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6 Financial and Emotional Reasons to Retire Early

Have some good reasons to retire early? The thought of leaving that career and setting aside the accompanying stress that it produces does sound exciting. In fact, you may already have begun to plan how you might be able to that 10 or 20 years before your retirement benefits are available.

reasons to retire earlyIt’s a lofty goal one that you must be sure about. You can’t just waive a magic wand and make it happen or ensure that it will be enjoyable. It takes planning and deep consideration of all the financial and emotional reasons to retire early before you pull the trigger.

To that end it would be wise to consider the following as they relate to early retirement. You may find after working through them that you want to hold onto that career for a few more years.

Financial Reasons to Retire Early

These first three reasons to retire early all focus on the financial side of the equation:

1. The size of your nest egg

How much are you going to need to retire? This may be the biggest of the reasons to retire early you need to consider. Depending at what age you retire you could have 40-50 years left to live. Will your nest egg fund that length of time?

The biggest determinate of that will be your intended style of living.

It would be logical to conclude that expenditures would decrease during retirement. With no kids in the house, a mortgage that is hopefully paid off and reduced expenses for transportation it should be entirely reasonable to spend less in the retirement years. However, other expenditures could easily take the place of those and you might find yourself spending more, not less.

Do you plan to travel extensively? What expensive hobbies are you going to take up? Will you be taking frequent trips to visit the grandchildren? Do you want to move into that upscale, gated retirement community? Will you be eating out more?

It could be tempting to live it up. After all, isn’t this what you’ve worked your whole life for – to be free to enjoy pleasures you couldn’t before?

There is no right answer as to how to live our life during retirement. It’s your choice. But you need to make sure that whatever money you’ve accumulated plus what you might be drawing in through Social Security, investment dividend checks, or a part-time job will be enough to cover that lifestyle. If not, you will have to cut the lifestyle back or work longer years to lessen the distance between retirement and your death.

2. Health Care Costs

Health care is becoming an enormous issue that cannot be ignored. With the new Affordable Care Act in place the future of health care costs seems to be going nowhere but up. Healthcare, once just a concern, has now been turned on its head and people are experiencing full-blown frustration and fear as to how this area of life will be managed.

We just received our premiums for 2015. If we choose to stay with our current policy the premium will increase by over 70%. Can you imagine premiums going up that much per year? It’s a staggering thought.

Couple the rising cost of healthcare with the positive development that life expectancy is increasing. The average life expectancy in the U.S. has almost reached 80 years of age. My grandfather will be celebrating his 101st birthday his February. He’s been retired for 30 years. That’s a long time frame to cover the increased medical costs that will come as the body ages.

If you plan to retire early say at age 50 you will be looking at a potential of 30-50 years of healthcare costs to cover. How will that happen? You will no longer have access to your employer’s healthcare plan. So you will have to be prepared to cover the cost of that in some other way.

3. Being Rehired

Being rehired at an older age is becoming increasingly difficult. This study from the Urban Institute states that workers in their 50s were nearly 20% less likely to be rehired than workers in the 25-34 range.

This could be due to many factors. Employers may see you as not being up to date with technology. They may think an older worker is more difficult to train, will cost more in salary and benefits or may have declining health issues that will impact performance. Clearly this isn’t happening in all cases but is a factor to consider.

Some people see this as age discrimination – older workers not be rehired because of their age. While this may be a reality it would be very difficult to prove unless and employer came right out and told you that was the reason. In most cases, you wouldn’t know the real reason you hadn’t been hired.

It will most likely be possible to find some kind of job. But it may be difficult to reenter the specific career you had before. So if you think there might be a chance you’d need to work again, it might be best to just keep working now.

Emotional Reasons to Retire Early

There is more than just money to worry about when looking at early retirement. These emotional reasons to retire early need to be considered:

4. Loss of connection with people

We build our social interactions in three main ways – family and friends, our work setting and through social organizations (i.e. church, clubs, etc.). If we quit our job to retire early we will lose 1/3 of our potential daily interaction with people. That presents a potential gaping hole in your social life.

How will you fill the void? Do you have enough of a support system in place compensate for your social needs?

You might be thinking, “Well, I don’t like the people I work with. I’ll be glad to leave them behind.” That may be true but you will still be losing connection to people who might have been able to help you out from time to time. There is something built into our DNA that drives us to have relationships and the work setting is prime place where those can be built.

I experienced this first hand when I became a stay at home dad. Even though I thoroughly enjoy what I do now, there is sense of being disconnected a bit from people I’d built relationships from at work. Athletes experience this all the time. What’s the one thing they say they miss most about the game? It’s almost always being around the guys.

So think about whether you want to lose that camaraderie and connection with people at an earlier age. You can still be connected with people after retirement. It will simply take more effort and intentionality because one natural way it happened before – through your work – won’t be possible anymore.

