An early retirement isn’t for everyone. You may not have much socked away, for example, which would make retiring early a bit difficult. But if you have some savings, an early retirement may be more achievable than you think.
Here’s a look at five reasons why you might want to retire as early as you can. See if they’re enough to change your retirement goals and plans.
No. 1: Putting off retirement can be risky
The first reason to consider retiring early is because you don’t know how long you’ll live or how long you’ll remain relatively healthy and active. Many people actually end up retiring early not because they want to but because they have to — due to a job loss or a health problem or because they had to care for others. For this reason alone, it’s worth being more aggressive in saving for retirement, in order to build a fat nest egg sooner rather than later.
No. 2: You hate your job
If you hate your job, it can be well worth retiring from it earlier than planned. That’s because hating your job is a far-reaching problem, even affecting your physical and mental health.
Somewhere between 20% and 40% of workers are very unhappy at their jobs, according to various studies. Here are some of the consequences that have been found to result from hating one’s job:
- Depression
- Stress
- Weight gain
- Sleep problems
Note that these health problems have corresponding additional problems, such as fatigue and irritability. The National Institute of Mental Health has noted that:
Health problems can occur if the stress response goes on for too long or becomes chronic, such as when the source of stress is constant, or if the response continues after the danger has subsided. With chronic stress, those same life-saving responses in your body can suppress immune, digestive, sleep, and reproductive systems, which may cause them to stop working normally.
People under chronic stress are prone to more frequent and severe viral infections, such as the flu or common cold.
On top of all that, unhappiness at work can lead to unhappiness at home, a less happy marriage, and a dysfunctional family life.
It’s also worth remembering that retiring from a job you hate doesn’t necessarily have to mean retiring from work altogether. It might just mean looking for, finding, and switching to a different job — perhaps in a field that you’ve always wanted to try.
No. 3: You can be very productive in your retirement years
If you’re not too interested in retirement because you’re imagining being bored and unproductive, know that you can still be very productive while retired. A close look at your savings and retirement goals might make it clear that you can’t quit working completely any time soon. But you might be able to retire earlier than you originally planned to if you keep working — on a part-time basis.
Look for a job that’s less stressful and, ideally, more enjoyable. Generating some extra dollars that way can help your nest egg last longer. You might be able to stay at your current job for a while (assuming you like it there), working part-time for a few years. Wherever you work, if you work, say, 10 hours per week and earn $12 per hour, you can generate about $500 per month, and that additional income could cover some major expenses, such as food and/or utilities.
It’s actually good for many people to work a bit and make money in retirement, as jobs offer structure and socializing — things that many people miss in retirement.
There are other ways to be productive in retirement, too. If you’re financially secure, you can volunteer for causes or organizations close to your heart, perhaps tutoring kids or leading museum tours. You might also make money by giving music or language lessons, selling crafts or baked goods you make, or doing freelance writing or editing.
You can use your more plentiful free time in retirement to work on improving your health, too. You’ll have more time to prepare nutritious meals and go for long walks or bike rides or visit the gym regularly. If you can lose any excess weight, you may reduce your odds of developing diabetes or high blood pressure — or if you already have various conditions, you may reduce their severity.
You may start sleeping better, too, as you won’t have the stress of your old job and may no longer have to wake up early for anything. Here’s a bonus: If you’re healthier, you may live longer!
No. 4: You can avoid running out of money with annuities
Many people avoid retiring early because they think they should keep stockpiling money lest they run out of it too soon in retirement. One way to prevent that is to spend a chunk of your retirement funds on one or more fixed annuities. Doing so is kind of like buying yourself some dependable pension income, as you can set yourself up to receive monthly checks and even ones that are adjusted for inflation over time.
The table below offers an idea of how much you might get from a fixed annuity in today’s economic environment, based on some recent quotes:
| Purchaser | Cost | Monthly Income | Annual Income Equivalent |
|---|---|---|---|
| 65-year-old man | $100,000 | $540 | $6,480 |
| 65-year-old woman | $100,000 | $517 | $6,204 |
| 70-year-old man | $100,000 | $618 | $7,416 |
| 70-year-old woman | $100,000 | $593 | $7,116 |
| 65-year-old couple | $200,000 | $923 | $11,076 |
| 70-year-old couple | $200,000 | $1,032 | $12,384 |
| 75-year-old couple | $200,000 | $1,188 | $14,256 |
No. 5: It’s not worth delaying Social Security
Finally, you may be putting off retirement because you know that for every year beyond your full retirement age — which is 66 or 67 for most of us — that you delay starting to collect your benefits, they’ll increase by about 8%. And you may know that starting to collect early — you can start as early as age 62 — means your checks will be smaller.
But you may not realize that delaying isn’t such a no-brainer decision. As the Social Security Administration has explained, “If you live to the average life expectancy for someone your age, you will receive about the same amount in lifetime benefits no matter whether you choose to start receiving benefits at age 62, full retirement age, age 70 or any age in between.” After all, starting to collect early means smaller checks but many more of them.
It can still be smart to delay, but that’s not the best move for everyone, and for some, starting to collect early may enable them to retire early. For one thing, it might allow them to keep some significant funds invested in stocks for the long run, aiming for growth.
An early retirement may be more within your grasp than you thought. At the very least, you may be able to retire a year or three sooner than you’d planned — if you take some smart steps now.
