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The definition of retirement

The definition of retirement

The definition of retirement isn't as simple as you might think

Recently, I was scrolling through Twitter and I saw this interesting exchange between @ritholtz and @mrmoneymustache (both recommended follows, by the way). 

Although Barry's point had nothing to do with MMM, the conversation does show the fragmenting definition of retirement, and it made me think about what my own personal definition of retirement would be. 

The "old" definition of retirement

As alluded to by Barry Ritholtz, retirement used to be a fairly uncontested term. My grandparents generation worked jobs for around 40 years, retired somewhere between the ages of 62 and 65 (or whenever their pension and social security would allow), and found other things to do beyond work. They volunteered, played cards, went on vacations... but they generally didn't work in the traditional sense of the word. Even entrepreneurs and business owners would only consider themselves retired (in the traditional sense) once they stopped actively participating in day-to-day activities, or sold their business. 

This traditional definition of retirement has been shifting for many retirees. With the collapse of pension funds, and inconsistent returns from investments coupled with lower than ideal savings rates, many traditional retirees are finding themselves back at work, either consulting or working part-time gigs. The proverbial 90 year old Walmart greeter is becoming more common than it used to be. 

To me, the traditional definition of retirement is "When one has finished their career and no longer works for money." Some "traditional retirees" who have gone back to work would not fit this description, but I would imagine they would agree that they aren't "fully retired" if they still HAVE to work.

To traditional retirees, the most important attribute of retirement is the absence of traditional  9-5 work.

Re-FIRE-ment: The new retirement

As the Financial Independence Retire Early movement has gained steam, a host of very very early retirees have started to create a new meaning for the term. The one similarity with the traditional retirement definition is the lack of a full-time career/corporate occupation... no refiree or retiree would consider themselves retired if they still worked for "the man" full time. That's where the similarities stop.

Although there are some refirees who support their entire lifestyle out of their investments and don't need to work at all (therefore meeting the traditional definition of retirement), most of them have some sort of side-hustle, online business, or consulting practice that enables them a large degree of independence, but still requires them to work at least part of the time.

Given all of that, my definition of reFIREment is: "When one no longer works a 9-5 career and supports their lifestyle through a combination of passive income along with self-employment or side-hustles."

To many traditional retirees, the idea of having to manage an income property, do consulting work, write a blog post, or do any "work" would be the antithesis of retirement, but to refirees, the meaning of retirement has more to do with freedom and choice of labor than the absence of work. 

My definition of retirement

I won't consider myself retired if I am working a 9-5 corporate job. That, at least, we can all agree on. But, I wouldn't say I was retired if I HAD to work for myself or run side hustles like a refiree. On the other hand, if I run a business or go to work for fun, that's my retirement and my business. I can quit at any time, so my independence is maintained. Work has almost nothing to do with my definition of retirement. 

“The state of supporting ones lifestyle entirely from passive income.”
— - Real Finance Guy

To me, retirement is essentially synonymous with financial independence. How I utilize that independence is up to me. 

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