Early Retirement Pros and Cons

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Early retirement pros and cons. I remember working another 20-hour day in my IT job wishing I could retire at 38 years old.

Then I got sick for about a week and thought to myself, “Man daytime TV sucks.”

This got me thinking should I retire early? If I did what would I do with my time?

I then realized that I LOVE to be busy and active. So retirement for me isn’t just lounging around.

For me, retirement would be the ability to start a business to help others. I would love to figure out how to help people get out of the cycle of poverty.

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These ideas are based on my personal experience and opinion and should not be considered professional financial investment advice. Furthermore, the ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

Early Retirement Pros and Cons

Retiring early is the dream for many people but there are a lot of potential cons that many people don’t think about.

The big thing to really think about is what is retirement in general. Is it total retirement and you see yourself sitting on a beach for 8 hours a day or do you see yourself instead working on your own creative endeavors or volunteering for a cause you are interested in?

Will you be making extra money in early retirement? Is it the ability to switch careers and have the ability to risk doing something different with your time?

The Pros Of Early Retirement:

There are many pros to early retirement but here are just a few.

More Time To Enjoy Life

When you are working to pay the bills, you end up working way too much. You don’t have time. And time is the one thing we can’t get back.

I would love to repeat my 20s with the knowledge and understanding I have now, but that ship has passed.

Also if you have worked very long hours for no real pay, you know how much it is worth being in control of your own time.

I had to leave early from my grandfather’s funeral after service because I needed to test out the new migration of software at work.

I have been called out of my wife’s grandfather’s funeral (seriously two different funerals) to take an outage call at work.

Being in control of your time is the main reason in my understanding to become financially independent and then choose if you want to retire early or pivot to something else. If you want to know more about financial independence and the steps to achieve that please read this article.

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I used to live paycheck to paycheck and after years of paying off debt and maximizing my investments I am now able to save and invest more than 45% of my wife and I’s gross pay.

This allows me to live comfortably (not a crazy rich person) and sleep better at night. If you want this let me know where I can send it to you below.

More Time To Spend With Family And Friends

At the end of the day, no one is getting any younger. We aren’t guaranteed tomorrow.

Retiring early gives you the ability to make memories with your friends and family. You will have the ability to spend longer than a long weekend on vacation.

You can see the sights and visit people you haven’t seen in a long time.

I knew a man when I was still in high school. He had just retired at 65 years old.

He and his wife put off vacations and other things until he would retire. Then not one year into his retirement he had a heart attack and died because he had nothing to live for. His career was his entire life. His wife became incredibly bitter because they had put off living for decades in her opinion.

His identity was now gone and he died before they even took one of the promised trips.

This is why even if you are pursuing something like financial independence retired early (FIRE) you need to start to disconnect your identity from your career if you haven’t already.

More Time To Pursue Hobbies And Interests

Before you retire you need to lose that 10 – 30 pounds or more (I lost over 100 pounds from Dec 2020 to Jan 2022).

Start to try out your hobbies now. See if this is something that would hold your interest long-term.

The point is you need some purpose and direction to retire.

Instead, make a list of what your average day in retirement would look like. Now if that seems like a version of hell to you in 5 years, what would need to change?

Start to make those changes now even if you aren’t able to retire at this moment.

You will want to start to set up your best life now and that will include working on different hobbies and interests in your free time.

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The Cons Of Early Retirement

There are a few cons to early retirement that are worth mentioning. They can be overcome by planning for them in your retirement journey.

Fees Incurred From Early Withdrawal From Pretax Accounts

There are a few fees associated with early withdrawal from pretax accounts like 401ks and IRAs. If you are younger than 59 1/2, you will likely pay a 10% penalty on the money you withdraw. In addition, you will have to pay taxes on the money you take out. Withdrawing money from your retirement account before you retire can set you back financially.

One option is to put in money in Roth 401ks and IRAs. You will be able to withdraw the principle early without any taxable events. You can read more about Roth IRAs here, but Roth 401ks function the same way.

