While some individuals are forced to take early retirement due to job losses, deteriorating health, or unexpected family responsibilities, others may choose to retire early so that they can spend more time engaging in activities that they enjoy such as traveling, volunteering, or spending time with friends and family. Regardless of why you may be considering retiring early, it’s essential to consider the following pros and cons before pulling the plug on your job.
Pros of Early Retirement
It can be Beneficial for your Health
When you no longer have to rush to work each day, you’ll be able to get the sleep you truly need, spend more time out in the fresh air and sunshine than before and generally enjoy a more relaxed pace of life.
You’ll have Time to Travel
Having more time on your hands will also mean that you’ll be able to travel more – no more limitations due to only having a few vacation days per year at your corporate job. The earlier you’re able to retire, the more time you’ll have to see as many places as possible before age-related health issues arise.
You Have the Chance to Embark on a New Career
If you’ve been considering changing careers, doing so sooner rather than later will allow you to stand more chance of being noticed by potential employers. You may even be considering starting your own business, and the earlier you can do this, the more chance you’ll have of making a success of it. Launching your own business at age 55 could provide you with intellectual stimulation for at least another 15 to 20 years.
Cons of Early Retirement
A Smaller Social Security Benefit
The earlier you take Social Security, the smaller your payments will be. For example, if you were born in 1960 or later and you start taking benefits at age 62 (the earliest age you’ll be eligible to do so), you will receive payments that are 30% lower than if you had to wait until age 67. For every year that you don’t take Social Security from age 67 to 70, your payments would be 8% higher each month.
Retirement Savings will have to Last Longer
If you retire at 50 or 55 and live to age 90, your IRAs and other retirement accounts will need to have sufficient balances in them to support you for 35 to 40 years. However, if you retire at 70 or 75, these funds will only have to last for between 15 and 20 years.
You’ll have to Foot the Bill for Health Insurance
In many cases, you’ll have to cover the cost of health insurance yourself until you become eligible for Medicare when you turn 65 – and premiums can be double or even triple of what you were paying while working.
Deciding when you should retire is not just a matter of making up your mind and handing your notice into your boss. If you would like to learn more about making the most of retirement, contact us today.
Retirement is the time in your life when you enjoy the fruits of your many years of labor. It’s when your student debts have been paid, you’ve been successful in your career, and you can finally take the time to do all the things you have planned. Early retirement is, by and large, everyone’s dream, and as a recent study suggests, it may just help you live longer, too.
A Unique Study
A study conducted in the Netherlands in 2017 and published in the prestigious journal Health Economics may have some significant implications for American workers. Per the study, men who retired early were 2.6% less likely to die within the five years after retirement than those who waited until retirement age. The female sample was too small to be conclusive.
This is in line with an earlier study conducted at the University of Wisconsin that found that retired people had more time for leisure, and as a result, they often adopted healthy habits. Things like quitting smoking, increased exercise, and more balanced diets were common, and this led to longevity. This sample included thousands of men and women and showed that retirement could, in fact, have a tremendous impact on health.
A Conflicting Study
Despite this evidence, yet another study published in the Journal of Epidemiology and Community Health found quite the opposite. Researchers said that people who worked a year longer than their counterparts were 11% less likely to die. Again, the sample size was small and focused almost exclusively on men, which doesn’t provide much in the way of information about women.
A study similar to the one at the University of Wisconsin and published in the Journal of Health Economics back in 2016 found that retirement had a negative effect on one’s health – namely men. Per the study, retired men had 12% higher chances of becoming obese within a period of two to four years following their retirement. Obesity leads to a variety of conditions which could have a negative effect on longevity.
Finding One’s Purpose
Overall, when looking at these various studies, there is one thing that is very clear. It’s important for individuals who retire to find some kind of purpose. For some, leaving their careers and embarking on a new life is exciting, but for others, they feel lost and like they have nothing more to offer to the world. Hobbies are vital and ensuring a healthy retirement nest egg is also important to avoiding stress and depression that often comes along with financial worry. Finally, and most importantly, everyone retires differently, and it is important to remember that another individual’s retirement should not be compared to your own.
Whether or not early retirement increases or decreases your lifespan is still unknown as the studies and the evidence are conflicting. The goal, then, should be to make retirement as enjoyable as possible through ample savings, hobbies, new personal relationships and connections, and a drive to stay healthy – both physically and mentally – well into your golden years.Continue reading