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Should I Retire Early? – 9 Questions to Help You Decide

What do the numbers 61, 65 and 73 have in common? You might guess they are the home run records set during various Major League Baseball seasons by Roger Maris (1961), Mark McGwire (1999) and Barry Bonds (2001) respectively. However, for our purposes here those numbers represent peoples ages. Specifically, the age they may be looking at to mark the beginning of their retirement. In fact, we could also put in numbers like 55, 50 or even younger as even people at those ages are asking could I or should I retire early.

couple in retirementLet’s just get this out of the way right at the beginning – clearly a person can retire at any age they choose. However, to receive full financial benefits from the Social Security Agency will require a person to work until a certain age (based on when they were born). For example, I was born after 1960, so full retirement age for me isn’t until age 67 according to the Social Security website.

I could begin to receive benefits as early as age 62. However, those benefits would come to me at a reduced rate. The calculation used by Social Security is based on the number of months once I retire until full retirement age is reached. In my case that would be 60 months if I retired at age 62.

Retiring early at age 62 sounds great. However, it would really cost me. It would turn a potential $1,000 benefit into only $700, a 30% reduction. $300 dollars a month would go a long way. The Social Security website has a great chart showing all the ages and reduction percentages.

So the choice to retire early isn’t a no brainer. In fact, there are many other things to account for aside from the financial considerations.

Should I Retire Early Questions to Consider

With all that in mind, when asking the question, “Should I retire early?” here are some questions to consider – three in each category related to career, finances and lifestyle.

Career Related Questions

1. Do I still enjoy my job?

Our lives are defined so much by the career we choose and using that career to work for a money to supply our daily needs. It’s one of the biggest places outside of family where we find purpose. In many ways it helps identify who we are and links us to a place in society.

It’s also one of our main resources for connecting with people.

If the job brings you pleasure, it may be wise to not give it up so quickly. Retirement could become a big negative as you struggle to find purpose and relationships outside of a career.

2. Am I still emotionally invested in my job and bringing considerable value to the organization?

Could you love a job but not be emotionally invested in it anymore? Absolutely.

Could you love your job but not really be contributing high levels of value to your organization? Again, absolutely.

Our attention gets redirected all the time. For many aging through midlife, that may mean things like grandchildren or travel. Perhaps charity work or supporting causes becomes appealing.

Maybe your company is going through a transition and the changes will require more effort than you are willing to give. Those changes may require you to adapt and change work style, routines or even get further training. That may not sound to appealing.

These could be signs that, while you love your job, the emotional energy for it simply doesn’t exist anymore and it’s time to move on.

3. Can I still physically do my job?

Some jobs are very strenuous on the body. However, let’s face it – no matter what the job, the older we get the more our bodies break down. This can obviously affect our work performance and thus our perceived value to the company.

If we are missing days routinely due to illness or physical discomfort, it may be time to step aside.

Personal Finance Related Questions

4. What financial obligations do I still have?

It would be real challenging to retire when still facing heavy financial obligations. Even more so when others are depending on your financial support. If children are still relying on you to pay for college or you are financing an elderly parent’s nursing home care, those could be obligations making it difficult to step away from your job.

Of course the big area of focus related to this question is whether or not you are debt free. Do you still have a mortgage, car payments or school loans to repay?

In addition, are there outstanding medical bills or credit cards with large balances? All these could financial obligations that are hindrances to retirement.

5. How much have I saved in cash and investments?

The question to ask here is “Based on what I have accumulated thus far, could I withstand a dramatic drop in my investments and still be OK?” You may ask “What’s dramatic?” I’d say 50-60%. Would you be fine (i.e. could you get by financially) if your investments lost that much of their value in a stock market downturn? (Note: I used the 50-60% drop in investments because that’s approximately how much value the Dow Jones Industrial Average lost from October of 2007 to March of 2009 in the market’s last financial crisis.)

The longer we continue to work and contribute to our investments, the better chance we have of accumulating enough resources to live comfortably in our retirement years. Some more years of saving and investing may push you into a more comfortable financial position.

6. Are the benefits too much to give up?

Your work may be offering some great benefits. Health insurance…employer match on the 401(k) retirement fund…stock options…company car…potential for advancement (yes…people in their 60s get promoted).

