After a grueling yet fulfilling career, everyone looks forward to retirement. However, only some have to retire at 60 or 65. With concepts of employment and working hours becoming more flexible by the day, many professionals are doing away with the idea of conventional 9 to 5 work hours.
Instead, they are charting their own paths from an early age or choosing to retire early. Today professionals want to enjoy their lives before the age of 60. They want to explore everything while they are still fit and young.
While early retirement can cause some concerns, it won’t be so if one has a clear course of action and knows what they want to do post-retirement.
Planning for the post-retirement period can help you save many contingencies, and you would not have to spend your advanced years working.
Since the mortality factors increase as one ages, it’s understandable why many professionals do not want to spend the best years of their lives only working. Early retirement has advantages, such as allowing one to pursue their dreams and spend more time with their family.
Do You Want to Retire Early? Here Are Some Points to Consider
While retiring early definitely has advantages, you must consider a few factors. Retiring on a whim is the worst thing you can do for your career or finances.
1. Your Savings
You will no longer have a fixed salary if you retire early. You will no longer have a salary and need to create a source of income. You will need to create a larger retirement fund in a shorter period.
You must clearly know your financial standing and whether you can meet your daily expenses and sustain your present lifestyle if you retire early.
2. Your Insurance
It would be best to have adequate health insurance to cover yourself and your family in the case of early retirement. If you are only covered by your employer’s insurance, that will stop when you choose to retire early.
Hence, it is important to have adequate coverage for yourself and your family before your plan to retire early.
3. Your Accommodation
Living without stress or financial hassles is a primary reason for retiring early. And that is impossible if you have to worry about the installments on your mortgage.
Can you pay off your mortgage or pay your rent after retiring early? Would you have to relocate after you leave your job? And will that be inconvenient for the rest of the family? Consider all these factors before retiring early.
Some Reasons to Retire Early
Are you unsure if you should retire early? Let’s consider why it could be a good idea.
1. To Avoid Stress
You can consider early retirement if you have a stressful job. Suppose a job is continuously taking a toll on you, mentally or physically. You may have to attend high-profile meetings and engage in difficult conversations constantly. Early retirement can benefit you in such cases.
Your decisions impact hundreds of people working for the company, which causes stress. Or you have to travel a lot, or your job is physically exhausting.
It has been proven scientifically that constant exposure to stressful situations can cause blood pressure. Heart conditions and other ailments may also occur. Consider retiring early to lead a more relaxing life.
2. To Pursue Your Dreams
Do you have dreams and ambitions apart from your job? Were you unable to pursue them because you had to take up a 9 to 5 job to pay your bills? Consider early retirement if you want to pursue your passions.
You may want to become an entrepreneur and quit working for someone else. Or you are more passionate about the arts than sitting at a desk job. Or you have always wanted to become a chef and have a restaurant. You can consider pursuing your passions if you retire early.
3. If You Have Enough Savings
If you have enough savings to enable you to live your lifestyle, consider early retirement. Many people nowadays consider retiring early, moving away from congested cities, and downsizing to live more relaxed lives.
Suppose you have enough savings to cover your essential expenses, pay your bills, cover your insurance, and live without any liabilities. In that case, consider retiring early.
Of course, you would have to work extremely hard while employed to create a corpus to sustain your lifestyle post-retirement.
4. If You Have Passive Income
If you can create a passive income supporting your lifestyle post-retirement, that is a good reason to retire early. You may not want to work till your sixties and rather create a source of income that is enough to sustain your lifestyle. You can think of investments that give you monthly dividends.
Or, you can invest in profitable businesses. You can create a source of income without having to work for it.
5. To Travel
If you have always wanted to travel the world, then retiring early to do so makes sense. The older you grow, certain age-related ailments will prevent you from traveling to many parts of the world.
You might want to explore the caves of Thailand or go scuba diving. Or, try rock climbing or go trekking in the Himalayas. Suppose you can afford your travel expenses and your essential expenses post-retirement. In that case, it is as good a reason as any.
6. Unhappy at Work
If you are unhappy at work, consider retiring early. You may be at a point in your life where your present job no longer motivates you. You do not feel like starting over again at this phase of your life. And that is okay.
You don’t have to force yourself to work forty hours a week against your wishes. That will cause more stress and unhappiness. That could eventually lead to depression. Similarly, suppose you feel your workplace is becoming toxic or you are being discriminated against. In that case, you may retire early and spend time doing what you love.
7. To Prioritize Family
Family is precious, and far too many professionals have regretted spending time away from their families to build a better life for them. You may consider early retirement if you want to avoid having similar regrets.
You may have traveled a lot due to your hectic schedule. Or maybe, you always worked night shifts and never found your children awake.
All of this could have strained your family ties. Or, a family member is sick, and you are their only caregiver. Early retirement will allow you to compensate for the lost time and become close to your loved ones again.
8. To Work Part-Time
If you can work part-time after retiring, then consider that option. You can do so to ensure some income and then spend the rest of the time doing what you love. Maybe, working full-time is tiring for you.
Or, there is something else you have always wanted to pursue. By working part-time, you can ensure some income and spend the rest of the time doing what you always wanted to pursue.
You can take up a gig, bake, do some gardening, or spend time reading or working at the library by working only a few hours a day. You can enjoy the best of both in this way.
At What Age Should You Consider Retiring Early?
It depends entirely on your situation in life and your personal preferences.
There is no fixed age when you should consider retiring early. For some, working very hard till age 40 and retiring seems like a good idea. For others, 50 might seem more suitable. However, it’s best to keep your finances in order at least five years before retiring.
The earlier you begin the process, the more time you will have to settle your finances. Hence, if you want to retire at 45, you should start getting things together and invest as soon as you turn 40 or earlier. It will allow you to build a corpus that will sustain you after your early retirement.
Speak to your employers about the perks and benefits you will be entitled to. Ask whether there will be any deductions if you retire early. Additionally, get adequate insurance cover and check your 401 status to see if your retirement funds will have any penalties due to early withdrawal.
Couples are choosing to retire together to live the life of their dreams. Early retirement could be a solution if you have always wanted to follow your passions. You don’t have to sit behind a desk or slog at a manual job if you have lost interest in it. A sudden onslaught of illness could make things worse in later life. That could make it difficult for you to pursue your dreams later.
It’s why many professionals today choose to retire early and spend their time at will. And if you have your finances in order, consider doing so.