Is it irresponsible to retire early?

For those of us who diligently save, invest, and plan with the goal to be able to retire sometime before the average age of 62, early retirement seems like an achievable and perfectly reasonable thing to aspire to. However, it’s worth reminding ourselves that most people don’t think this way.

I recently read the stream of comments on an article about the author’s journey to, and ultimate achievement of, early retirement in his 30’s. Readers’ comments ran the gamut but could roughly be grouped into a few categories, including “good for him”, “this is impossible”, and “you’re not pulling your weight by retiring early”.

It’s the latter objection that really struck me. One of the commenters’ point was this – the government spends a lot of time and money educating each person in the US. Kindergarten through 12th grade, plus possibly 4 additional years of subsidized college, adds up to a substantial investment. If a person only works for 10 or 20 years not only are they not paying enough in taxes to “reimburse” the government for the cost of their education, they aren’t doing their part to fund Social Security, Medicare, and Medicaid through payroll taxes either. In short, people are mooching off the system to retire early.

student-849825_1280According to a report from the Census Bureau, in 2012 it cost, on average, $10,615 per year to educated a child at a public school. Using a handy-dandy inflation calculator we find that’s equivalent to $11,039.8 in 2016. 13 years of education (K-12) then costs the government (mostly local and state, with some federal contributions) $143,517.40 in today’s dollars. That IS a large investment. Are we then indebted to the government (or society, or however you’d like to think of it) to work for 45 years to pay back that money through income taxes?

I think the answer is no for a few different reasons.

1. You don’t owe anything

You can’t be beholden to somebody else for something you’re forced to do. Education is obligatory until a person turns 18 years old. If the government is forcing you to attend school you’d don’t have an obligation to “repay” the government by generating sufficient taxable income.

2. You’ll still be paying taxes in retirement

Second, retiring early doesn’t mean the end of paying taxes. If a person retires early and doesn’t receive any more salary, or EARNED income, then it probably mean the end of payroll taxes for the retiree. However, I don’t know of anybody who just puts their entire retirement nest egg in a non-interest paying account and steadily draws the account down throughout their lives. People buy stocks, bonds, CDs, rental properties, etc. The income from those sources are taxed. In addition, retired people who own homes pay property taxes (which largely fund local education) as well as sales taxes.

3. You’ve Probably Paid Enough Taxes Anyway!

money-163502_1280I assume that the average person pursuing early retirement is making
significantly more than the average person. Yes, there are people making $40k that are retiring early, but to get there they need to practice the kind of extreme frugality that has no appeal to the average person. As your income increases your taxes increase faster. The average per capita income in the US is approximately $36k. If you double your income to $72k you’ll pay approximately 3.5x as much in taxes. If you’re in the $200k+/year income bracket and you’ve worked for 10+ years you’ve likely paid enough taxes to cover your education and then some. If you earn enough to achieve early retirement, you’ve likely been a high earner and have thus paid quite a bit in taxes already.

4. Benefits are Proportional to What You Paid

Programs like Social Security provide an income in old age (roughly) proportional to what a person contributed over their lifetime. If a person pays less into Social Security over their lifetime they’ll receive lower benefits as a result. Your benefits are based the average of your inflation adjusted salary (up to the maximum amount of taxable Social Security earnings, which is $118,500 in 2016). If you retire at 45 years old and don’t generate any more earned income then you’ll get a $0 in income for the next ~20 years until you retire. Your benefits will thus be significantly lower than they would have been if you’d worked until retirement.


So, in short, I don’t see anything irresponsible about retiring early. If you get to early retirement you’ve likely already paid PLENTY in taxes, you’ll continue paying taxes in retirement, and you won’t be taking anything from the system anyway.

4 thoughts on “Is it irresponsible to retire early?

  1. I refuse to feel guilty about making a decision that will be in the best interest of my family and me. I’m pretty sure I’ve paid my dues or “debt to society” or whatever someone might want to call it.

    In a little more than ten years as a full-fledged physician, I’ve paid about $1.6 million in income taxes alone. By the time I retire a few years from now, that figure will be right around $2 million.

    If I find a way to avoid income taxes in early retirement, which is quite possible (see The Taxman Leaveth, I certainly won’t feel like I’m cheating anyone.


  2. Early retirement is definitely not an irresponsible thing. In fact it is a result of financially responsible decisions you have made in your life. Calling it irresponsible reminds me to communism where in many countries you could actually go to jail if you didn’t work and refused the work offered to you as it considered to be dangerous for the society.

    1. Roadrunner – the argument against early retirement that I find interesting is this: society has made a large investment in you. You’ve been provided a free primary and secondary education, and if you’ve attended a state university, you’ve also been provided a heavily subsidized university education. The hope, of course, is that society’s investment in you will pay off. You’ll become a productive member of society, pay taxes, and fund the next generation’s education to ensure their life is as good or better than yours. More importantly (and perhaps more self-servingly) you need to be productive to help fund the retirement benefits of the previous generation that funded your education.

      By retiring early you’re effectively breaking that unwritten contract. Is this irresponsible? Do we have an obligation to be productive for a certain amount of time (or pay a certain amount of taxes) to repay this investment in us?

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