Consider the boost keeping these benefits for another five or ten years could do to your financial bottom line.

Lifestyle Related Questions

7. What will be my standard of living in retirement?

This is probably the biggest lifestyle question you need to consider. What do you want your standard of living to be during retirement? Will you downsize? Eat out more? Cruise the world? Become involved in expensive hobbies?

Considering how you want to spend your retirement years will go a long way in determining how much money you will need and thus, when you might be able to retire. Retirement calculators like the ones found here (Dave Ramsey) and here (Vanguard) can be a great resource to help you sort out the answer to this question.

8. Will I be moving towards something?

This goes back to whether or not you love and are still emotionally connected with your job. Many people simply get burnt out on work and quit without giving consideration to what they will be moving towards. Life on the couch in retirement watching television all the time doesn’t sound appealing to me. Yet that’s where many people end up because they haven’t considered what to do in the next stage of their life.

It may be time to retire if there is something hot on the burner that you just can’t wait to start. If not, working several more years may provide time to contemplate what you will do in a future that doesn’t involve punching the clock.

9. Does my significant other agree it’s time?

For couples, retirement should be a joint decision. I would consult with my wife about this issue and seek her counsel.

If she didn’t agree it was time and was uneasy about it, I would have a hard time going against that.  The tension and daily uneasiness that would most likely result from spouses disagreeing about this issue could be very disruptive to the relationship.

Should I Retire Early?

As I stated at the beginning of this post, the choice to retire early is a personal issue. There is no problem with people retiring at any age.

The key is to give it serious thought before making a decision. Start now, no matter what your life circumstance. Weigh the pros and the cons of retiring at different ages. Most importantly, be willing to make adjustments along the way. We don’t know what life holds in the future and plans made now may look very different 10 or 20 years down the road.

There are so many factors to consider. Use this as a starting point to answer the should I retire early or not question and start piecing together your retirement puzzle.

Questions for Discussion: Based on your current projections, when do you plan to retire? What are you looking forward to in retirement? What scares you the most about retirement? Do you think your lifestyle will change in retirement?

Image courtesy of American Advisors Group at Flickr Creative Commons

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  1. I retired at 53. I was a mid level manage. I had a relatively small pension without inflation protection. The single most important factor was that I retired with zero debt. My house and car were paid for.

  2. Based on experience, I shouldn’t retire early as time can be used to earn more and more for a better retirement life, and all I have to make sure that my job is the job I really want so that I have some kind of professional experience.

    • “…time can be used to earn more…” Not only that but time can be used to invest more. 10-20 more years of not living off your investments could give them considerable time to grow. Of course, there is always the risk of a market downturn and that they won’t grow. But if you are also living off of your investments during a market downturn then you are suffering a double hit.

  3. I couldn’t agree more with you, Brian! Retirement is not easy as it seems. There’s a lot to consider and contemplate. I think one of the biggest issue and hardest situation one might face during retirement (especially during senior years) is health care needs. Think about it and assess yourself while you still have time to prepare. Are you ready (or are your finances ready) to face such expensive and demanding need in your life? Contemplate if you’ll need Medigap plans, Long term care insurance and other protection that will help you survive your future possible needs. Think about 100x before deciding to retire early. This post is very helpful to start contemplating about what’s important in retirement planning!
    All the best for everyone!

    • “…health care needs.” Couldn’t agree more Leandro…this is a real concern. Young people who are healthy may overlook this and think nothing will ever happen to them. You have to plan like you will live to 100 and consider what health and care needs you will have for the last 20 years of your life after you are done working. Thanks for the comment!

  4. Nice to revisit this! I would also add that folks should not let the “early retirement zealots” influence their thinking too much. Having a big-picture view of your life’s purpose is the most important thing, IMO.

    • “…early retirement zealots…” I like that terminology Chaz! Proponents are pushing this as if it is the end-all and be-all to your adult life. I see the value in early retirement but for many people it’s a) not practical and b) not a wise move (even if you could). There is great value in work and just because you could retire doesn’t necessarily mean you should.

  5. TheBrokeProfessional says

    Great discussion. I’ve been thinking about this myself a lot lately especially since I love reading a lot of these early retirement blogs. I’m blessed to work in a profession I enjoy and pays well but I know eventually there will be a time to call it quits. I’m not sure when that will be, but my current goal is to get debt free and put as much as I comfortably can in my retirement accounts.

