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Celebrating Four Decades of Quality Care ~ 1982 - 2022

The Pros & Cons of Seniors Retiring Early

Just about everybody spends time dreaming of early retirement, but is it right for you? Most people have spent at least four decades in the workforce before they’re ready to retire, which makes retirement one of the biggest life changes we undergo. Even if you’re financially prepared for retirement, you may not be equally prepared for the other challenges of retiring early.

The Pros of Early Retirement

The biggest benefit of early retirement is so obvious it almost doesn’t need to be said – you can stop working. For people who don’t particularly enjoy their work, early retirement can be a great opportunity to start something new. You can enjoy travel before health issues may take a toll on your mobility, or stay at home and enjoy spending more time with your loved ones.And retirement doesn’t necessarily have to mean the end of work. Many people use retirement as an opportunity to turn a hobby into a small business. If you’re under the full retirement age of 66, you won’t see deductions in your benefits until you’re making over $17,000 annually.But is retirement good for your health? The answer is: sort-of. Recent research suggests that early retirement can do great things for your mental health because it can alleviate stress and fatigue. This is particularly true for people who are in a stressful line of work. But studies have also shown that, in many cases, retirement can take a toll on your physical health. One such study by the Harvard School of Public Health found retired individuals were 40% more likely to have a heart attack or stroke than their working counterparts.

The Cons of Early Retirement

There’s a reason many people can see their health decline when they retire. People tend to derive a good deal of their self-esteem and sense of well-being from their work. When you take away work and don’t replace it with something else, it’s easy to fall into an unhealthy and idle state of being. And then there’s the financial aspect of early retirement. Because you’re retiring early, your retirement savings will have to last longer. People often expect their expenses to decline in retirement, but that’s usually not the case. Healthcare costs tend to go up as you get older, and retired people still need to socialize and lead an active life. To make matters more difficult, if you want to seek employment to supplement your income after retirement, you may find people over 50 have considerable trouble reentering the labor force. Retiring early may put you in a tricky position with respect to your healthcare. Medicare eligibility begins at 65, which can complicate things if you’re used to getting healthcare from your employment. You may also find that there are penalties for withdrawing from your retirement savings early. It’s important to talk with your financial advisor about this possibility, especially if you have tax-deferred retirement account.

Social Security Benefits & Early Retirement

For the purpose of Social Security benefits, early retirement can be initiated as early as age 62, but full retirement starts at 66. The longer you wait to start receiving your benefits, the more you’ll receive once you begin. If you start your benefits at 62, you’ll receive about one quarter less than you would if you’ve waited for full retirement. Further still, people who are eligible for full retirement and continue to wait to retire will see increases in their benefits for each year they postpone, up to age 70.

Making the Change

Once you’ve made the decision to retire early, the best thing you can to do put yourself on the path to success is make a formal plan. Life expectancy is currently 79 years old. Take a few minutes to figure out the specific amount of money that you’ll need to retire; the AARP retirement income calculator may help. Retirement doesn’t just mean you can start doing new things; it also means that you need to start doing new things for the sake of your health and wellbeing. The negative outcomes of retirement aren’t inevitable, but you’re far more likely to suffer poor health if you don’t remain active and socially connected. Having a plan for your money is important, but it’s just as important to have a plan for your time.

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