In recent years, conversations about retirement have been heavily influenced by the idea of “retiring early.” You may have seen headlines, YouTube videos, or even friends sharing stories about how they want to stop working by 40 and “enjoy life.”
But financial independence and retirement are not the same thing. And treating them as the same can lead to very different outcomes.
Financial independence simply means you have enough resources or income to support your lifestyle without needing to rely on a (full-time?) job. On the other hand, retirement means you are no longer going to work anymore, whether it’s by choice or not.
One is about financial readiness; the other is a decision on whether you want to continue working.
You Can Be Financially Independent & Still Choose To Work
There are people in Singapore who are financially independent and still choose to work, sometimes even in high-stress, demanding jobs.
On the other hand, some people have stopped working for a period due to old age, travel, or rest, but they are not yet financially independent. They may be relying on savings, family support or even part-time work to sustain themselves.
So “not working” doesn’t mean you are financially independent. And being financially independent doesn’t mean you must stop working.
We Sometimes Confuse The Breaks We Take With “Being Free”
It has become more common for people to take breaks from work. Some call it a sabbatical. Others take a year to travel, and spend time on a personal project to avoid burnout. From the outside, it may appear that these individuals are financially secure and do not need to work.
However, in many of these cases, the time off is partially supported by their savings and/or other part-time work. There is nothing wrong with this. In fact, many of us may need such breaks at some point. But we shouldn’t confuse it with having built a system that can support us for decades.
Quite Often, It’s Our Life Goals That Determine Our Financial Decisions
One of the most overlooked aspects of financial planning is that everyone’s starting point and obligations are different.
A dual-income couple with no children (DINKs) can potentially accumulate financial assets faster. Their cost base is lower, which gives them more flexibility in housing and lifestyle choices. For example, a 27-year old Singaporean couple is able to quick their high-paying corporate job, rent out their HDB flat, coupled with their savings, to travel the world. It goes without saying that this would not be feasible for a similar-age couple with young children.
Read Also: Does It Make Financial Sense To FIRE In A Different Country Through Geoarbitrage
You Can Be Financially Independent & Choose to Work
Likewise, gaining financial independence doesn’t mean we need to stop working. If we enjoy what we are doing, we can continue doing what we love while earning a decent salary at the same time.
Of course, having financial security helps. It’s possible that your dream job may not pay you as much as your current job, and this means having to take a pay cut for the job. It’s a lot easier to take that pay cut when you are financially independent.
Reaching financial independence doesn’t mean you must stop working. For many people, the goal isn’t to leave the workforce entirely.
When your finances are stable enough, you gain the freedom to choose work that fits your life, instead of shaping your life around work. For some, this could mean moving into a lower-stress role, shifting to part-time hours, freelancing, starting a small business, or pursuing something you find meaningful, even if it pays less.
It’s the difference between working out of choice and working out of obligation. When someone says, “I work because I want to, not because I have to,” that is financial independence in practice, even if they are still working.
Read Also: YOLO VS FIRE: How To Enjoy The Best Of Both Worlds
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