Most tech employees love what they do, but that doesn’t mean they want to do it forever. Because they work in a field with especially lucrative benefits (namely, equity compensation and competitive pay), many can experience financial freedom well before the traditional retirement age.

Let’s examine what it means to enjoy a work-optional lifestyle and the considerations for achieving it.

What Does “Work Optional” Mean?

“Work-optional” refers to an individual’s ability to live entirely on their savings and investments without sacrificing their quality of life. With a work-optional lifestyle, you work because you enjoy what you do, not because you need a paycheck to rely on. 

This term typically applies to those who are younger than traditional retirement age. Tech employees in their 50s, or sometimes even late 40s, may pursue a work-optional lifestyle that’s more active or career-focused than those in a traditional retirement.

The primary benefit is that it enables tech employees to pursue their passions, make bolder career choices, or take long periods between jobs—all possible because they have the financial security to do so.

How to Achieve a Work-Optional Lifestyle

The key to achieving a work-optional lifestyle is to find a way to replace your future paychecks with other sources of income—savings, investments, interest or distributions, passive income, etc. 

Like a traditional retirement, you’ll need to figure out your “magic number”—how much you’ll have to set aside to achieve financial freedom. This number is something you and your advisor can determine together, as it’ll depend on several unique factors:

  • Your age and life expectancy 
  • Recurring expenses (utilities, insurance, taxes, etc.)
  • Cost of living (especially if you plan on moving to a new area)
  • Goals (travel, starting a business, philanthropy, etc.)
  • Debt (mortgage, student loans, car payments, credit cards, etc.)

From there, you can figure out how much you’ll need annually to cover your financial obligations and maintain your lifestyle. Perhaps that’s a certain percentage of your current salary, say 80%, or a number, like $100,000. Multiply your anticipated annual expenses by the years you expect to live and work optionally (likely 30-40 years) to get a rough idea of how much you’ll need.

The Challenges of Retiring Early

One of the biggest challenges people face when entering into a work-optional lifestyle is that they don’t have access to the same resources as those who choose to retire at a more traditional age. 

They may have to wait until they’re older to avoid penalties and gain access to benefits like:

  • Social Security benefits
  • 401(k) and IRA distributions
  • Medicare
  • Pension plans (this would be extremely rare, but if applicable)

While these present an added hurdle, they shouldn’t stop you from trying to retire early if that’s what you want. For example, working a part-time or less stressful full-time job may help you access affordable health insurance and boost your savings. You may also want to focus on contributing more to your other, more flexible accounts (like a taxable brokerage account) that allow you to take penalty-free withdrawals at any age.

Navigating the Transition to a Work-Optional Life

While the idea of never having to work another day in your life may be appealing, it’s essential to acknowledge that there are genuine challenges to pursuing this path.

By shortening your timeline toward financial freedom, you’ll likely have to sacrifice certain short-term luxuries or splurges to fund your future lifestyle. This will require discipline and a forward-focused mindset, which can be challenging for some people.

It will also take careful planning, including being strategic with your equity compensation or stock options. This can be tough to navigate independently, so we always recommend that you work closely with an advisor throughout this process.

One thing people don’t realize when retiring early is just how emotional the transition can be. Our jobs don’t just provide a paycheck; they define how our days are structured, who we socialize with, and how we define our worth and value. Leaving work to pursue your passions means relearning how to structure your day, building new relationships, and redefining your sense of fulfillment and purpose. You’re going to have to be intentional with your time; otherwise, you may struggle with feelings of isolation and depression in your post-working years.

Ready to Embrace Your Financial Freedom?

Living a work-optional lifestyle can be well worth the planning and disciplined investing, especially when it means you can pursue other passions or take more significant risks in your career. If you’re considering this, we can help you review your current financial standings, examine your compensation structure, and build a realistic and achievable plan for retiring early.

Feel free to reach out and schedule a time to chat with us soon.

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.