FIRE – Retiring Early, Is That Even Desirable?

Advantages and Disadvantages of Financial Independence

What disadvantages could there be to being financially independent? At first glance, none, but for the sake of completeness, let’s briefly examine any potential downsides:

Possible Disadvantages of Financial Independence

• Lack of motivation: The absence of the need to earn money could lead to a lack of motivation or the realization that being financially free does not necessarily bring happiness.
• Desires from others: Your private circle might expect you, as a well-off relative or friend, to cover expenses, be generally generous, and so on.

Advantages of Financial Independence

• Personal autonomy: The freedom to largely shape the rest of one’s life independently.
• Avoidance of burdensome ties: The freedom to break away from professional and personal relationships perceived as burdensome.
• Ability to financially assist others: The freedom to be able to support others financially.

Advantages and Disadvantages of Early Retirement

For the second part of FIRE, the RE, which stands for “Retire Early,” it’s less clear whether, on balance, this is positive or negative.

Advantages of Early Retirement

• Time for hobbies, travel, sports, and social contacts.
• Any negative aspects of employment disappear: All forms of stress at work and risks from the daily commute.
• The possibility of living according to the weather, easily staying home during bad weather and spending a lot of time outside when it’s nice.
• Geographic independence: The possibility of choosing a new place of residence, temporarily or long-term.
• Ability to follow one’s natural rhythm and schedule sleep as desired. A midday nap, which is hardly feasible in Germany, also becomes possible.

Social and Psychological Downsides of Early Retirement or Becoming a Privateer

The idea of lying on the beach sounds appealing, especially if one has only occasionally enjoyed it. But is vacation still desirable when it becomes the rule and not the exception?

• Many things lose their charm in excess, and often it’s the shift between states that allows us to appreciate the more pleasant one. Is there relaxation without prior tension, happiness without (some) unhappiness, excitement without boredom?
• If you have all the time in the world, does that apply to your social circle as well? The social component of a fulfilling life is often underestimated.
• Much of our conversation and social interaction revolves around work. If others talk about their work concerns and achievements, you’re the one who “can’t relate.”
• “Bohemian” or privateer has little social prestige as an occupation, especially among those for whom this lifestyle, perceived as luxurious, is out of reach.
• Employment also provides a sense of purpose. Without work, this may be lost, leading to a sense of emptiness and disappointment.

Financial Downsides of a Shortened Working Life

In addition to the potential social and psychological downsides mentioned above, there are also financial aspects that should not be overlooked when considering early retirement:

If you are legally insured, it’s essential to ensure that you remain legally insured during your time as a privateer to meet the necessary “insurance period” for admission to KVdR (health insurance for retirees) as a compulsory insured person rather than as a voluntary insured person.