Key Lessons from 60 Early Retirees on Financial Independence

Pursuing financial independence and retiring early, often referred to as FIRE, has gained popularity among many individuals seeking a different lifestyle. After interviewing over 60 people about their experiences and advice on this journey, three significant lessons emerged that could guide others contemplating this path.

Investing Wisely Over Hiring Advisors

One of the most emphasized pieces of advice from early retirees is the importance of learning to invest independently rather than relying on financial advisors. Alan and Katie Donegan, who achieved financial independence in 2019 and now travel the world, have been vocal about this strategy. Their insights are shared during a free ten-week seminar on FIRE, which they conduct for those seeking guidance.

Katie Donegan shared, “People fear doing it themselves, so they pay for a professional advisor, which they don’t need, then they pay high fees and get poor performance.” The couple calculated that had they stuck with their high-fee advisor instead of switching to low-cost index funds, they would have been over £1 million worse off. They advocate for investing in index funds, especially for those who are still in the workforce, suggesting that a conservative approach with bonds can be detrimental.

Recognizing the Value of Time

Another key lesson is the importance of not delaying retirement unnecessarily. Brad Barrett, host of the financial independence podcast ChooseFI, points out that many individuals fall into the trap of thinking they need just “one more year” before retiring. He highlights that this mindset can lead to missed opportunities for happiness.

“I think people don’t understand the finite nature of their lives,” Barrett explained. He emphasized that every additional day spent working beyond necessity is a day lost in pursuing personal fulfillment. This perspective resonated with many, prompting them to act on their desires rather than defer them.

Building Relationships and Hobbies

A recurring theme in conversations with those who have retired early is the potential for loneliness and isolation. Many early retirees shared that being the only one in their social circles who has retired can lead to a lack of companionship during leisure activities. This underscores the necessity of cultivating strong relationships and engaging in hobbies before making the leap to retirement.

At a retreat in Bali, attendees frequently expressed regret about prioritizing their careers over personal relationships and experiences. A couple of finance professionals with a net worth nearing $2 million admitted they had neglected their marriage while focusing on financial growth. They recognized that investing time in their personal lives is just as crucial as building a retirement fund.

Participants at the retreat discussed the importance of setting aside funds for experiences with loved ones. One expert highlighted that a designated “fun bucket” for enjoyable activities enabled him to break free from a frugal mindset, allowing him to take a memorable $20,000 cruise from Greece to Italy with family.

The insights gained from these conversations have prompted a shift in priorities for many. Although the allure of financial independence is strong, the lessons learned from those who have navigated this journey highlight the balance between financial planning and living a fulfilling life. As individuals consider their paths toward retirement, these takeaways serve as valuable reminders of what truly matters.