Why Early Retirement Isn’t As Awesome As It Sounds

Most people have a hard enough time envisioning retirement at all, much less early retirement. Despite that, many workers have managed to quit their jobs and achieve financial independence by age 40 or even younger. Sipping drinks on the beach all day at the ripe old age of 30 sounds incredible, but there’s a downside to it, too.

Illustration by Elena Scotti/Lifehacker/GMG

I first read about the concept of early retirement via the finance blog Mr Money Mustache. Blogger-turned-personal finance guru Peter Adney managed to retire by the age of 30, crediting his massive savings rate and extreme frugality. He argues that most of us can afford to do the same, but we fail to take control of our situation and too heavily blame outside forces. As someone who writes about both personal finance and the economy, I think that’s a simplistic point of view, but it hasn’t stopped many others from striving for the same dream, including the semi-anonymous blogger Brian at Done By Forty.

Documenting his own goal to reach retirement by the age of 40, Brian explores the full picture of what early retirement looks like. He told us:

We bloggers who write about early retirement and financial independence do a pretty good job outlining the benefits of those goals: Additional time with our friends and family, the freedom to pursue activities without the pressure of needing a paycheck, and the security of having a nest egg that can sustain one’s expenses indefinitely. But we do a lousy job seeking out the risks inherent with a huge life change like early retirement.

In a recent post, he breaks down one of those risks: early retirement might dull your brain.

The Relationship Between Retirement and Cognitive Decline

There are actually a handful of studies — most notably, the Health and Retirement Study — that find a link between cognitive decline and retirement in general. Researchers call it mental retirement, and it may hit harder for younger retirees.

Citing a study published in the Journal of Economic Perspectives, The New York Times reported (emphasis ours):

The researchers find a straight-line relationship between the percentage of people in a country who are working at age 60 to 64 and their performance on memory tests. The longer people in a country keep working, the better, as a group, they do on the tests when they are in their early 60s.

The study used a memory test that asked subjects to remember a series of words, then tested people from different countries, some of which encouraged citizens to retire early. They found that early retirees scored significantly worse than subjects from countries who retired later.

“My feeling is that the memory test signals the tip of an iceberg: A small sign of a larger mental decline,” Brian writes in his post. Of course, correlation is not necessarily causation, and memory tests are just one way to measure cognition. Other scientists have pointed this out, too. As one researcher told the Times:

It’s quite convincing, but it’s not the complete story. This is an opening shot. But it’s got to be followed up.

That said, the authors of the Mental Retirement study seem to be pretty convinced that there is indeed a causal relationship. They point to a couple of reasons early retirement might dull our cognition.

How ‘Mental Retirement’ Happens

This might be a matter of “use it or lose it”. The earlier you let go of mental stimulation, the worse your cognition gets by the time you’re, say, 60 years old. It’s easier for us to learn when we’re younger, so when we opt out of learning, we miss out on the chance to improve cognition down the road. They say if you want to keep your cognitive abilities, like memory, you should stay active.

“The very prospect of an early retirement itself may sap the worker’s motivation,” Brian told us. “Why take on difficult projects and learn new skills if you are fifty, but are leaving the workforce in five years?” In other words, the mental retirement effect may kick in before you’ve even left your job.

If these studies hold any water, that means that if you retire at 30 or 40, cognitive decline could start even before that.

“I’ve been thinking a lot differently about my early retirement since writing the post,” Brian said. “The research seems to point to keeping some sort of work in your early retirement plans, which is ironic and maybe a little sad, too. But the risks of cognitive decline are too great. Without really convincing research on how you can effectively mitigate those risks, the best approach I can think of is to keep some form of work in my life.”

As much as we complain about work, it seems there’s an upside to it: It can keep us sharp. Of course, the answer isn’t that black-and-white, either. Not all work is mentally stimulating, for example. And working until you die just to stay sharp sounds like a pretty depressing solution.

What We Can Do About It

The thing is, this isn’t just a problem for early retirees. It might be something that affects all of us. Rachel Wu, a University of California-Riverside psychology professor, argues that we all suffer from cognitive decline as adults because of the way we learn.

When we’re kids, we’re encouraged to learn broadly: We take on multiple skills at once, we’re allowed make mistakes, and learning is open-minded. As adults, we switch to specialised learning: We’re supposed to pick one career, one job role, and if we make mistakes, there are serious consequences, like losing a job.

“When you look across the lifespan from infancy, it seems likely that the decline of broad learning has a causal role in cognitive ageing. But, if adults were to engage in broad learning…similar to those from early childhood experiences, ageing adults could expand cognitive functioning beyond currently known limits,” Wu said in a statement.

In other words, she argues that, retirees or not, we can stay sharp by learning multiple skills, getting out of our comfort zone, and embracing mistakes.

“Back when I started the blog, my plan was to insert more activity diversity into my life: just to spread my twenty four hours more evenly into the things I like doing. Like board games. Or naps,” said Brian. “But the more I think about that, the more that seems like a rudderless existence, too focused on leisure and rest. Our plan today is to insert meaningful work into my retirement, irony be damned.”

The solution seems to be less about working through retirement and more about making sure you’re exposed to stimulating activities when you retire.

If they want to stay sharp, early retirees have to think beyond the traditional “sipping drinks on the beach” approach to retirement. This is why a lot of early retirees, including Mr Money Mustache, use the term “financially independent” instead.

“The honest answer is that I’m not totally sure what that life will be like yet,” Brian said. “It turns out that knowing that you don’t want to work a traditional job until 65 is not the same as knowing what you’d rather do instead.”