Financial Independence and Mental Health
Financial Independence and Mental Health
I have talked in the past about the money mind meld. Basically, the realization that I was financially independent came to me suddenly, and hit me like a ton of bricks. I was in no way prepared for the rapid switch in world view, and it took me months, if not years to wrap my head around what post FI life looked like emotionally. Although those striving toward financial independence believe that feelings associated with reaching their goal will most likely be joy and ecstasy, for many of us the reality has been quite different. This does not mean that financial freedom is an unworthy goal. You wouldn’t be here reading if that was the case. There is a relationship between reaching financial independence and mental health, however, that is not always positive.
The best way to avoid these pitfalls is to be aware of them from the beginning . So I thought I would talk about a few that can be particularly dangerous.
Depression
My first realization after stumbling upon financial independence was that I was profoundly depressed. At the flip of a switch, I was suddenly aware that a large part of my life’s purpose was behind me. I had worked hard enough to accumulate a sum of money that should last forever. This conclusion came at a time when I was struggling with medicine and feeling burned out.
Why wasn’t I joyful?
A big part of the answer was that I was lost. I had spent so many decades defining myself either in the identity I had built around being a doctor, or the clarity I found in boosting income and starting businesses. In one fell swoop, none of that mattered anymore.
But who then was I? What gave my life meaning? Why wake up every morning?
Of course I had family and friends. I had trips and vacations. It’s not that my life lacked complete direction. But a singular purpose was missing. My identity was no longer wrapped up in my profession. I had nothing left to strive towards.
Financial independence and mental health are not always synonymous. Dysphoria can be as common as euphoria.
Anxiety
Another common feeling that surrounds reaching financial freedom is anxiety. There are several reasons. The most obvious is that once this sacred goal is reached, there is fear that it will be snatched away. Maybe the market will crash and I will become a victim of sequence of returns risk. Or real estate will plunge. Maybe the cost of health insurance will go so high that I won’t be able to cover my monthly needs.
There is also the one more year phenomenon. Should I retire early or not? This stress often causes anxiety to rise as a careful conservative saver tries to let go of the accumulation phase.
This is part of the reason we are kidding ourselves with the safe withdrawal rate. Why we hold onto jobs too long or start crazy side hustles. There is certainly a component of that in my half retirement.
Anxiety is one of the most difficult connections between financial independence and mental health.
Isolation
We are natural stealth wealth practitioners. We learn early in our path that our friends and family often do not want to hear us proselytize. They don’t understand our proclivity to frugality and don’t want to be judged for their spend thrifty ways. So we stop talking about our habits. We hide our wealth.
And then when we retire early we realize that the dark side of stealth wealth is isolation. We are alone. We no longer socialize at work because we quit our jobs. Our family and friends can’t go out for coffee on Monday morning because they are all too busy working.
Even if they could spend time with us, they think something is wrong. They ask us if we are ill or having a mental breakdown. Their worldview doesn’t include nor understand early retirement.
Final Thoughts
Financial independence and mental health are closely tied but not always aligned. Often reaching this glorious goal post leads to both euphoric and dysphoric emotions. Being aware that depression, anxiety, and isolation are all possible responses to financial independence helps ease the transition.
None of these feelings need to be permanent. Purpose and identity can be rebuilt and depression abated. Anxiety eases when we make these difficult transitions and find that the world doesn’t fall apart around us.
And isolation can be minimized by making new friends and reaching out to this wonderful personal finance community.
Great job of pointing out some of the negative aspects of FIRE. The isolation can be a huge reason why depression can occur when you lose your work identity that you have built for so long.
I think that’s why I am happy I started blogging and hope to maintain this after I leave work. I feel a part of a great community and one that is very interactive with comments etc. As long as you can remain socially engaged through this I think you can push back some of that isolation
Being involved in this community, any community, helps.
Important to discuss the emotional side of FIRE that I think many people go through, but not that many actually write about. The isolation piece is quite interesting. It’s one that you don’t expect to happen since once you fire, you expect to have so much more time, but the truth is that most other people will be continuing to work, even when you are not. Would be curious to hear how you combatted these emotions in your early retirement.
I went to CampFI and hung out with you guys at FinCon. In other words, I had to rebuild a community.
The anxiety and fears you point out are probably the biggest hurdle everyone faces once we are lucky or skillful enough to reach FI. I believe that pushing yourself out of your comfort zone is the key. It’s not easy, but each time I have done that, on purpose or by circumstances, it has given me a feeling that I can dare to try more new things. Forge a new life. Live differently.
You know Susan, meeting you and reading your blog, I think you can do almost anything. You sound pretty brave to me.
Depression probably isn’t quite the right word. It turns out serotonin is associated with status and accumulation of status and the feelings of power associated with possessing status and serotonin tends to shut off once the competition for status ends. This behavior is even present in crustaceans and animals that don’t even have brains only ganglia, so it’s a very old system. It is sub-cortical but none the less powerful.
Anxiety at least for me was about living through the beginning of portfolio deflation. Kind of like getting your sea legs. I monitored every day what was happening with the money and eventually I saw my plan actually was solid and sustainable. As time went on my daily monitoring turned into weekly and now bi-monthly, about ten minutes devoted to that. Portfolio deflation is nothing like accumulation, and once you start to deflate usually after leaving the W2 you take back all of your risk of living from your employer, and that is stress producing because humans are neurologically hard wired for risk avoidance. Understanding this FACT is a great help because you can write off a large part of your anxiety to being how your brain is wired, and not due to an actual impending life failure. Understanding this helps to re-equilabrate the sense of risk avoidance. In my above account checking behavior you can see this exact relative extinction of checking. First a lot of checking now far more rational checking.
Isolation is somewhat associated with status in that our “work” colleagues and the team you form are part of that status. As long as you don’t take drugs, alcohol, food and TV/screens and engage your life, new beginnings will assume the position of familiar haunts. In retirement there is no sunset, in fact the opposite. It’s a new sunrise. All time travel is forward. The past is merely a memory. It is not defining, but at best prologue and adds context to what is new. The advantage of retired time travel is the time belongs to you and you alone. It’s actually quite delightful.
I’ve been thinking a lot lately about finding balance on the way towards financial independence. Go all in MMM style or take a more measured approach and double the time to FI.
We are finding our groove and have well over 10 more years until FI is a reality. I hope that seeing FI as a journey and not the destination will help with some of the struggles you had when you stumbled into FI
I think the ideal is somewhere in between. Some frugality and some enjoying the journey.
Dr.Gasem,
Your analysis of each line item is absolutely realistic and in real time counselling in open for taking. Thank you for your well thought-out out look in to life after great carrier.