Why Retiring Early Could Be the Worst Decision Ever

Many of us dream of retiring early and leaving the workplace behind. Most retirees will be in their sixties before they call time on their careers, but there are obvious reasons to call it a day before we reach regular retirement age.
We want to enjoy those years while we’re still young and mobile. The fear of being ill and infirm before retirement calls is a significant driver, but making an early decision may not be the best idea.
Don’t Count on Medicare

Remember that the Federal program providing healthcare for older American citizens doesn’t kick in until age 65. Before that point, residents must arrange their private insurance; the premiums could blow a significant portion of their retirement nest egg.
Current law states that health insurance costs cannot cost more than 8.5% of a household income, which is a relatively high percentage, and annual premiums can run into five-figure sums.
Household Costs Continue

Those who look to retire early will usually look to do so without the constraints of a mortgage. However, a survey by American Financing shows that 44 percent of Americans between the ages of 60 and 70 are not mortgage-free.
These costs can be challenging to meet in later years, particularly when illness and infirmity strike. If you are looking at early retirement, it only makes sense if that mortgage is clear.
In all cases, an emergency fund for future repairs, taxes, and utility bills is essential.
Paying Penalties

Most retirement plan funds also come with financial penalties for making early withdrawals. Those looking to take a lump sum payment before their 60th birthday could find that those regulations considerably reduce their savings.
Tax-deferred accounts such as 401(k) and IRAs require a ten percent payment before the policyholder can get their hands on the cash. It’s easy to do the math, but the cost of accessing those funds is more challenging.
Making That Money Stretch

It’s a morbid point to acknowledge, but if we knew how long we would live, we could make better plans. The truth is that people are living longer, and it’s essential to plan for a long life post-retirement.
Life expectancy varies depending on several factors, but those retiring at 55 should look to make plans beyond the age of 80. Dying with an unused nest egg, which you can leave to children, friends, and family members, is preferable to running out of money in your twilight years.
Filling the Time

It’s essential to have a form of plan in place for later years. Financial comfort is one concern, but for now, we’ll focus on how you will fill your days.
As they approach retirement, many friends say they will volunteer in a thrift store or take up golf. Most also have the desire to travel more. I would say that only 10% follow through with these plans. The rest drift through the retirement years, wondering how they will fill their free time.
One possible solution is finding gainful, part-time employment beyond volunteering, but recruitment processes are getting more challenging. While there should be no bias against employees in their 50s and beyond, companies prefer those who can promise more years of service.
What’s Next?

It’s a question that all retirees need to ask themselves. What comes next once they’ve left their regular workspace for the final time? On a base level, many will miss former colleagues and the day-to-day interactions with other human beings, but potential issues go much deeper.
You may feel you’ve contributed to society all your working life. Work gives us focus and a purpose. In short, it’s a reason to get up in the morning. After a few weeks of relaxing and not worrying about the day-to-day grind, there will often come a time when you ask yourself a much more difficult question.
Have I anything left to offer society? It’s an unpleasant feeling that can affect self-esteem and overall mental health. Individuals can feel they have served their purpose, and there’s no more in the tank. They may feel ridiculed by younger members of society, which is a serious issue for some.
For others, the whole point of retiring is to leave society behind. Their contributions are over, and it’s time to travel, play sports, and relax. However, those mental concerns may creep up over time and add stress to any financial problems post-retirement.
What’s It Really Like?

Personal experience can often help in cases such as these. I’m not retired, and it will be many years before I do so, but I did have an extended break from work. At age 34, I suddenly became a single parent and decided to stay home and focus on my young daughter.
It gave me focus and satisfaction and was my proudest achievement, but I missed the office. I felt that my brain needed purpose and an escape from the daily routine of nursery and the Teletubbies.
It isn’t the situation that most early retirees will find themselves in, but I knew that I couldn’t give up employment permanently and was back working full-time within two years. I had asked that question: What’s left, and what can I contribute to the workplace?
Some will embrace early retirement: They will take the opportunity to enjoy their later years and to walk away from the workplace before the regulation leaving age. However, as this article underlines, there are many potential pitfalls, and early retirement isn’t the best option for everyone.