    Another thing I try to keep on top of is my health. A lot of people are unfortunately forced to retire because of various health reasons. If I practice good eating and exercise habits, I will at least be more likely to have a choice in when to retire.

    • That’s a good point. Health goes a long way in determining how long we can work. The more we do now to maintain it the better chance we have of working longer, thus contributing more to our retirement accounts.

  6. I don’t really plan on retiring, just working less. I really enjoy what I do, but I am sure that I won’t have the ability to do it as much as I get older.

    • Our bodies and minds do betray us the older we get. All the more reason to stay fit and mentally active so we can hold onto those abilities as long as possible.

  7. I imagine waiting as long as possible to collect social security (if it’s still around when I get to that age) for maximum payout. Though I hope to retire before then. I imagine I’ll never be in total retirement though. I really enjoy some of the work I do. I just don’t want to HAVE to do anything.

    • That’s true Stefanie and something I really didn’t touch on. SS probably won’t be around in it’s current form when many of us are ready to apply for it. All the more reason to prepare to support yourself by age 67.

  8. I’m not going to pretend like I can forecast out the next 30-40 years, but I would like to think I’d have the option to retire by 55 (though I’m not sure I will). It also depends what “retire” is for you. Some small business owners who are not involved in day-to-day activities may still “work” but are only working part-time or are building other businesses for fun. I do think some in their late 50s and 60s are definitely getting such good benefits that there is no reason to retire. If you can work forty hours doing fulfilling work you enjoy it can make a lot of sense to keep working.

    • You raise a great point to consider DC. A shining example of this is Truett Cathy, owner of the Chick-fil-a restaurant franchise based here in Atlanta. He is in his 90s and still goes to the office every once in awhile. In fact, he has recently overseen the start of a new restaurant with a Hawaiian based theme in the Atlanta suburb where I live. (Who knew pineapple on a chicken sandwich would taste awesome.) Definitely an example of someone still having fun tinkering in their later years.

  9. Good article, Brian. For me, it’s all about quality of life. I don’t want my “retirement” to be a time of massive frugality. I want to be able to travel the world and experience new things in my later years. I know that this likely means I will have to put it off later than some, but I am willing to accept that.

    • “…be a time of massive frugality.” I think many of us share that same goal Jefferson. That’s why we are working hard and sacrificing now with the hopes of enjoying it later.

  10. I’m not so sure I will retire, but will move onto other ventures. I think I have maybe 10-12 years of being an optometrist left in me, then we’ll see. Hopefully, our financial picture will allow us to have lots of freedom in deciding what we want to do. I just got a new “job” as an online content editor, and I’m really enjoying it so far, so I can see myself doing something like that. I’m not very good at sitting around, but maybe I’ll feel differently in another decade.

    • It really is hard to project how we will feel about doing some kind of work at 65 years of age and beyond. So much can change in the coming years that will alter our perspective.

  11. Hopefully, as a person nears retirement, they’ve moved their investments to an asset allocation with less risk than 100% equities. If you have a 50/50 stock/bond asset allocation, you should only lose around 25-30% when the market declines 50-60%.

  12. I don’t know if I ever want to fully retire, but I do want to reach financial independence. Hopefully around 35 for that, and that would be great 🙂

  13. Excellent questions, Brian. To be quite honest, I am always a bit surprised when I realize way toooooooo many people arbitrarily pick their retirement date. There is a lot to consider before you retire. My husband and I both enjoy our week and have young children so we’re happy to continue working until at least they graduate from high school. We both want to travel when we retire at the same time both of us are the type to still have some work but with a lot of flexibility and on our terms. The great thing is these days all you need is wi-fi and a computer. 🙂

    • I know. I think it’s OK to plan but what happens when you get to that date and don’t feel ready? Or circumstances don’t allow you to? Is there a backup plan? I think for many there isn’t. And you are right about technology…it certainly has the potential to change the way we view this decision, especially for people who make money online.

  14. Great in-depth questions to answer before making the big move to retirement. I honestly have no idea right now, as I’m still pretty young. My boyfriend sees himself working for a while, and not doing the whole “early retirement” thing, which would benefit me if we could just live off of his income. My parents made the decision easily. I had graduated, they wanted to move, my mom was eligible for her pension, and my dad had been laid off. It made perfect sense for them to make the transition last year.

