Is retiring early right for you? (2024)

FAQs

Is retiring early right for you? ›

Pros of retiring early include health benefits, opportunities to travel, and starting a new career or business venture. Cons of retiring early include a strain on savings, and a depressing effect on mental health. There may be ways to chart a middle course: cutting back on work without fully retiring.

By retiring early, you could enjoy a new lifestyle and put work stresses behind you. But if you haven't saved up enough, you might run into financial challenges. And if you love your job and get a lot out of it, leaving it might actually be bad for your health and general wellbeing.

Unfortunately, most people don't — and many early retirees regret how soon they claimed their Social Security benefits. Research from the National Bureau of Economic Research (NBER) revealed that one-fifth of older Americans wish they had put off their Social Security claim.

For the most part, retirement does increase people's sense of wellbeing, according to the survey. About 67% of retirees who are 15 years or less into retirement said they're happier since retiring, and 82% said they're more relaxed on a typical day.

Retiring early also means managing healthcare costs for the long haul. Remember, if you retire before age 65, you may need to have more saved to cover medical expenses in the years before you can apply for Medicare. You'll need to pay for healthcare coverage during that time and beyond.

67-70 – During this age range, your Social Security benefit, if you haven't already taken it, will increase by 8% for each year you delay taking it until you turn 70. So, if your benefit will be, say, $2,500/month if you start at your full retirement age, it would be more than $3,300/month if you can wait.

Yes, you can.

As long as you live strictly within your means and assuming certain considerations, such as no significant unexpected costs and no outstanding debts.

Some people are able to retire relatively early — even in their 40s sometimes — while others work well into their 70s and even 80s. What is the average age of retirement in the United States? Right now, the average age for men to retire is 65 while the average age for women to retire is 63.

Some of the biggest retirement regrets include: A vague financial plan. No retirement goals. Counting on long-term employment.

A worker can choose to retire as early as age 62, but doing so may result in a reduction of as much as 30 percent. Starting to receive benefits after normal retirement age may result in larger benefits. With delayed retirement credits, a person can receive his or her largest benefit by retiring at age 70.

Are people happier after retiring? ›

77% of pre-retirees anticipate feeling happier on a typical day in retirement compared to 67% of current retirees who say they are happier. 75% of pre-retirees expect to feel less stressed, which matches retirees' experiences.

If you feel like you've completed what you set out to do with your work, that is one indication it may be time to let it go. When you are financially secure enough that you no longer need the income, and feel that you have done all you need to do at your job, retiring might be the right choice.

Inflation, inflation, inflation

Here in lies the challenge for retirees – in order to keep up with inflation, you need growth, but you still need to draw an income to live on. There's also the sense of less time to recover.

The idea of taking early retirement for health reasons is not new: several research studies in recent years have found that stopping work early can have health benefits and help to increase the length of your life.

First, there's the possibility that you could regret working too long and wish you'd retired sooner. That's especially true if you're financially independent and burnt out in your career. However, there's also a chance you'll regret retiring too soon and wish you'd spent a little more time working and saving.

Poor health constitutes the main reason for early retirement.

Delaying Social Security can create a larger retirement income than is protected from inflation. Waiting to claim your Social Security benefit will result in a higher benefit. For every year you delay your claim past your FRA, you get an 8% increase in your benefit.

You'll likely need assets worth 10 to 16 times your salary by the time you leave your job. A 45-year-old making $120,000 who hopes to retire at age 60, say, should already have nearly $700,000 set aside. (See the Retire Early calculator.) You can get by with less if you'll have other sources of income.

So it's perfectly legal to retire in your mid-50s if that's your goal. But it's important to keep in mind that retiring at 55 isn't the norm for most people. If you're going by the normal retirement age prescribed by Social Security, for example, that usually means waiting until you're 66 or 67.

You Have the Chance to Enjoy it Longer

Compounding this is that the stress of work can actually contribute to health issues, so if you stop working sooner, you may remain healthier longer. No longer having to work means you have time to work on yourself!