Following the release of my grand plan to the world of the Australian media, there was an explosion of mixed responses, from high fives to cynicism. Challenging the status quo also seems to create mass confusion, to which the most frequently asked questions I responded in my last blog post. Of course there was no way I was going to come out all of this unscathed without also undergoing a formal baptism of fire with the Internet Retirement Police (IRP).

The IRP have come in to teach me a whole raft of lessons. Many of which have told me to give up on my goal. Many lessons of which, you can imagine, I have not paid attention to.

However there was one particular response that made me chuckle. In this case the IRP have stepped in to warn me about how ethically unsound my decision is.

A chap named Geoff wrote a response piece: “Retiring at 35 might be good for you, but it’s bad for the rest of us” to my initial ABC Article, outlining why choosing financial independence and an early retirement is ethically unsound. He however changes my name Pat with the name Frank, as this somehow makes it less presumptuous.

Let me do my best to respond to Geoff’s various concerns. I will also change his name, because I find that sort of thing humorous. I’ll call this imaginary fella Jeff. Jeff has a few concerns about the ethics of financial independence. Jeff also has a few misunderstandings about how tax and welfare operate. Let’s go through the various concerns.

“Frank grew up in an average sort of household with an average household income, and as an average kid he benefited from family tax breaks, free health care and education and, when the time came, a heavily subsidised spot at a public university The assumption is that Frank, upon graduation, will have a long career paying the income tax which will help fund his retirement and enable society to offer others the same opportunities afforded him”

So let me get this straight Jeff, I am a fattened cow and the villagers now deserve their milk? Jeff is no doubt correct that I benefited from some of those things. But asking someone to contribute an uncapped amount to pay for a finite debt is ludicrous.

I do not begrudge anyone who decides for altruistic reasons that they will work longer and donate more money to worthy charities. But working longer with the goal of paying more tax takes an individual who is especially selfless AND who believes the government puts their money to good use. I have not yet reached this level of selflessness I am afraid. It may also be that I do not necessarily agree with everything my money is spent on.

Is my burden automatically larger than the person next to me simply because I am capable of earning more? Last I checked my obligation is based on how much I earn, not how much I am capable of earning.

“It does not occur to him that he is happily taking everything on offer while reserving the right to decide when, how and what to pay in return”

I have very little choice in how much tax I pay whilst I am working, but Jeff is correct in saying that a side effect of choosing not to work is paying less tax. What if I still work but do it part-time, or if I change jobs now to a lower paying job? Does that mean I am also “reserving the right to decide when, how and what to pay in return“?

How about those that retire at 60 or 55, are they partaking in an ethically questionable decision?

Where does it end, Jeff? Are we all obliged to get the highest paying job we are each capable of and work it until we are 65?

This all smells a bit too much of communism for my liking.

“His modest income means he is eligible for a part pension: only $4,500 a year, but just enough for an annual trip to Bali”

This is plain incorrect. It seems Jeff does not understand that there is both an Asset test and an Income test that one must pass in order to receive the Australian Government Age Pension.

In my case, if I stick to my plan of having and maintaining $1,000,000 (2017 AUD) in investments during my retirement, in addition to the roughly $420,000 in superannuation by the time I reach pension age, I will be significantly over the Assets Threshold to qualify for a pension.

Interestingly, my contemporaries who have ploughed all their money into a $1, 167, 000 (median house price in Sydney as of October 2017) Sydney home and who have managed to put together just $250, 000 in their super accounts (the average in super accounts is actually much less than this) can qualify for a full pension, despite having an almost identical net worth to my conservative projection at retirement.

It would seem that ones PPOR (principle place of residence) has unwittingly become a tax shelter for inheritance purposes and a convenient asset to store net worth, while still remaining eligible for a pension. I don’t mean to condemn this behaviour at all. All the power to those people for investing, buying a home and living the life they want to live, while complying with all the government’s current tax laws. I am just pointing out the incongruence in Jeff’s argument here.

“Before you walk out the office door for the last time, ask yourself: do I truly have sufficient credit, both ethically and financially, to turn my back on work, or have I funded my early retirement in part by neglecting my obligations to the society that makes my choices possible?”

I am not sure exactly how much income tax I will have paid by the time I stop full-time work, but my rough calculations put it at about $400K – $500K. In addition, I paid off my HECS debt of just shy of $50K. I will also pay tax on the income within my superannuation account and all the various other consumption taxes that we all pay on a day to day basis.

Due to my high income and my desire to increase my income as much as possible now, I pay an above average amount of income tax. When I do retire, I will still continue to pay tax on my growing investment income. Do I have a responsibility to continue working full-time simply to pay tax?

Is it perhaps possible that people can contribute to society in others ways, than just through payment of taxes? For example, volunteering is just one endeavour I plan to devote my time to once I become financially independent.

Alas, it is exactly this sort of ‘suck you dry for everything you’ve got’ culture that led me down this path to begin with. Society has a way of always wanting more from you and this is on full display here. Clearly saving and investing with an aim to support one’s self, rather to rely on Government handouts, is not good enough.

Nowhere in any of my plans do I depend on welfare, everything I am doing is to be financially independent.

Jeff goes on to be quite morbid, talking about my death and healthcare costs basically saying I am using up the same resources everyone else is.

To that I would say, below are some great things that have already come out of my journey of saving money and enjoying a frugal lifestyle I am pursuing, in order retire early:

I actively advocate, and have written on this blog previously about reducing car usage for various reasons. This means that I put less strain on the road network, I contribute less to the deterioration of the roads and hence do not contribute as much to the maintenance and up keep cost of roads. Walking and riding your bike more will also tie into reducing your healthcare burden.

I advocate, and have written on this blog about reducing your wastage as far as possible. This reduces the cost and strain I put on the environment and on the rubbish collection and waste services.

Though anyone of us can be struck by an unfortunate health event, it may be less likely for someone who retires early. One of the reasons to retire early is to have far more time to take care of your health and remove yourself from a sedentary lifestyle. This has been shown again and again to be the single best thing you can do for your health and reduces one’s impact on the public health system dramatically.

The great thing about all the above, is not only will it be good for the environment and improve your quality of life overall (while you shed the baggage of years of indoctrination into a lifestyle you did not necessarily choose for yourself), but it will also lead to an unavoidable surplus of cash each and every pay cheque. If you are on an average to high income, keep it up for a decade and you make full time work optional.

If you too decide you want to do this with your life and want to be public about it like me, be ready for a lot of people to tell you that it is impossible, that it is risky, that it is unethical, that you are crazy, that you are naive or any number of other stupid ways to see this. Just remember, others have walked this path before and are living this life right now. We are just on our way there.

Shuffling through different opinions

Pat the Shuffler

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