5. Filling the competitive void

Everyone has a competitive side. Some have it more than others. It’s what pushes us to excel. It drives us to accomplish great things. It’s what gets us frustrated when we lose a simple board game.

We have this innate, strong desire to be more successful than others or at the very least to be excellent ourselves in what we do. For the entrepreneur a competitive spirit helps them best other businesses. For the mid-level manager, their ambitious nature helps them get noticed by their superior. And for the CEO, it’s a main factor in seeing their business rise to the top.

Again I turn to retired athletes who have been competing all their lives. What do we find them engaging in post-retirement? Business ventures. Golf. Broadcasting. Even gambling. They are attracted to activities that fuel their competitive juices and keep them around that type of environment. They can’t let it go because it’s all they’ve known.

So what’s going to drive you for the next 20-30 years when you step away from your career early? Will your competitive spirit die because you are not engaged in something purposeful? Will you be OK with that?

6. Boredom

“Boredom? Why is this on the list? Now I’m going to have time to do all the things I never could do when I was working.”

That’s true. But how much tinkering can you really do around the house? How much TV can you absorb before it just becomes noise? How many vacations can you take before even those become mundane?

The issue here is to live with intentionality. Don’t retire early to simply “get away from work.” Have a plan and be moving towards something. Have a target to shoot for that will have real meaning for your life.

When I quit my job to be a stay at home dad and personal finance writer this is the approach I took. I live my life each day with the focus of taking care of the household responsibilities and running this blog. I have specific targets I’m moving towards that keep me alert and aware of my life purpose.

If I didn’t have those I’d be pursuing one activity after another and eventually find myself bored with all of it.

Is Early Retirement For Me?

Early retirement is not for everyone. If you can pull it off great! That means you are financially stable, have a good support system and have thought through what direction your life will head next.

However, without those factors in place it would probably be better to continue working. That may be frustrating but it’s a better scenario than being broke and directionless.

Questions: Are you considering retiring early? What do you have to do to make that happen? Does work bring out the competitive nature in you? How would you fill the social void left from leaving your job? What other reasons t

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Next Post: My 6-Yr. Old Has Earned $100 and We Are Opening a Savings Account

Prior Post: 5 Practical Steps to Consider When Making a Career Change

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Comments

  1. Health care is a pressing issue that has been haunting people who are nearing retirement. This has been creating nightmares to people. To make things worse, another pressing need is arising nowadays and that is the high cost of long term care.

    It’s true that your expenses decreases when you retire but there are new expenses that will come your way. So thinking about retiring early is not a good idea for me. Well, that’s just my opinion. A lot of people are living much longer today. As a matter of fact, around 7 out of 10 of people who are 65 and above will require long term care at some point of their lives. It’s not wise to take the risk of retiring early without enough retirement income and insurance products.

    This is a very informative post for me which I’m sure will be highly appreciated by many. This can make people think twice about retiring early and will also help them prepare accordingly for their future. Thanks for sharing these important pointers.
    LTCOptions recently posted…Middle-Class Families are Most Affected by Long-Term Care CrisisMy Profile

  2. The thing that I miss most in my retirement is the camaraderie and interactions with fellow coworkers. I worked for 40+ years in a very social environment in retail and financial services, and my work involved talking and working with dozens of people each day. I have to say that it has been a struggle to fill that void, despite the fact that I have my wife here at home and I’ve taken up blogging. In some way, writing my blog has given me a feeling of purpose because I feel I’m using my experience to help others with financial issues which I experienced myself.
    Gary Weiner recently posted…12 Ways to Save on Holiday ShoppingMy Profile

  3. The lost connection with others is huge. I am an introvert and I still need to interact with others. Some days I will work from Panera or Starbucks and other days I go to the gym during the day. Anything to get me around others helps.
    Jon recently posted…3 Biggest Drivers of Retirement Savings SuccessMy Profile

  4. The way I see it the ‘dream’ is to have enough passive income streams to be able to decide when you retire, so you don’t need to worry about making extra money each month to pay the bills. I’m looking at property.
    Myles Money recently posted…Free University Education For AllMy Profile

    • Rental property can be a great source of passive income. At times it doesn’t seem very passive though. Tenants and property issues can take up a lot of the landlord’s time. But done properly it can be a cash generating machine.

  5. As of right now I could never retire early, so it’s hard to even think of that, although if by chance I could, meaning winning the lotto say tomorrow, I would easily not be bored and would be able to fill up my days with useful projects.
    Tonya recently posted…I Admit It, Sometimes I Dislike Rich PeopleMy Profile

  6. I agree with you Brian. That’s why when I reach in 30s, I should really know if the company I am working for is where I want to stay until the time I retire. Just to assure that I have a stable and fulfilling job. By the way, I would never like to get to a point where I might still look for a job when I am in 50s. The age of 55 is my ideal retirement age. However, if I can still enjoy working then, why not work for more years? You know the health risk when you’re not doing any thing active.
    Jayson recently posted…What does the Best Income Protection Insurance Provide?My Profile

    • “…I would never like to get to a point where I might still look for a job when I am in 50s.” Agreed…me neither. Sadly though I think it’s happening for a lot of folks who have lost their job in the recent bad economy.

