There are two things most financially-conscience people aspire to: retiring rich or retiring early. But which is better?

Many people who haven’t retired believe early retirement sounds fantastic, especially since so many are disengaged from work. On the other hand, who wouldn’t want to retire rich? However, to retire rich, you typically have to work for decades or get really lucky with an investment or career.

As someone who pseudo retired early at 34 in 2012, I can confidently say that retiring early is far better than retiring rich—assuming retiring rich means retiring much later in life.

I say this because, after more than 13 years on my retirement journey, I now have more money than when I first retired. Comparing what it was like to retire at 34 with the money I had to the money I’ve accumulated by 47, I can say without hesitation: I wouldn’t trade the time and freedom I’ve had for the extra wealth. Not even close.

How To Determine Whether To Retire Early Or Retire Rich (And Older)

Let’s break down some numbers to illustrate why retiring early is better than retiring rich and older.

After 17 years of working, saving, and investing, let’s say you accumulate a $1 million net worth—$400,000 in home equity and $600,000 in the S&P 500. You’re 40 years old. Living in a big coastal city, you’d be considered “Coast FIRE” since a 4% withdrawal rate provides a modest lifestyle.

Now assume your net worth grows at 6% annually for the next 20 years without you working. By 60, your net worth would reach $3.2 million. With a 4% withdrawal rate, you could spend $128,000 a year before taxes, though inflation would cut that purchasing power in half.

Alternatively, if you kept working and saved $20,000+ annually to help boost your net worth growth rate to 10% per year, your net worth would grow to $6.7 million by 60. You’d then be able to withdraw $268,000 a year.

The difference in net worth between working for another 20 years versus not working is $3.5 million ($6.7 million – $3.2 million). Now ask yourself: is it worth spending 40,000 more hours working for an extra $3.5 million if you have all your basic needs met?

Given that the majority of American workers don’t enjoy their jobs, the answer is clear: spending ~40,000 hours doing something you don’t love is not worth it. Most jobs get boring after 10 years, and at age 40, you’ve already put in 17 years after college.

Unless you’re deeply passionate about your work—like saving lives—it’s far more rational to retire early with less money than to retire much later with more. If you sacrifice spending years doing something that doesn’t provide tremendous value, I fear you will look back upon your life with deep regret.

When you’re gone, no one will care that you spent 40 years getting teenagers addicted to a social media platform just to drive ad revenue. In 30 years, no one will remember you for creating a sugary drink that fueled a diabetes crisis. In 20 years, no one will care that you helped a money manager grow their wealth so they could buy a $50 million mansion in Aspen. And in 10 years, citizens will also forget about all the government grift that occurred under your political leadership.

The only people who will miss you when you are gone are your loved ones and the people you directly helped.

The Amount You Retire Early With Matters

Of course, retiring early with too little can be risky. Let’s say you semi retire with $500,000 and spend your 40+ hours a week hustling as an online entrepreneur, you’re not truly retired—you’ve just changed careers.

To make early retirement truly better than retiring rich and older, you must have enough passive income to cover your living expenses. Otherwise, you’ll fool yourself into thinking you’re retired while:

• Relying on your partner to keep working at a job she doesn’t not like
• Stressing about finding new ways to make money
• Sacrificing your soul to make money
• Sacrificing your peace and happiness for financial gain

If your passive income covers your basic needs, you’ll quickly realize that early retirement is superior to working longer just for more money. The value of freedom is priceless. Sooner or later, you will find more meaningful things to do with your free time.

The Age At Which You Retire Rich Matters Too

Of course, the longer it takes you to retire rich, the more you’ll prefer to retire early. What’s the point of retiring rich at 75 when you have such limited time and power health to enjoy your wealth?

For the argument to favor retiring early, I believe the gap between retiring early and retiring rich needs to be at least 10 years. For example, retiring early at 35 versus retiring rich at 45 is a toss-up. However, if it takes 11 or more years to retire rich, each additional year strengthens the case for retiring early.

