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I’m on holidays for the next two weeks, so we’re re-running the most read editions of Carrick on Money from 2018. This particular newsletter looks at the debate over early retirement.

A current fad in personal finance devoted to early retirement has been dismissed by an investing expert. “I think FIRE – financial independence, retire early is silly,” Barbara Friedberg writes in a recent post on her blog.

For background on F.I.R.E., check out this recent edition of the newsletter. Basically, it’s about hyper-saving in your younger years so you can achieve financial independence and retire well before 65. “Don’t get me wrong, reaching financial independence is great, as it relieves a big life stress, that of not having enough money,” writes Ms. Friedberg, who describes herself as a veteran portfolio manager, expert investor, and former university finance instructor. “But, what is the allure of early retirement? I don’t get it.”

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Early retirement is one of the more divisive topics in personal finance. Some people pine to stop working as early as their 30s, others shudder at the thought of exiting the workforce into 30 years of free time. As Ms. Friedberg acknowledges, a lot depends on the kind of work you do. If it’s fulfilling and enjoyable, then you may want to continue doing it as long as you can. If it’s a physical or mental grind, or both, it’s understandable if you want to bail as soon as possible.

Ms. Friedberg suggests that the cure for the early retirement fixation is to find work you enjoy. If that’s not on, then F.I.R.E. offers a way forward through mindful spending – buying less, mainly. This is a great message in the age of free-spending consumption, but it’s also a bet that depriving yourself in the near term will work out in the long term. Life won’t always co-operate with a plan like this.

May I suggest a more balanced approach of enjoying yourself in your younger years to some extent, while also saving actively for retirement at whatever age suits you? This sounds like a boring compromise, but it’s actually a bit radical. Just look at how people are spending today – on cars and SUVs, on houses, on renovations, on trips, on amazing experiences for their kids and more. It’s obvious we’ve tilted more to spending than saving. Restoring some balance here would be a big step toward financial independence.

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Rob’s personal finance reading list…

What seniors worry about

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The top fears are running out of money and not having enough money to pay for long-term care. Yet another nudge to save diligently for retirement while you have the chance.

Decorating tips for people who are living small

Check out these ideas if you’re living in a condo or apartment. Optimize your space so you don’t have to spend money on expensive storage units.

Today’s interest rates help the young, hurt seniors

An opinion piece says the Bank of Canada’s interest rate policy has encouraged heavy borrowing by young people (to buy houses, mainly) and hurt retirement for elderly Canadians by depressing returns from safe investments like GICs. “The policy amounted to a forced transfer of wealth from one generation to another.” A member of that supposedly advantaged younger generation offers a strong rebuttal here.

Cheap and healthy meal ideas

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The editors of the website Kitchn swear by these recipes, which typically require only a few basic ingredients. Sadly, eggs are one of them.

Today’s featured financial tool

Wondering what to expect in the years ahead for investment returns, inflation, life spans and more? Check out these guidelines produced for financial planners.

Ask Rob

Q: “I’m 59 and a year or so from taking full- or part-time retirement and am now more actively planning for that stage of my life. Many of the experts that you interview on a regular basis, including Frederick Vettese – a favourite of mine – talk about the value that annuities play in that plan. I’m sold. Can you shed any light on this from my perspective, assuming that I might want staggered annuities centred around age 65?”

A: I have written a lot over the years about how annuities offer a cash-for-life option for part of your retirement savings. Most recently, I discussed the benefits of annuity laddering, where you buy annuities in chunks instead of all at once. For example, you could make three purchases over three years starting at age 65. The idea is to leave the door open to benefiting if interest rates rise (rising rates push annuity rates higher).

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Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length.

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What I’ve been writing about

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Follow Rob Carrick on Twitter @rcarrick.

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