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Retirement vs. Financial Freedom: What Is the Difference?

July 13, 2025

3 min Read

Written by Stacy Sare Cohen

Edited by Angela Corry

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Retirement and financial freedom are often used interchangeably, but they’re actually quite different. Retirement is typically seen as an end goal — but what if you could achieve financial independence without waiting until your 60s?

That’s the beauty of financial freedom: it gives you the flexibility to decide what your future will look like, according to your own timeline — not when you turn 65.

Let’s take a closer look at the differences between financial freedom and retirement.

What Is Retirement?

When people think of retirement, they picture a specific age or year when they’ll stop working full-time and live off their pension, savings, residual income and Social Security.

Some retirees may have made investments along the way, such as a 401(k) that they can roll over into a Roth IRA. They can also cash out their health savings account (HSA), which they can use for medical needs and expenses without being taxed.

However, most people rarely consider retirement in terms of accumulating wealth, said Liberty Group. While it’s important to consider your retirement age, it’s also essential to think about the money you’ll need to save far in advance so you can achieve financial independence, which means your income is larger than your expenses.

For most retirees, this will enable them and their spouses to cover their bills with a little extra left over to take vacations and live a comfortable lifestyle during their golden years. However, they might not have achieved wealth.

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Some retirees who have held life-long vocations, such as teachers and business professionals, might decide to work part-time as substitute teachers or consultants. Others might take up pet projects such as fix-and-flip investing.

What Is Financial Freedom?

Financial freedom is the ability to live your life on your own terms. It’s not about a specific age to stop working in the future, such as retirement.

Financial freedom enables you the flexibility to take time off, travel and create the space to pursue your passions — write a novel, start a new business venture, or study architecture for a year in Florence without the worry of financial stress.

With financial constraints out of the way, you can decide to retire early and live a life that aligns with your goals and values that provide personal fulfillment rather than financial necessity.

However, the sooner you begin, the more long-term wealth your investments can earn.

By starting early, you’re taking advantage of time and compound interest; an investment of $10,000 can grow into $78,000, according to a YouTube video by Endeavor Wealth Management, which also recommended diversifying your portfolio and never putting “all your eggs in one basket.”