  7. Great post!! I’ve actually been thinking about this topic frequently. Our goal is to have my husband be able to retire at age 45, but honestly I don’t think either of us will stop working completely. We want to be financially independent then, but both of us are doing what we love and we like to work. I’m certain we’ll both have side jobs for as long as we can! It keeps the mind active, gives you a social life and just gives you more of a sense of purpose. Plus, if I’m working strictly because I WANT to, I’ll enjoy it that much more 🙂
    Sarah recently posted…7 Things I won’t give up to save more moneyMy Profile

  8. Many people assume their costs will go down when they retire but I see the opposite happening more than people realize. People want to have fun! 🙂 And fun is expensive, which is why it’s so important to actually plan how you want to spend your retirement, to ensure you save enough money to fund your retirement dreams. I see too many people latch on to a magic number, say $1M and assume it’s enough for them. Sometimes it’s more than enough and other times it’s not! And people also overlook long-term care, so don’t just consider your regular health insurance, but also want happens if you need long-term care assistance. Right now a nursing home costs roughly $80-90k per year with an average stay of 3-5 years.
    Shannon recently posted…Teach Kids How To Save, Spend and Share Their MoneyMy Profile

  9. If all continues to go as projected, DH and I should attain FI by age 50. It would be an early-quasi retirement situation as I will likely still work part-time because I enjoy being productive. It’s also about freeing up more time to do other projects that aren’t remunerated like volunteering and visiting with family and friends but that will enrich my life immensely.
    Kassandra recently posted…The Truth About My MarriageMy Profile

    • “…I enjoy being productive.” That’s big for me as well. Even though I’m a stay at home dad, I still fill the need to produce something and keep pushing myself.

  10. Many people in the middle class will work just as hard as their parents or grandparents but will not be able to retire. By stripping away pensions and increasing the cost of health care, retirement simply cannot happen with the same level of comfort as had happened even 10-20 years ago. I had originally wanted to retire in my 50’s, now I am planning on working until I’m at least 65, and probably closer to 70.
    Money Beagle recently posted…When Technology Backs You Into A CornerMy Profile

  11. We are targeting 50 in our family. The greatest income potential is 35-50 and I don’t want to miss out on that time. There is much more that we can do with money other than taking care of our needs. Plus I have a whole bunch of employees that depend on me and frankly I enjoy my job and helping others do well in their careers. I’m more than happy to walk away, but there is plenty of time. I want to be more than confident in my decision rather than have to enter the market again after being out for an extended period of time. What is the rush if you enjoy what you do.
    Lance recently posted…How to Save Money and Con the Salesperson Part 1My Profile

    • I would say that’s a wise plan to not miss out on those income earning years. I’d even contend that for some careers it’s 50-60. That’s the target maximum income decade for my wife’s career as a CPA. Plus by then, some of our kids will be gone from home, thus reducing expenses further.

  12. I’m so glad you mentioned the cost of healthcare as a factor here. That could very well be an enormous factor for all of us! I can’t believe your premiums are going up 70% in 2015-yikes! Unbelievable. In 2015 we are switching to a plan with a lower premium and higher deductible. It’s an employer-sponsored plan. Can’t imagine what the cost would be if hubby’s employer weren’t picking up part of the tab! This is a major factor that needs serious consideration from anyone considering retiring early.
    Dee recently posted…7 Frugal Ways to Prepare for BabyMy Profile

    • Hopefully the healthcare issue gets resolved and the prices stabilize. I just don’t see that happening on our current trajectory. It’s going to take a lot of the American people standing up and saying “No more!” and that doesn’t seem to be happening yet.

  13. I am not worried about being bored in early retirement at all. There is so much stuff to do all the time- I can’t imagine what it would feel like to sit here with nothing to do =) Plus, I’ll likely always have some sort of side hustle or job.

    I have heard many people say they would be bored if they retired too early though. I just don’t get it.
    Holly recently posted…The Scary Thing About the High Costs of Health InsuranceMy Profile

    • Yeah…I don’t see you having this problem. I think the people that say they would be bored don’t have a plan and aren’t moving towards anything specific.

  14. I think that not seeing people everyday, like you would with a job, could be quite lonely at times and something I hadn’t thought of before. Also, I am quite competitive and so would only have myself to compete with! Not that it would necessarily be bad, as I’d win… 😉 I’d definitely need a plan as to what I’d be doing otherwise I’d probably waste a lot of time doing nothing.
    Nicola recently posted…The Pros and Cons of Loyalty CardsMy Profile

    • Every person will think differently about these issues I guess. So much of it is based on our unique personality and what turns us on/off. Being an introvert, I’ve been more surprised than I thought I would about missing contact with people. I’m coping but it has been an adjustment.

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