It’s no surprise your job feels like a prison after reading many personal finance blogs. It has become a rite of passage for many early retirement (ER) bloggers to declare their freedom from the ‘chains’ of corporate life. After all, being free from what 99% of the world’s salaried class are doing every day certainly gives an early retiree the bragging rights. At times, the financially independent ER bloggers seem like the real 1% as we remain part of the 99%.
Some bloggers recall walking out of their job as the best day of their life, some write about leaving the cubicle prison to embrace the great outdoors, some showing the middle finger to their boss, and many saying bye to office politics. On a bad day, these ER blog posts are like a soothing balm to the wounded employee. They provide inspiration to work on your own financial condition. We often feel better reading some of these blogs, knowing your day will also come when you can do the same as these bloggers seem to have accomplished. However, that’s not reality for most of us…yet. Even if it is for you, it ain’t the end.
If a bad day in the office awakens the entrepreneurial bug in you, read this first before it bites you! Before an office frustration defines your outlook, think twice before buying into the ‘corporate prisoner’ framework.
Sleep on it.
The next morning, you will smile at the irony of financial independence. Your office is not always the villainous terrain that many blogs make it out to be. For most working people, their job structures and gives meaning to their lives. A cranky boss or bad co-worker cannot entirely define your employer and what you do at work. If that bothers you so much, find another job.
Even if you have reached financial independence, think what made it possible. Articles about corporate ‘slavery’ are often written by the fortunate few who make the rest of us corporate warriors feel inadequate. Yet, it is the corporate slavery that paid the authors a good income, matching 401(k) and benefits so they could live frugally and save towards their ER. Would that be enough? No! ER depends on living off investments for decades with the expectation of growth or at least, preservation of capital against inflation. How do you think that will happen? Even after ER, you still need the business world to continually increase sales and improve efficiency so that profits can keep going up. Only then will dividends and stock prices continue their upward march, which all retirees count on.
Every one of the 500 companies in the S&P 500 index, and for that matter, every company traded on any stock exchange anywhere in the world exists for one reason only: To deliver consistent and increasing profits every year. Without growing profits, all inflation-adjusted safe withdrawal rate (SWR) studies fail and dividend investors who count on living off growing dividends would be sorely disappointed.
‘Financial independence’ is a paradox as you are not financially independent of the business world’s relentless drive towards higher profits to ultimately reward shareholders. You may reach employment-independence by achieving the so-called financial independence. Anyone financing their early retirement through SWR or dividends from a large equity portfolio wants reliable income and portfolio longevity. While enjoying your early retirement, you still want the companies to get the most out of every dollar they invest and every cubicle worker they hire. You want the company to hire the best workers and for those workers to be dependent on their job so they are motivated to ultimately…that’s right, keep you financially independent. Just a while ago, you might have been that cubicle worker who the company expected to contribute a lot, so the company can realize a good ROI for keeping you employed. It’s okay to expect a good return as an investor in a company, but it is not okay if the company wants the same from you as an employee? Can you see the irony here?
Those who earned their ER through real estate may think differently. They might see their retirement as not so dependent on the business world, but they are missing the bigger picture. Even if rental income totally covers your living expenses, there is underlying dependency on the business world. You may generalize it as the ‘economy’ but it is ultimately the productive businesses that drive the economy. The monthly rents you receive from renters and their ability to pay higher rents in the future are dependent on the businesses that employ the renters, in other words, by the same companies that get vilified as self-serving corporate prisons. A bad boss or an annoying co-worker or a stifling HR policy can be present in any company, be it a large conglomerate or a small private business. The renters are putting up with all this so they can write you that check on the first of every month.
I am no crusader for companies. I also have my bad days at work. All companies have their annoying sides but as a professional, you can benefit from the business world as much as you want to. I just don’t want to vilify them as heartless evil corporations or cubicle prisons and yet, count on their ability to generate higher profits to finance my early retirement.
What are your thoughts about having the right attitude towards the business world? Is it dependent on your net worth or investment portfolio? Can we ever be truly independent of the business world? Please pick your answer below and share your views in comments. Good luck in your journey towards employment-independence!
Raman Venkatesh is the founder of Ten Factorial Rocks. Raman is a ‘Gen X’ corporate executive in his mid 40’s. In addition to having a Ph.D. in engineering, he has worked in almost all continents of the world. Ten Factorial Rocks (TFR) was created to chronicle his journey towards retirement while sharing his views on the absurdities and pitfalls along the way. The name was taken from the mathematical function 10! (ten factorial) which is equal to 10 x 9 x 8 x 7 x 6 x 5 x 4 x 3 x 2 x 1 = 3,628,800.