  15. These are all excellent questions you have to ask yourself before you’re ready to finally walk away from your main job.

    My wife and I are totally planning to retire in about 11 years. She’ll be 48 and I’ll be 45. We’ve planning this for a long time, and you can bet we’ve got our finances all in order to make sure we’re on track.

  16. This is a very loaded question for me. Since I work for myself and the scope of my work changes constantly, it’s hard to give an accurate retirement age since I will always probably be making some kind of side income. Right now I’m just trying to focus on moving away from video work as much as possible, at least the kind I’m doing now. I don’t see any kind of early retirement in my future…I just always want to do work I love. That was a very indirect answer! 🙂

    • But very honest. 🙂 And you actually raise another very interesting questions I didn’t cover…Is someone truly retired if they are still making an income by doing something. My dad does not hold down a full time job but still generates some income by refinishing antique furniture. Should he consider himself retired?

  17. We are definitely looking to retire at least a little earlier – maybe going for Freedom 55. I am only 25 right now, so who knows what the future holds.

    • Haha…Freedom 55…I like that! The future is for sure uncertain. I know the older I have become the more my thoughts have changed about work/family/retirement/the future.

  18. We don’t really think too much about retirement. Instead, my wife and I have an overarching personal goal for our lives and flexible short, medium and long-term personal and monetary goals that we’ve staked out to help guide us there.

    • Having goals for different time periods of your life is great Chaz! Gives you the balance of immediate things to shoot for and long-range things to dream about. Love it!

  19. We don’t spend a whole lot of time thinking about when we’re going to retire and has become more that way now that we’re both involved in running our business. Assuming I/we still enjoy what we’re doing, I could envision us working later in life but on a more limited scale.

    • So much can change between now and then that can alter our best laid plans. I think most people our age are accepting the fact that we will be working at some level into our 70s.

  20. Holly Johnson says

    We are so far from retirement that we don’t think about it very often. We are in our early 30’s now and have no plan to do worry about it since our kids are so little. We’ve still got two college tuition bills to think about, possibly two weddings! I don’t think we’ll consider retiring until our kids are out of the house, which works out great because we don’t have enough money to retire now anyways.

    • We have four college bills to consider and possibly two weddings as well. My preference would be to focus on retirement more than the college bills. I feel responsible to provide for our retirement years first, then focus on college with whatever I can. I don’t want to use all my money on college and have nothing left over for retirement. The kids are going to have to help get themselves through school.

      • Holly Johnson says

        Our first priority is retirement but we do plan to pay for about half of our kid’s college bills and weddings. It would be a lot harder to do all of that if we quit working before they got there! =/

  21. We don’t think so much about retiring as we do about getting to a financial place where Rick can do what he wants to do. He and his best friend talk often about businesses they’d like to start or own, and when we get our debt paid off, he’ll be in a great position to do that. I can’t see either of us giving up work forever, both of us will likely do some kind of freelancing as we like to be productive. Numbers-wise, he can easily be done at 62, but we might wait till 67 to start collecting Social Security.

    • I plan to stay active as well. Getting to the point where you have some freedom to choose your path is extremely critical to the retirement question.

  22. I don’t personally spend to much time worrying about “retiring” early. I definitely spend time thinking about making sure we’ll have enough money to retire at least at the normal retirement age, but past that my efforts are much more aimed at creating a life today that I enjoy. I don’t really see retiring early itself as a legitimate goal because all that does is give you a whole lot of nothing to do. Now, obviously if you are able to build up enough assets to allow you to spend your time doing something you legitimately love, then you’ve done something worthwhile. But to me, that’s a more specific and richer goal than simply being done with work.

    • That’s a great point Matt. There is a big difference between just being “done with work” and retiring to do something specific. That’s what I was hitting at when I said have something to move towards. I would still want to have goals and objectives at that stage of my life.

  23. Based on my current projections, I will be “in a position to retire” by 50 at the latest. However, “being in a position to retire” certainly doesn’t mean that I will stop working – it just means that I’ll have more freedom to chose what work I do…

    • “…it just means that I’ll have more freedom…” Excellent point! This is really the essence of planning for the future…to have the freedom to chose.

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