If you're in your 50s and wondering whether early retirement is right for you, you aren't alone. Many people wonder whether putting in an extra 5, 10 or 15 years at work is really what they want to do. At the same time, they also have real concerns about how early retirement could go wrong, both personally and financially.
Benefits of Early Retirement
Deciding to leave your career early isn't an easy decision, nor is it one that should be taken lightly. At the same time, doing so can have a positive impact on your life.
More time for relationships: Many people choose to retire early so they can spend more time with spouses, children, grandchildren, and friends. Leaving your job means you'll be able to enjoy spontaneous time with those you love while also being able to plan get-togethers without having to work around your employer's schedule.
Living on your own schedule: Retirement allows you to live your life on your own schedule. This means you can explore interests, pursue your hobbies, travel and even work part-time if you like. For many people, being able to do all of these things while still relatively young and healthy makes early retirement worthwhile.
Possible Drawbacks of Early Retirement
Not everyone who retires early remains happy with their decision. The financial ramifications can be long-lasting and could prove to be troublesome.
Financial issues: Early retirement might strain your finances, particularly if your original plans were created under the assumption that you’d retire later in life. You'll be on your own for health insurance until you qualify for Medicare, and early withdrawal of retirement funds can carry with it some hefty penalties. These costs can make it difficult to afford even day-to-day living expenses, including housing.
Finding a purpose: Many people, particularly those who retire early, may find it difficult to find a sense of purpose after retirement. This can be because the new retiree has been very identified with their career over the years and now has to develop a new identity outside of work.
When considering the pros and cons of retiring at 55 (or whatever age best suits you), keep in mind your circumstances are unique. Talking to a counselor may be helpful in your decision-making process. You might also want to speak to your attorney and an accountant about the financial and estate planning consequences of retiring earlier than expected.