Deciding to Retire Early

Written by: Scott Sery

The entire point of most people’s working careers is to be able to retire someday.  While that may not mean the same thing for everyone, it usually means that they will be in a position to no longer have to work if they do not want to.  For many people working is their hobby.  They love to work, and they do not see themselves ever retiring.   For others, the sooner they can be financially independent the better.  But is it worth retiring early?  There are many factors that go into the decision, and many things that might not make it a good idea.

Depending on when you were born, the government determines retirement age to be 65 to 67 years old.  Technically early retirement is any time before you reach that age.  However, most people see retirement as around age 60 since this is when you can start to take distributions from an IRA or other qualified account, and an early retirement would be deciding to stop working while you are in your 40’s or 50’s.  If you want to retire before you turn 60 years old, there are several things you should consider first.

Why You Want to Retire Early

Basically what retirement boils down to, no matter when you retire, is having free time; time to do what you want.  For a lot of people retiring means they get to finally work the job they love.  That is the job that does not pay enough to support their lifestyle but is either fun to work, or is making an incredible impact.  Many others simply want time to spend with their families.  They have kids and grandkids that they desire to watch grow, and being free from the commitment to work will allow them to be a bigger part in their lives.  Volunteering for a charitable organization, spending more time on their hobbies, travelling, relaxing, and enjoying life are other big motivators.  With early retirement, you get plenty of time to do all of these things.

Why You Do Not Want to Retire Early

To get to an early retirement you have to work a lot.  More work means you can save more.  You have to have dedication and discipline to actually save that money rather than spend it.  You need to have both qualified and non-qualified plans so you will be able to give yourself an income until you hit age 60, and you have to make sure all your accounts have been built up enough that you will not run out of money.  Since the stock market is fairly unpredictable, running out of money is a big concern.  Your early retirement years might be fine, but when you are older, and unable to work, you may see shortages.  When you have few working years under your belt, your social security benefit will be smaller.  This means less of an income stream in your later years.

Early retirement is an attainable goal.  If you prioritize your free time and the time you are able to spend with your family, then take the time now to plan out how you could retire early (have you seen the shockingly simple math behind early retirement?).  Maybe it means saving up just enough that you will only have to work part-time, or freelance to make ends meet.  Weigh the pros and the cons and determine if it is worthwhile for you.  After you make the decision, take some time to meet with a trusted advisor to figure out a plan that allows you to retire early.


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Deciding to Retire Early

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