouldn’t trade the time and freedom I’ve had for the extra wealth. Not even close.
How To Determine Whether To Retire Early Or Retire Rich (And Older)
Let’s break down some numbers to illustrate why retiring early is better than retiring rich and older.
After 17 years of working, saving, and investing, let’s say you accumulate a $1 million net worth—$400,000 in home equity and $600,000 in the S&P 500. You’re 40 years old. Living in a big coastal city, you’d be considered “Coast FIRE” since a 4% withdrawal rate provides a modest lifestyle.
Now assume your net worth grows at 6% annually for the next 20 years without you working. By 60, your net worth would reach $3.2 million. With a 4% withdrawal rate, you could spend $128,000 a year before taxes, though inflation would cut that purchasing power in half.
Alternatively, if you kept working and saved $20,000+ annually to help boost your net
