To successfully retire early, you need to fill these three requirements

  1. You must make enough money and be able invest it well.
  2. You must be able to budget your spending.
  3. You must be able to enjoy living without work.

(You could argue that 1) is two things, but if you don’t make enough money, you can’t invest in the first place, so it’s effectively one criterion.)

Let’s see what happens, when some qualities are lacking.

Those who got (1) and (3) but lack (2) think they need 5, 10 or even 20 million dollars to retire. They will be working all their life. They have no idea how to get more living out of their dollars, so they will try to accumulate ever more of it. No amount will be enough.

Those who got (2) and (3) but lack (1) will do okay, but they will never accumulate enough money to be financially independent. Likely they will just work at little from time to time. They will never retire.

Those who got (1) and (2) but lack (3) will become financially independent, but they will eventually get bored and go back to work. I may be in this category.

Those who got (1) but lack (2) and (3) make great providers. They see it as their job to work and support. When they look back at how hard they worked and how much money they earned, they can’t think of where it went.

Those who got (2) but lack (1) and (3) make great supporters. They should marry the ones discussed in the paragraph above. Alone, they’d be rather miserly and bitter knowing how to handle money but not having any to handle.

Those who got (3) but lack (1) and (2) will serve as a bad example of someone who have run up their credit and declares bankruptcy.

I’ll accept corrections and additions to these combinations in the comments below.

Originally posted 2011-07-18 12:06:05.