How ‘findependence’ differs from retirement

Are you working because you want to or have to?



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(Getty Images)

(Getty Images)

Having planted a stake firmly in the camp of financial independence, I’m often asked exactly how the phrase “findependence” is different from retirement.

There are a lot of distinctions between the terms, many of them subtle ones. I often say that financial independence means working because you want to, rather than because you have to financially speaking. In the latter case, the situation is akin to the bumper sticker that says “I owe, I owe so off to work I go.”

I may also say that findependence (I’ll use the contraction of financial independence here now) often occurs years if not decades before traditional retirement. There are several early retirement practitioners running websites about how they achieved financial independence in their 30s or 40s, although they usually add that they continue to “work” in the sense of doing some work for money. That “work” will typically be as an independent supplier rather than an employee and may consist of writing books, running web sites and perhaps publicly speaking. They call this “early retirement” but I’d argue the better term is “early financial independence.”

You can find more on this topic by simply googling the term “financial independence vs. retirement.” You’ll find several results, including a couple of articles by me that have appeared in various websites both Canada and the United States.

Consider this piece from FI Journey entitled Financial Independence vs Early Retirement: What’s the Difference? Here’s how the writer sums it up: “Financial independence is setting an annual income goal for yourself, and putting your money to work in such a way that you can live off the proceeds from your investments without ever reducing your retirement account. If you started your ‘retirement’ with a million dollars in the bank, the idea is that you would die with a million dollars in the bank, whether that was 5 years or 50 years later.”

Then there’s an article from a year ago featuring a dialogue between two early retirement gurus, J.D. Roth of the Get Rich Slowly blog and the blogger known as Mr. Money Mustache: Coming to terms: retirement vs. financial independence. There, Roth notes that both bloggers have accumulated nest eggs that would allow them “never to work again” yet “both of us have elected to continue doing work for money.” Even so, they still consider themselves “retired.”

Mr. Money Mustache, aka “Pete,” replied that only certain personality types will sit around doing nothing in retirement but for him, retirement “just means you’re free to do what you really want to do.”

Roth said they both think it’s possible to call oneself “truly retired” even if they continue to work for money but added that not everyone agrees. One reader maintained that “retiring is stopping doing work for pay.” Then Roth segued to an excerpt from his one-year Get Rich Slowly Course that outlines four types of retirement: traditional “full-stop” retirement at 65 or so, early retirement that can occur between 30 and 50, semi-retirement and finally a series of “mini retirements” that can be distributed at various points of a long career of work.

Roth concludes much as I would, saying that because retirement is a loaded word, he prefers to use the term financial independence, which he says “is essentially the same idea but without the baggage.” He also talks about something we’ve mentioned in this blog before: that there are degrees of financial independence, ranging from dependency on parents or employers, to dependency on creditors, to freedom from debt, to what I’ve called “barebones” findependence and finally “complete” financial independence. He decides that once you’ve saved enough to fund 25 years of your current lifestyle, you’ve achieved financial freedom.

MoneySense contributing editor Jonathan Chevreau runs the Financial Independence Hub and can be reached at







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