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August 19, 2021

Pros and Cons of Early Retirement

Is retiring early a good decision?

It is not uncommon for people to dream about retiring early. The thought of having free time, leaving the workforce, and being financially independent is very appealing. Retiring early can mean living wherever you want and doing whatever you want. Here are a few pros and cons to early retirement.

Pros: Time to travel and explore

If you enjoy exploring and traveling the world, this pro may sound more appealing. It can be hard to set aside time for vacations when you are working a full-time job. You don’t have to take time off work or use up any vacation days, which can be quite a process. If you’ve saved up enough, you can travel to many different places without having to worry about work responsibilities. Not to mention, when it comes to travelling, the younger you are, the less discomfort you’re likely to have.

Cons: Less social security benefits

If you start withdrawing funds from Social Security before you reach full retirement age, you will receive 30% less benefits than if you were to wait longer. Waiting to retire means you can get an increase in Social Security benefits. This is something to be aware of if you’re planning to rely mainly on Social Security benefits.

Pros: Opportunity to start a new career

It is getting more common for people to work during retirement. It is a good opportunity for people to start fresh in a new field or to save more doing something else other than what they were working full-time for. Most retirees work not because of financial obligations but so they can start new in a different field and actually do something they enjoy.

Cons: Need bigger retirement savings

Depending on what your plans are, you might need to save up more for retirement if you are planning to retire early. Even though there is more to do the younger you are, you need to make more money to spend while in retirement. You’ll also need to make sure your savings will last you longer for the extra years you’re no longer employed.

When to retire can be a difficult decision. Put some thought into it and decide based on what you want to prioritize in your life. Factors like your health, family obligations, and interest should be included in the decisions. Retirement is just the beginning of a different lifestyle.