A blog about how to achieve Financial Freedom

Retire before you're 40

RETIRE before you’re 40

Wouldn’t it be fantastic if you could retire before you’re 40 years old? In this article, we share our story to inspire how you are also able to retire early. Not by working like crazy in a few years. This may seem a good way, but you will probably end up with a burnout, which will only help you retire even later.

Retire before you're 40

The day you don’t have to work anymore is a hallelujah moment for a lot of people. Some of us win the lottery, but most have to work a long time to reach the stage of their pension. The majority of people need their pension to accomplish this. After this, the ‘good life’ begins.

The problem with the old-school pension

Unfortunately, there are a few problems with an old-school pension:

  1. People are getting older. This increase in age makes it more difficult to keep pensions up to the right level. It is common practice that pension payments nowadays are lower (because pensions are not indexed), which means that overall pension ages are raised
  2. You only receive your pension when you reach a certain age, mostly somewhere above 65, while you are more able to enjoy some free time when you are younger and still have a lot of energy to do different things
  3. Pensions are based on the principle of having one fixed job during your life (preferably) and a steady salary. When you are flexible with your work, often change jobs, or having a sabbatical year, you will end up with a pension gap
  4. Pensions are expensive for entrepreneurs or small businesses. It is nearly impossible to get a decent pension plan yourself if your employer doesn’t provide one or if you are your own employer
  5. Pensions are part of the legislative framework of a country and are controlled by the government. The ‘rule makers’ get to determine the rules and can change them. Ultimately you are not in control of your own money.

These problems make it attractive to look for alternatives when it comes to your pension.

It is very important to be pro-active about creating your own pension. A lot of people see pensions as something for the far future and often neglect the subject as an important financial issue to act upon today. That understandable, because where do you start? And how do you ensure a financially secure future for yourself?

From retirement to pretirement

Powered by the problems with old-school pensions, the original definition of retirement is starting to shift. New forms of retirement are emerging as we speak, creating a whole new idea of retirement. In the past, the idea was to work first and relax later. Nowadays a lot of people start to see the advantages of being able to relax a little bit earlier in life, creating a different work-life balance

In the ‘old’ definition, retirement means that you don’t work anymore at all. Instead, you are getting a defined benefit or contribution plan that allows you to pay for your expenses. Being retired is closely related to having worked a lot of years in your life and reaching a certain respectable age at which working is no longer possible and or desirable.

In the ‘new’ idea of retirement, retirement is not only for old people. Instead, retirement simply means that you don’t HAVE to work anymore, or that you choose to work less. This can be achieved at any age, as long as there is another income source present. The term pretirement or early retirement describes this new kind of retirement, positioned between traditional employment and retirement.

The Financial Independence Retire Early (or FIRE) movement is all about this idea, showing new concepts that the ideas behind early retirement. FIRE is rapidly growing and especially popular with the millennials in the workforce.

Creating financial independence

Retire before you're 40

For us, retirement is closely related to the concept of financial independence. Retirement is not only when you are too old to work. You can be retired and still able and willing to work, but the big idea is that you don’t HAVE to. This means you’re financially independent.

If we zoom in to this, being financially independent means you are not depending on your job to live your life. It gives you the freedom to quit your day job without having to worry about the monthly bills coming in. Other income streams (s) than your work cover the monthly bills. Because of this, you can eliminate the pressure of needing your job to get by. Now, you can create a way of living that gives you a lot of freedom.

How you can retire before you’re 40

For us, financial independence was an important step in reaching our goal. We always wanted to be able to start a new adventure without being tied to monthly fixed costs. This idea of financial independence was fed by our vision of being our own boss without having the financial stress that often is part of being an entrepreneur. Not having the pressure of needing new sales, clients, and/or assignments was very important for us. The steps that helped us to reach our goal were.

  1. Having a Big Hairy Audacious Goal, which determine why we want to be financially independent and for what we are working towards for
  2. Saving as much money as possible cutting expenses as much as possible
  3. Paying for our real estate in cash without having the burden of a mortgage
  4. Creating a (semi-)passive income from renting out rooms to student creating assets which allows us to have a basic income to cover our living expenses

Following these steps will help you to retire before you’re 40. Whether it is by investing in real estate as a pension fund for the future and have income from the rent. Make sure that working isn’t per se necessary to cover all your expenses. And then you can continue working, like us. Just because we love to explore new adventures and reach new goals.

Interesting read: Meet People that Retire before 40


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