Pros And Cons Of Early Retirement Extreme

Pros And Cons Of Early Retirement Extreme

Retirement doesn’t always mean that you never have to work your butt again. And early retirement doesn’t even mean that you’ll be going to live the ideal lifestyle.

Does retiring extremely early mean financial freedom?

And why do people want to retire extremely early today?

Early retirement can be achieved by generating enough resources or money to cover all your regular expenses. This is a practice of living wherein you intend to leave your employment before the statutory age.

What Is An Early Retirement Extreme? 

The Early Retirement Extreme (ERE) movement requires saving aggressively and a drastically simplified lifestyle. The ultimate goal of ERE is to achieve financial independence very fast, in about 5-10 years.

This requires up to 80% of your paycheck to be invested and 20% as your budget for all your expenses – both fixed and variable expenses.

How can you retire extremely early? The answer is completely depending on how well you could manage your personal finances. Managing your personal finances with the purpose of achieving retirement after 5 years requires a huge overhaul of your budgeting.

Retiring extremely early has become a huge movement especially for the people who hate or are not really to engage with their full-time job. Unfortunately, there are 85% of people around the world who hate their job and Japanese are surprising up to 94%.

So, no wonder why ERE became very popular worldwide.

But what does it really take to follow ERE?

Before you imagine quitting your job in five years, consider these ERE’s pros and cons.

Let’s get started…

Pros Of Early Retirement Extreme

Aggressive Saving

Many financial experts and professionals recommend retirement savings rates of only 10-15% while using the concept of ERE requires a savings of up to 80% of after-tax take-home pay.

Need to earn DIY skills to save money

As part of the cost reduction strategy of ERE, aspiring early retirees have to learn DIY skills to avoid paying someone else for skilled work. This includes auto-repair, carpentry, cooking, gardening, plumbing, sewing etc.

Positive Ripple Effects

ERE promotes point to positive ripple effects of reducing lifestyle expenses – like taking a walk or bike to get around instead of using a car. This way you can improve your health without going to the gym. This can save you money and at the same time reduce your health care cost.

Learn About Investment

ERE advocates learning to invest to avoid paying professional fees for this. Here are some of the few things you need to know about investment and why it is important.

      • Investing Can Deliver Great Returns
      • Diversification of Assets
      • The Power of Compounding
      • Failing to Learn to Invest Increases Your Risk of Making a Mistake
      • Famous People Do It
      • Great Tax Benefits
      • It Helps You Stop Exchanging Hours for Dollars
      • Inflation
      • You will Have to Invest Sometime in Your Life Anyway
      • Nobody Else Will Help You Any way

Read more here.

Investing your savings

The ERE movement advises the aspiring early retirees to invest their savings until they’ve accumulated enough money to cover all living expenses with their investment returns, just using the so-called 4% safe withdrawal rate rule.

Theorically, spending only your investment gains combined with the build-up of compounding interest earning enables you the pot of savings to last indefinitelyas long as you maintain your newly frugal lifestyle. 

This will free you from working and trading your time for money for the rest of your time.

Cons of Early Retirement Exteme

Aggressive Frugality

As you save your money aggressively, your budget for your daily expenses will become drastically lower. ERE advocates cut way back not only on minor costs like cable TV and lattes, but on major expenses like food, housing, and cars.

So, if you love netflix series or going out to eat, or traveling different places, then ERE will be difficult for you, unless you earn extraordinary big income.

Social Engagement Limitation

Continuing to do productive work is a way of staying engaged socially and intellectually. And according to one study, working past age 65 could lead to a longer life. So, ERE is not necessarily a good idea for one’s financial and emotional wellbeing.


Whether we like it or not, prices increase an average of 3% a year. Being an ERE retiree, you are not incontrol of this inflation rate. So, your income from your investment is not that really stable and secured.

Risk Of Market Crash

Statistically speaking, a market crash happens every now and then. Some experts who are analyzing the graphs state that the market crash happens approximately every 10 years.

As an investor myself, I know that nobody really 100% predicts when the next market crash will be coming or whether the market will bullish and bearish today.

So, no matter how good you become in investing your own money, your investment is not 100% protected. Thus, your monthly withdrawals can be affected.

Not suitable for families with children

One of the biggest critics of this movement is the childcare. Childcare occupies a big part of the budget and cutting way back on this carries emotional distress.

Indentity Crisis

Psychologically speaking, when people stops working whether by losing a job, normal retirement or extremely early retirement, they tend to experience an identity crisis.

Losing a job title at the workplace or a professional title and engagements is a huge impact to one’s life.

Just like my friend and fellow nurse, Susan, said “Why should I retire early? All of my friends are working. When we gather together, all what they talk about is their work. What will I talk about then if I retire early?”.

A lot of people who retire extremely early, including the author and founder of ERE, Jacob Lund Fisker, return to work after a few years of being ERE retiree.


There are a lot of people who are happily living an ERE lifestyle today. However, ERE is not for everybody. Yes, everybody wants financial independece but this concept requires a huge overhaul in one’s finances.

If you’re considering to take a leap and use ERE concept, make sure you ask yourself if you can cope up with the pros – especially in learning DIY skills and investing as well as the agressive savings ratio of up to 80% of your take-home pay.

Whether you have kids or not, this big decision requires a thorough consideration of a lot of things.

ERE is not my style. I have a big respect to those people who can leave a extremely simplied and minimalistic lifestyle.

I love enjoying things in life like travel, going out with friends and families, holding parties at home, driving around the cities and long drive around Europe etc.

I enjoy life and even if I’m already able to retire, I’d still be going to work part-time as a nurse and still find ways to make money online. Just like this blog. This is just one of my sources of income.

Your Better Option

I love working for my own business from home. Affiliate marketing is a type of business that has made many people a huge fortune while others are just earning around $10,000/month and this is what I’m doing and I love it.

See, how I earned up to $1,174.09 per day doing product reviews and how you too can do it.

There are many reasons why you should use this concept too to earn a full-time income from home. And these were my reasons when I started with this business.

  • I can earn money with any product online
  • The simplest and easiest concept for online business
  • Sure success as long as you keep going
  • Unlimited earning potential
  • No face-to-face or direct selling
  • No face-to-face rejection
  • No networking
  • No recruitment
  • No inventory
  • No administrative work
  • Very low investment
  • I can work entire just with my laptop and internet.
  • I am my own boss
  • Scam protected
  • I can earn Passive Income online!

So, if you hate product demonstration or presentation, public speaking and certainly not a fan of recruiting your families and friends just to earn, then this is the best business for you.

However, I know this business is not for everybody and there are some other opportunities rather than affiliate marketing and bloggin. So, I have created a list of the proven ways to earn money online for you.

Start your affiliate marketing business now.
Earn while learn and build your passive income online. 

I’m looking forward to seeing you and guiding you in this awesome community. See you on the inside.

This is the end of my topic today “Pros And Cons Of Early Retirement Extreme“. I hope this post will help you to improve your personal finances by making a better decision.

If you have any thought or question, please don’t hesitate to leave a comment below. Good luck with your journey to financial freedom online. God bless!



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