Early Exit vs. Career Continuity: Weighing the Pros and Cons of Early Retirement
Retirement planning can feel somewhat doable when you’re armed with an easy-to-use income tax calculator, a compound interest calculator, and other tools that are brilliant but that fail to account for life’s twists and turns.
From the numbers you get, it can look like maybe you could retire in as little as ten years. But those calculators simply can’t account for unexpected illnesses, expensive weddings, even more expensive divorces, and all the other things we assume will never happen to us.
When it comes to making the big decision as to whether to truly give it all up and take an early retirement, things are a lot more complicated. Is leaving your career the dream? Does staying in your career mean better long term stability? Do your dreams include new career heights, or scaling the heights of a mountain as you travel in your newly retired life?
Let’s take a closer look at what early retirement is, the pros an cons, and what you need to do next as you consider this mammoth life decision:
What Is Early Retirement?
Early retirement is when a person chooses to stop working before ‘normal retirement age’ which is between 65 and 67 in America, depending on the year you were born. It could just mean retiring 5-10 years early at around 55, or potentially achieving FIRE (Financial Independence, Retire Early) in your 40s.
The Pros Of Early Retirement
1. More Time And Freedom To Absolutely DO Life
Over 50% of Americans see retirement as a new chapter in life. Early retirement means having time to do whatever you want. Time with the kids, travel, focusing on a passion project—whatever takes your fancy. An early exit from the workforce means early entry into a full-fat, extra cheese, I’ll-take-dessert-with-that version of life.
2. Better Health And Wellbeing
High-pressure careers are known to increase your chance of suffering from a myriad of physical and mental issues. Even your average day job comes with its strains and stresses. With that in mind, it makes sense that early retirement is likely to lead to better health and wellbeing.
3. Passion Projects Aplenty
Retirees who are able to leave the workforce because of financial security have the freedom to pursue passion projects like interest-based education, pocket-money hobby businesses, and creative pursuits.
Passion projects that are not hinged on financial success can give you a deeper sense of purpose, something many retirees feel they lose when they stop working.
The Cons Of Early Retirement
1. Financial Wobbles
Even with a lot of financial forecasting, leaving your job means relying on savings, passive income, and pensions. Sadly, because nobody can predict market crashes, life events, and global events, there is never 100% financial security. That means unexpected costs, like serious healthcare issues, can turn things upside down.
2. No More Benefits
Over half of the American population rely on their employer for health insurance coverage. Once you leave your employer, you leave behind benefits like health care insurance, which can be very expensive to fund yourself.
3. The Retirement Sads
For many people, retirement doesn’t instantly equate to a dreamy new life. In fact, it can lead to loneliness, feeling lost, and lacking in purpose.
Around a quarter of senior American adults are considered to be socially isolated, and the common circumstances that lead to that isolation can be somewhat sped-up when somebody retires early. Having no structure or schedule to daily life, and no regular guaranteed contact with people can be deeply challenging.
So, Is Early Retirement Right For You?
Deciding whether to retire early or keep working isn’t just about the finances. It is about lifestyle, dreams, goals, well-being, happiness, and security.
To start seriously considering your options, run the numbers, think about the lifestyle implications, and consider what you truly want your next chapter to look like. The best decision you can make is one that aligns with your financial goals and gives you true, deep, personal fulfillment.
