Personal Finance FAQ

Don’t Base Your Decision to Retire on Your COVID-19 Quarantine Experience

The biggest misconception people have about me is that I’m in control of every situation. I’m rarely in control of any situation.
–Lauren Bacall

Recently, Forbes magazine published an article that suggested that the COVID-19 induced quarantine experience is a good trial run for retirement.

In some ways, that’s true. When you retire, you need to have a purpose in life still, and sitting on the front porch watching the traffic go by is a sure way to ensure that you won’t need as much in retirement as you thought, because you’ll be pushing up daisies a lot sooner than you planned.

Still, when you create a mental vision of your retirement, it probably involves you actually doing something, whether it’s travel, volunteering, hiking, taking up a hobby, what have you. It probably does not involve sitting at home every single day, only going out for truly essential activities.

So, while changes are that you are spending less money during the coronavirus quarantine, there was advice in the article that I strongly disagree with, specifically:

People see they can limit their activities when required—much like they would have to do to live off their retirement funds[…]

No, no, and no.

Planning a retirement that is a sere existence, far removed from your normal life (and, let’s be clear, even if COVID-19 hangs around like that awkward person at the bar trying to butt in on your conversations, this isolated existence will not be the permanent new normal) is an exercise that is almost certainly doomed to unhappiness and maladjustment.

As research from Australia National University’s Valerie Brathwaite shows, sixty percent of people who reported dissatisfaction in retirement cited income as a driver of the unhappiness.

Unsurprisingly, the University of Michigan’s Health and Retirement Study shows a direct correlation between net worth and retirement satisfaction. Furthermore, research from the Employment Benefits Research Institute 33.1% of respondents in the lowest quartile of wealth reported that retirement was “very satisfying,” whereas 71.5% of respondents in the highest quartile of wealth reported that retirement was “very satisfying.”

In a sense, I liken the above quoted approach as saying that you’d be OK going to prison for the rest of your life because they give you three square meals and shelter every day.

High aspirations.

Yes, deciding when to retire is a balancing act between working longer to grow both your nest egg and your post-retirement standard of living versus having to go to work every day, but putting your thumb on the scale of retirement to only define it as the cooped up existence that most of us are currently experiencing as a result of the COVID-19 quarantine is a false equivalence. Just because you can do something doesn’t mean that you should do something.

Certainly, we’re showing that we can adapt to and live in a lower spending environment enforced by quarantine. For people who are already early retirees, the COVID-19 pandemic’s enforced lockdown is providing an unexpected benefit of preventing them from needing to sell off as many of their retirement assets to cover living expenses during a down market. It’s a braking mechanism against selling low. However, for a vast majority of us, we anticipate having an expanded lifestyle once we’re able to (SAFELY) open our economy and society back up.

Unless you’re sitting in quarantine, relishing the isolation, and thinking “I’m never going to change my lifestyle,” then don’t base your decision on whether or not to retire simply off of the fact that you’re financially staying afloat during the pandemic’s shelter in place requirements.

If you do make that decision, make it because you have found that you have sufficient assets to live a lifestyle that you want to live post-quarantine, not because you can survive financially while you’re not allowed to go anywhere. If you quit just because you can survive without a job, you’ll soon find yourself unhappy because you’ve shackled yourself with unnecessary financial constraints that leave you little room for error. After all, how much more restricted of a spending lifestyle will you have than what you’re experiencing during the COVID-19 shelter in place? Instead, assess how you’ve discovered ways to derive meaning in your life during this time, determine what you want your retirement life to look like, and then develop a plan to achieve your retirement goals.

Has the COVID-19 pandemic caused you to think about retiring? Let’s talk about it in the comments below!


Jason Hull, CFP®, was the co-founder of Broadtree Partners, a firm that acquires $1-5MM EBITDA companies. He also was the co-founder of open source search consultancy OpenSource Connections, a premier Solr and ElasticSearch firm. He and his wife FIREd (financial independence retire early) at 46 and 45, respectively. He has a BS from the United States Military Academy at West Point and a MBA from the University of Virginia Darden Graduate School of Business.

You can read more about him in the About Page.

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