Alternatively, you could look into paying into a whole life policy, and information on those can be found in my article on being your own bank.

Possible Financial Insecurity

The issue with retiring early is that you are limiting years of financial wealth, even if you aren’t retiring fully. If you decide to go part-time or change careers a loss of pay could be expected or maybe even welcomed depending on how much stress the job was causing.

But it can cause an issue if you retire in your mid 50’s for example as you are potentially losing 10 – 15 years of income. The income you may need when you are in your 90s.

If you want to run retirement calculations against your real numbers I would recommend signing up for Personal Capital and entering your retirement account information. From there, there is a planning tab and a retirement calculator that lets you play around with the date you retire, how much if any social security you are expecting, and other factors to see what will happen potentially to your money if you live to 85, 90, or even longer. So pick up Personal Capital today to start planning out your potential for early retirement.

Possible Health Concerns

Healthcare costs have risen almost 400% in the last 20 years. I have not seen anything proposed to curb the growing cost of health care as a whole from any party in the US. Of course, moving to a different country can alleviate some of this depending on where you go.

The out-of-pocket costs for people in their 80s is mind-boggling. “According to the report (from RBC Wealth Management), those between 65 and 74 spend about $13,000 a year on health care. That jumps to $24,000 between 75 and 84 and then rises to $39,000 for those over the age of 85.“

Just let those numbers sink in for a second.

According to that same report, “According to a new report from RBC Wealth Management, the projected lifetime cost of care for a healthy 65-year-old is $404,253 – and that doesn’t factor in long-term care costs, which could be as high as $100,000 a year.”

What if you are unhealthy? Then these numbers should be multiplied by 2 – 4 times. So even if you are healthy full retirement at a young age without a hefty nest egg probably isn’t a good idea, without some sort of income coming in.

Are these numbers figured into your retirement calculation? Most retirement calculators don’t even factor these in. If you know of one that does comment on the site to me below, please.

Limited Social Interaction

When I worked for Apple one of my shifts gave me Tue / Wed off. It was a horrible shift. I worked every weekend and had two days off a week that no one else had. Therefore I had no friends to hang out with and no family either really. It was a very long 12 weeks until my shift changed.

Most people’s social interaction happens at work and not going to a job removes that social interaction.

Therefore, if you are going to retire early make sure you have a circle of friends and routines that will give you that social interaction. For example, I have a Board Game / Table Top RPG group that meets every Friday night to keep social interactions up.

What social groups have you built or can you build now to make sure that early retirement doesn’t leave you lonely?

Wow, you read a lot to get here. Can you do me a favor, please? Can you leave a comment if this was helpful to you or if I missed something? Alternatively, it would help me out a lot if you shared this content with those that might need to see it. Thanks, you are the best!

Weighing The Pros And Cons Of Early Retirement

There is little reason to not retire early if you have the means.

Most will not be able to do this but with a good plan, you could at the very least be able to pivot your career so that you could “retire early” from work you hate doing.

It will also help you to have a reason for why you would want to do this. This reason needs to be pretty big as you will need to live pretty strictly to make this a reality.

Or create a business that can be sold so that you can have a big payout. Regardless of your path toward early retirement, you will need to have a plan, in general, to eliminate fees and not run out of money in 30 years.

About Dwight Scull

I have been married to my wonderful wife, Rebecca, who puts up with me since 1999. I am a proud father to my Gen Z, son, and daughter-in-law. Grandfather to my favorite granddaughter who was born in 2021.

I lost my mom, father-in-law, and 12 others in 2013 and was DEEPLY in debt. I started reading and watching all the financial info I could find.

I chipped away at my debt and went from a negative $105k net worth having one home paid off, no credit card debt, and saving/investing 45%+ of my gross salary.

I used these daily habits to lose 100 pounds and keep it off.

I believe that you can overcome any challenge you face if you just take small daily actions and be consistent with them. It is how you will be financially successful.

Join my free Facebook group to get a ton of free resources to help you get out of debt, learn how to invest your money and work toward having the option of retiring early.

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