'Retire Early Or Retire Rich?' — Man Asks Whether It's Better To Retire At 40 With $125,000 A Year Or At 60 With $300,000 Annually

It’s a classic question: retire early with more freedom to enjoy life, or retire later with a larger nest egg

A user posted a similar question on the Reddit forum r/Fire: "Retire early or retire rich?" The post asks readers to choose between retiring at 40 with a pretax income of $125,000 per year or at 60 with $300,000 annually. 

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Community responses vary, with many highlighting the value of time over money. One user commented, "No amount of money ever bought a second of time," emphasizing the priceless nature of early retirement.

Another user pointed out that the RE in the FIRE Reddit stands for "retire early," therefore it's clear the vast majority of people reading the post would opt for early retirement over retiring with more money later in life.

The discussion on Reddit mirrors broader sentiments about retirement, reflecting a mix of personal experiences and financial strategies. Another commenter shared a personal anecdote: "My dad is retiring at 70, and historically his male family members have died around that age," stressing the uncertainty of life and the potential benefits of retiring earlier. 

The FIRE (Financial Independence, Retire Early) movement, popularized by Vicki Robin and Joe Dominguez in their book "Your Money or Your Life," advocates for a life where people are not chained to jobs they dislike due to financial pressures. Adherents save aggressively to achieve financial independence early, aiming to retire well before the traditional age of 65. The movement encourages evaluating every expense by considering the hours of labor it costs, aiming for a retirement fund that is about 30 times its annual expenses.

Trending: If the United States had access to today’s high-yield savings accounts rates in 2015, it wouldn’t need to save another penny.

A 2024 MassMutual survey revealed that the average retirement age in the United States is 62. Although many aspire to retire early, achieving this is often not feasible. Hypothetically, it might be simple to choose an option, but realistically, opting to retire early or retire wealthy requires stringent financial discipline.

How To Determine If Early Retirement Is For You

Retiring early requires careful planning and consideration of various factors:

1. Budget and Savings Impact: Understand how retiring early affects your financial stability. Consider if you can maintain your lifestyle with reduced income from early retirement.

2. Social Security and Retirement Savings: Early withdrawal from Social Security or tapping into retirement accounts can lead to significantly reduced benefits. Weigh the pros and cons of accessing these resources sooner.

3. The 4% Rule: This rule of thumb suggests withdrawing 4% of your retirement savings annually. Adjust for inflation to ensure your savings last at least 30 years.

4. Rule of 55: If you retire after 55, you may withdraw from your 401(k) or other retirement plans without the usual 10% penalty, though taxes still apply.

Ultimately, the decision to retire early with less money or retire later with more is a personal one. There’s no right or wrong answer, and the best choice will vary depending on your personal circumstances, goals, and risk tolerance. Consulting with a financial adviser can help you weigh the pros and cons of each option and develop a personalized retirement plan that aligns with your financial needs and aspirations.

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*This information is not financial advice, and personalized guidance from a financial adviser is recommended for making well-informed decisions.

Jeannine Mancini has written about personal finance and investment for the past 13 years in a variety of publications including Zacks, The Nest, and eHow. She is not a licensed financial adviser, and the content herein is for information purposes only and is not, and does not constitute or intend to constitute, investment advice or any investment service. While Mancini believes the information contained herein is reliable and derived from reliable sources, there is no representation, warranty, or undertaking, stated or implied, as to the accuracy or completeness of the information.

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