Once the gap reaches 20 years, it’s almost a certainty that retiring early is the better choice over retiring rich. We only have about 80 years to live, and 20 years is 25% of the average lifespan. No one should sacrifice that much time just to accumulate more money than they need!

The Definition Of Rich Is Subjective

The final factor in deciding whether it’s better to retire early or retire rich is defining what “rich” really means. The concept of retiring rich is subjective. If you earn a top 1% income of $650,000, you might be considered rich, assuming it’s sustainable and you’re not spending it all. If you have a top 1% net worth of over $13 million, you’re undoubtedly rich.

However, being rich also means having your health, strong friendships, and enough investment income to cover your basic living expenses. So, when determining if it’s better to retire rich, you need to evaluate whether the hours spent working to reach that “rich retirement number” are truly worth it.

Is spending over 10 years to achieve a top 1% net worth worth it? That depends on how much you enjoy—or loathe—your job and the physical and mental toll it takes on you. Every year, we see NFL players in their prime walk away from millions because of the health risks of playing football.

Personally, no amount of money is worth sacrificing more than a decade of your life for, especially once you’re past middle age. Time is far too precious to waste on something you don’t enjoy. Sure, having $10 billion at 57 would be great, but it’s not worth it to me if I’ve got to sacrifice too much time away from my family.

Again, we’re comparing the option of retiring early versus retiring with an enormous amount of money. This isn’t a discussion about going from poverty to incredible wealth, which is worth grinding for decades. If you can retire early, by definition, you have a comfortable enough amount of wealth to be free.

The Key Is to Adapt in Retirement to Changing Needs

I consider myself an early retirement failure because I miscalculated how much money I truly wanted in early retirement after five years. I also didn’t accurately forecast how much I needed due to the growth of my household.

In 2012, I retired with about $80,000 a year in passive income, which I thought would be enough for me and my wife to live comfortably for the rest of our lives. We had planned to relocate to Honolulu after she negotiated her severance package in 2015, aiming to lower expenses and improve our lifestyle.

However, after she retired, we wanted to travel—and travel we did, visiting 10 countries a year for two years. Then we wanted to have children, and after some challenges, we had our son in 2017. Since we were more familiar with San Francisco than the demands of parenthood, we decided to stay. Seven years later, with another child and rising costs of everything, we’re still here in the Bay.

A big part of living a successful early retirement lifestyle is recognizing your financial miscalculations, accepting them, and then taking action to improve your situation. You are never fully stuck in retirement. For me, adapting meant shifting my asset allocation to generate more income when needed and creating supplemental income through consulting.

Since I love to write, generating additional income through books and Financial Samurai has been a bonus. I would write regardless of whether I made any money from it, as I did in the early years of this site.

Cherish Time More Than Money Please

Now that I’m in my late 40s and still living in San Francisco, I know plenty of ultra-wealthy people with net worths exceeding $20 million—some even have $100 million, $500 million, or $1 billion. But despite their wealth, they carry the same worries, stresses, and health issues as those with far less.

Some are fortunate and love what they do, but many continue grinding, clinging to their status in society while hoping becoming even wealthier than their peers. Yet, 10 years later, I’m not sure they will feel more fulfilled. It’s hard to quit the money and status even if you have enough of them.

Aside from the ability to fly private or live in $10+ million homes, their lives aren’t much better than those who retired early with much less. Sure, the rich retirees can easily donate $100,000 to their children’s private schools and enjoy the adoration of the headmaster and staff, but beyond that, there isn’t much difference.

So if you’re deciding between retiring early or retiring rich, I say retire early. By retiring early, you prioritize your most valuable asset: time. If you prioritize time, in the event of an early death, you will have fewer regrets. If you live and later decide you need or want more money, you can always allocate some of your freedom to earn.

There’s always another dollar to make, but never another second to create. Once your basic needs are met, you’ll regret sacrificing time far more than money.

Of course, the ideal scenario is to retire both rich and early. But even then, without a life of purpose, all the time and money in the world can quickly feel meaningless.

Reader Questions

Would you rather retire early or retire rich and why? If most people don’t like their jobs, why do they continue to grind after accumulating a large enough income to live happily ever after?

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