Retiring early is a big decision that must be carefully considered. There are many advantages and disadvantages associated with early retirement. Our team at Frisch Financial offers retirement planning and investment planning to help you decide if early retirement is right for you.
There are many advantages associated with early retirement that you need to consider. Some of these advantages include the following:
- Dissatisfaction with Your Job – If you currently are dissatisfied with your job, early retirement can give you the opportunity to pursue a more satisfying career or hobby. Retiring early can help you find a job that makes you excited to go to work on Monday morning.
- Freedom to Explore – A major benefit of retiring early is the freedom. You will not be held to the rigid 9 am to 5 pm job and the 24/7 digital connection, giving you the freedom to explore the world, pursue your interests or get a new job that you love.
- Health Benefits – Sedentary jobs can lead to an increased risk of illnesses such as diabetes or heart disease. Thus, retiring early could be beneficial to your health.
- Caring for Family – Retiring early also gives you the opportunity to care for your ailing loved ones. Sometimes it can be more cost-effective to retire early so you can care for your family members instead of hiring full-time help which can be expensive.
- Retirement is Fun – Early retirement gives you the chance to do anything that you want. You can go on vacation, spend time with family and friends, or enjoy the luxuries that you have missed during your working years.
There are also many disadvantages that can be associated with early retirement that should be considered. Some of these disadvantages include the following:
- Not Enough Savings – Early retirement means that you will need to live on your savings for many more years than if you were to retire later. It is important that you factor in your current living expenses to determine how much money you will need to save.
- Loss of Benefits – One main downside to retiring early is that you will lose your employee benefits. If you claim social security benefits before your full retirement age, you will receive a decreased amount of Social Security benefits each month. Additionally, you could possibly lose access to the health insurance plan offered by your employer. You may need to find a private health insurance company to cover your medical benefits.
- Detrimental to Your Health – Contrary to popular belief, early retirement can also be detrimental to your health. Many retirees live a more sedentary lifestyle because they do not have somewhere to get up and go to each day. Additionally, your physical and mental health can decrease when you are not exposed to the daily work stress.
- Changes to Relationships – Retiring early can change your relationship with your spouse and your friends. If you and your spouse do not retire together, it could potentially cause some tension in your relationship. Additionally, you could lose the socialization factor that occurs naturally at work, which could lead to a decrease in your mental and social health.
- Difficult to Return to Work – If you decide that early retirement is not for you after you have already retired, it can be difficult to return to your previous job or another job. Generally, it can take over a year for job seekers over 55 years old to find another job. Also, if you do find a job, it most likely will not pay as well or provide benefits or perks as good as your old job.