"When is the best time to retire?"
Never is the best time to retire.
I was asked that question in an idea list about why I think the retire early aspect of FIRE is a terrible idea. I'd tell anyone who would listen to forget about ever "retiring." Focus instead on the next step or next chapter and using you're earlier professional years to create a transition to a post retirement period that is very active and potentially lucrative.
1. "What would you do if money was no object? Do that."
That quote in idea #1 is attributed to Alan Watts. Here's the video.
2. Pay your dues
A fire department colleague hates that term, I love it. Your early 20's can be a time for adventure, relevant to my life now, like working for the Forest Service fighting wildfires although I did not do that in my 20's. Later 20's and into your 30's is a time to build a knowledge base and if you're lucky a financial base.
A good financial base or emergency fund that could cover a couple of years worth of expenses could provide fantastic optionality at a pretty young age. I got laid off at 35 but we had about a year and a half's worth of expenses set aside that we could have used before taking the desperate step of tapping my 401k.
The job I got laid off from was a pretty good job and it definitely helped me build both types of bases mentioned above. I then spent another year building these bases before moving on to my next and current professional chapter as a self employed investment advisor.
For anyone associating retirement with freedom, becoming self employed is when I obtained freedom where freedom is defined by things like setting your own schedule, not needing an alarm clock or having to include things like "opinions are my own" in your Twitter bio. If you can accept the above definition of freedom then I retired at 37.
I don't think of myself as retired, I moved on to something that gave me more flexibility, more ownership of my time to do what I want. Some will call that retired but it was actually the beginning of a period where my workload increased dramatically building a much more rewarding career than I ever would have had as a W2. I was unambiguously freer than I'd ever been as an adult but working hard than I ever had.
4. You might need an income after you "retire"
Traditional retirement is a difficult transition for many because they lose purpose, routine, social interaction and their paycheck. I would argue it is better to instead transition into your post-primary-career and for the best outcome, start that transition early, like now. The earlier you start the more optionality you'll create for yourself.
5. Seeking out new professional endeavors
I knew early on that to help start this new phase of my career as an investment advisor, an independent investment advisor, I would be a prolific writer. I wasn't hoping for a big audience, I was hoping for a way to document be correct about some things. It turned out there was interest in my content and I was lucky enough to grow a pretty big audience. This was in the earliest days of blogging and while I still do blog, my audience now is tiny.
Writing though did become a new endeavor in terms of what it led to. I was a regular outside contributor at TheStreet.com for eight years. It also led a pretty great side gig at ETF provider, AdvisorShares. Writing also gave an opportunity to go on stock market television many times over a 5 or 6 year period. That was a fun thing as a unique set of experiences. Where writing led to lucrative opportunities in the past they could do so again so I continue to write for that optionality but more importantly because it is fun.
6. Immerse in hobbies or other areas of interest
The starting point of a hobby is to have fun of course. Some hobbies lead to revenue streams. Do you like to create things? Paintings? Photographs? Music? Something else? What if it turns out your really good at the thing you like to create? What if you're great at the thing you like to create? This creates a path to an income stream. Even if there is no income stream to be had, this is a productive use of time, productive because it is enjoyable.
A non-creative hobby, like stamp collecting. There are people who essentially know everything there is to know about stamps because it interests them and is fun for them. Same with other collectibles. Although time consuming, this is a path to an income stream too. Even though these sorts of things are time consuming people have a blast with time spent this way. Even if there is no income stream to be had, this is a productive use of time, productive because it is enjoyable.
7. Teaching or coaching
Helping others in this way is very rewarding and purposeful, regardless of how much income is or is not realized.
8. Actively volunteering
I use this example all the time for just about everything. I've been a volunteer firefighter for 19 years. There'd be something for me to do to help around the station house for the rest of my life. There's a clear path to an income stream from it right now if I wanted to pursue it. Having something purposeful to do is always there for any volunteer opportunity. Converting into an income stream may not always be possible but the more time you put in, the better chance you'd have.
9. Don't just wait to die
That's pretty harsh but for a lot of people, that is what their retirement turns into. The above list is all about how to transition into a next chapter full of purpose and beginnings not an end.
The point in idea number 3 is that I started this transition in my 30's, very early as per idea number 4, after building the base I needed in my 20's, paying dues. As the years have gone on I've been adding ideas and endeavors into my life such that if I ever stopped being an investment advisor (seems unlikely) I would just be giving up one thing in my life out of many things going on which isn't all that disruptive or difficult.