The Perks and Pitfalls of Early Retirement
Are you considering early retirement? If you are, then you can join the many professionals worldwide who are mulling retiring early this very moment.
Many researchers attribute this change to the evolving work landscape. More and more people want to see the world, go on a cruise, try out a different career or just have more time to spend with family and friends. While the promise of early retirement can be enticing, think about the trade-offs.
To help you better understand early retirement, here’s a list of its pros and cons.
The Perks of Early Retirement
You can ask professionals midway through their careers, and many of them will tell you that early retirement is the dream. If they can do it without any complications, they would happily clock out of their current jobs for good. It makes you ask, what’s so good about early retirement anyway?
Start a new career
If you’re unsure or unhappy about the career you have, this is your chance to wipe the slate clean. You can say goodbye to your stuffy office, overly zealous boss and ungodly hours. Now’s the time to chase that teenage dream to be a painter, a writer or a wildlife photographer.
For many, working is not the issue. In fact, they would happily work until they’re 90 so long as it’s the job they’ve always wanted. The years invested in a 9 to 5 job gave them the financial freedom to pursue the careers they wanted to try but always thought unprofitable, tedious or just plain impossible.
Even more common, a lot of retirees want to work but not full time. They’ve grown tired of missing long breakfasts and romantic dinners with their significant others. Now that they’re older and more settled financially, they prefer to take on part time or consultancy jobs. That way, they can use their degrees and experience but without as much pressure.
Spend time with your family and friends
A successful career comes with costs, and usually, that means spending less time with your family and friends. Think about all the birthdays, anniversaries and neighborhood barbecues you missed while you were busy climbing the corporate ladder. They were necessary sacrifices to ensure that you and your family are financially stable, but early retirement is a great way to make up for all those years.
Retiring early lets you spend more time with your family – be a more attentive partner and a more present parent while your kids are still young. You can reconnect with your friends, finally say yes to that dinner invitation or be there for more milestones.
More time for your hobbies
Haven’t you ever wondered how good you’d be at golf if you spent more time on the course? Do you miss all that time under the Tuscan sun? Eager to see if you can learn Tango with enough lessons?
When you’re busy at work all the time, your hobbies take a back seat. You either use social calls as an excuse to do them more or fit them in whatever free time you have left.
Now, you can take all the rest and relaxation you need. Imagine having the freedom to cruise around Europe on a whim or take your grand kids to Disneyland for their birthdays. If you have a lot of hobbies waiting to be explored or places you can’t wait to see, then maybe early retirement is a smart move.
The Pitfalls of Early Retirement
While there are many perks to retiring early, it’s best to also consider the pitfalls that come with it. Like any decision early retirement has opportunity costs. It’s important to make this choice with both eyes open and aware of the life that’s awaiting you on the other side. Here are some of the things you need to think about:
Financial capacity & depleting savings
For every relaxing day you are at home, you’re spending money that you’re not earning. Let’s say you retire at 50 and live up to 90. That’s 40 years of everyday expense, not to mention yearly vacations, that your savings and pension should be able to cover. If you retire at a normal age, you have decade more to earn and a decade less being dependent on your savings and pension. You also need to consider the time you’re giving your savings and investments to compound before you’re ready to retire.
If you don’t have enough money saved up to live comfortably, to sustain the lifestyle you have now, while in retirement, then you might not be ready to retire. Remember, more free time means more expenses. If you’re not busy at work, you will most likely keep yourself busy doing something else like shopping, traveling and doing other leisurely activities that cost money.
Globally, many former professionals are living below the poverty line because they were too hasty in retiring when they’re not financially able to cover their expenses in the coming years. Think about it and make sure you’re financially ready.
Contrary to popular belief, early retirement is not always an exciting adventure. Unless you have a plan, you will most likely spend every day figuring out what you want to do. Many early retirees struggle with transitioning from their busy schedules – with meetings all day and never-ending deadlines – to the unstructured life that is retirement
Are you ready to make your hobbies an everyday commitment?
You might love golf once a week but not every other day. You might enjoy traveling a few weeks out of the year but not the whole year round. You might look forward to visiting your grandkids on their birthdays, but imagine driving to see them every week. If you’re excited to do all these, then good for you, but that life is not for everyone. Many early retirees agree.
In fact, many retirees will tell you that they miss the grind. They miss the people they work with. They miss the challenge. They miss being needed. Most of all, they miss having something valuable to do.
Ask yourself why you’re retiring. If you can’t think of viable reason – something that will withstand years of being out of work – then maybe early retirement is not for you.
To retire or not to retire?
Before jumping into early retirement, think about it long and hard. Retirement is just a big a commitment as staying employed. Make sure it’s what you want, and you’re ready for whatever it throws at you, perks and pitfalls alike.
To retire early or not? The decision is up to you.