People tend to think of adult life in two stages: when they work and when they retire. But as of late, the idea of creating a “work-optional” lifestyle has shifted how you can consider these stages.

What if you didn’t have to wait until you reached a certain age to retire? Given the resources and benefits available, traditional retirement doesn’t have to be the norm for tech employees. In fact, you may be surprised to learn that a work-optional life is within reach.  

What does it mean to be work-optional?

A work-optional lifestyle comes when you’ve reached financial stability you can sustain long term.

How can you create a financial plan that makes work optional? Let’s find out.

Understanding Work-Optional

Work optional is, essentially, an alternative to retirement; it utilizes financial freedom to create a sustainable lifestyle that isn’t reliant on a paycheck. Being work-optional means that you have the option to leave your current career earlier than you normally would, like full retirement age. 

There are different ways to reach a work-optional lifestyle. You may have created a large enough nest egg to retire early or accumulated enough savings to switch gears. Living this way could allow you to take on a passion project, start a business, work part-time, or change careers. It can also give you the freedom of knowing that while you can continue in your current role, you don’t have to. With this lifestyle, you can leave anytime you want and you can choose to stay. 

Work-optional is considered a new and improved alternative to retirement. Why? Because many of us love our career paths—no matter how winding—and view retirement as an opportunity to refocus our energies on fulfilling and exciting endeavors. 

How to Find Your “Number”

The biggest question about transitioning to a work-optional life is how much needs to be in your savings.

To determine the answer, reverse engineer the question. Start by considering what your ideal life looks like. Maybe you’d like to travel a couple of times a year, start a business, move to a new city, etc. Whatever you want your work-optional life to look like, determine approximately how much you plan on spending annually.

To start this process, look back at your current financial statements. What recurring expenses should you expect to cover? Some could include:

  • Mortgage or rent
  • Utilities
  • Insurance (health, life, car, home, etc.)
  • Travel
  • Debt (car payment, student loans, etc.)
  • Holiday expenses/gifts
  • Phone and internet bills

Get as detailed as possible when creating this list. The more realistic and inclusive your yearly expense total is, the more prepared you’ll be. 

Once you have a good idea of what your yearly expenses will look like, multiply it by your anticipated life expectancy. For how long will you need to be able to cover those expenses? In addition to living expenses, you’ll need to consider acquiring sufficient health insurance among other nuances. Stopping work altogether would, of course, require a more significant savings goal than switching careers or going part-time.

As you consider how long you’ll need your nest egg to last, assume a long and prosperous life. The average lifespan in the U.S. is about 78.9 years, so if you want a work-optional lifestyle at 40, that gives you nearly 40 more years of good life ahead. 

Don’t outlast your savings; make sure you’re well-prepared for longevity no matter how your work-optional life pans out. 

Address Hurdles 

If you’ve taken the amount of money you need to live each year comfortably and multiplied it by your predicted life expectancy, you’ve likely landed on a rather considerable number. While it can seem intimidating (maybe even impossible), take a breath and slow down—there are ways to address the hurdles ahead.

Instead of aiming for a full stop, consider alternatives. Replacing your 40+ hour work week with a part-time job, consultant gig, or career change can help move you towards a work-optional lifestyle while putting less burden on your savings.

If you’re not living work-optional yet, but know you want to be soon, consider how you can lessen your expenses in this new phase of life. Maybe now’s a good time to focus on paying down debt (mortgages, car payments, student loans, etc.). With less debt to pay off later, you may reduce your yearly expenses significantly.

Now’s a good time to start ramping up your savings efforts as well. Look at your current spending and identify opportunities to reroute or re-prioritize your monthly income. A few years of saving diligently could be enough to reach your target number.

Find Financial Freedom with Brightview

When done the right way, a work-optional lifestyle can be exceptionally freeing. Quitting work tomorrow because you have complete financial freedom can help bring perspective to your professional life. When you aren’t in it because you have to be, you know you’re working because you’re passionate about what you do.

If this is your goal, consider what you want the next phase of your life to look like. Plan accordingly to give yourself the freedom to forge a path that’s right for you.

If you haven’t already, speak to your advisor about the desire for a work-optional life and the steps you should take to get there.

I’ve helped professionals in the tech industry achieve work-optional lifestyles for years. Together, we can establish a savings goal, develop a plan, invest accordingly, and prepare for a work-optional lifestyle that suits your needs.

To determine if we may be a good fit, feel free to schedule a time to talk.

After a successful career in high-tech, Sheila McGinn, CFP® followed her passion and became a fee-only Financial Planner, where she helps clients navigate complex financial decisions and reach their financial goals.

Disclaimer: This content is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. For advice specific to your situation, consult a financial planner, accountant, and/or legal counsel. Reproduction of this material is prohibited without written permission from Brightview Financial Solutions, LLC, and all rights are reserved.