Early Retirement Pros and Cons

Early retirement, something many people strive for and sometimes people fear. So what is early retirement and what are some advantages and disadvantages that we have to be looking out for? Well let’s first define what early retirement even is. You know over the years that age of retirement kind of tends to be a moving target. And for some of you, maybe you have a day picked out or you’re already retired and it was a line in the sand and that’s when you’re going to retire. For others, they’re uncertain. You hear years out there like full retirement age. It’s a little bit different depending upon your birthday for most people, 65 you know, when Medicare starts. 62, the earliest you can draw Social Security retirement benefits. 59.5, when you can start drawing you know from IRAs and such like that. 55, the point you can start drawing from a 401K. So you start to hear all of these different ages. So what is early retirement? Well it’s really in the eyes of the beholder. You know for some people you know retiring at 64 might be considered early retirement because they’re retiring maybe before they take Medicare and before they reach full retirement benefits would kick from Social Security. Other folks, early retirement might be before 59.5, before that. Recently there was a movement that kind of dug this thing called FIRE, financially independent, retire early. So some people are working really hard to retire even into their 40s because they don’t want to have this lifestyle of working lifestyle all the way out there. So what are some other advantages of retiring early? And really think of this as just retiring early in your own mind. Freedom from your work schedule and office is obviously right. If you’re not punching a clock, if you’re not going in, you have the freedom to do the other things that you want to do. Time to pursue those passions because you don’t have that time commitment to your work or your office. You can you know go out and pursue passions and interests and hobbies and volunteer. Maybe it’s grandkids and travel and all this sort of stuff. And improvement in wellbeing. Studies have shown over the years that people can sometimes step away from a stressful work environment and their health can improve and they can maybe hopefully have time to be more physically fit and all those sort of things. Also retiring early doesn’t mean that you have to step away from working. Maybe it’s just a change or a slow down. So stepping away from your primary career and stepping into a field that maybe is less stressful or something you enjoy or a hobby that you want to pursue. Sometimes people even start up small businesses in ] retirement and do something they’re very passionate about. So again, you can kind of hear a theme. A lot of it’s time driven, right? You know you think about it, the commitment you give to your employer, to your office, to your work, your own business if you’re doing this, you know it’s a vast time that we find ourself awake during the day, we spend in the work thing. What are some things we need to be cautious of? What are some things we have to be on the lookout for early retirement that could cause some bumps in the road down the road? So obviously, if you’re fully retired and you walk away, where’s income going to come from? You know if we’re retiring early enough even before Social Security benefits kick in, maybe you’re fortunate that you can start your pension, if you have a pension, a little bit early. But again, the income has to come from somewhere. So either from savings, from part-time employment, something. So again, retiring early, that’s a lot of years potentially to have that income out there. Health insurance, where’s health insurance going to come from? Maybe while you’re working it’s an employer plan, something like that. If you’re pre-65 you know that’s before Medicare. So how are we getting those benefits? Are we going on the marketplace to do that? Are we doing something different? So again, that health care and doing that over multiple years and what does that look like? The loss of meaning. So this is an interesting thing. Talking to clients and friends and all that sort of stuff that have retired, you know work often becomes a part of you and who you are with friendships at work and developing that. Because again, you spend so much time there. So that meaning of fulfillment and that accomplishment depending upon what you’ve been doing. Some people say I can’t wait to walk away. When that door closed for the last time, it was the best day of my life. Other folks there’s a piece of them that’s really hard to walk away because it’s that meaning of fulfillment and even sometimes feeling of loneliness because of that. Again, so much of our life is spent sometimes in the office, in the workplace that connection and loneliness with our peers and coworkers along the way. So if you’re thinking of retiring early, sit down and talk to a professional. There’s a lot of different things to navigate, not just financially, but as you hear there with health insurance and even taxation. I didn’t get a lot into and obviously just some of these work life balances that exist in your life. So again, we appreciate you watching our show. We hope you got some great things from this week’s show. And again, all this here so you can plan to retire well.