Ending your working career earlier than you’d planned and enjoying the fruits of your labors is an appealing prospect. Yet there are many things to consider that nobody tells you about. Here are 19 important things about early retirement you need to know.
It Will Be an Emotional Rollercoaster
Early retirement can often be more of an emotional rollercoaster than normal retirement because the initial feelings of euphoria can be higher. You can be elated that you can finish earlier than planned, but this can swiftly turn into feelings of loss. Preparing yourself psychologically is key.
Having So Much Free Time Can Actually Be Difficult
The allure of retirement free time seems appealing, yet so much free time can actually be more overwhelming than you’d think. It’s important to fill it with hobbies you’re passionate about. According to the Financial Times, some people may even return to some form of work due to boredom.
Extra Financial Planning Might Be Required
Financial planning for your retirement is always necessary, and it’s necessary from a very early age. However, early retirement can often mean reevaluating your finances and budgeting for any hidden expenses if you’re planning on ending work earlier than you thought.
It Can Be Challenging to Lose Your Professional Identity
Your professional identity has shaped your entire life, and especially if you have a title to be proud of. Losing that identity earlier than planned with early retirement can often result in an identity crisis. Some retirees can lose their sense of self-worth without a career.
You Might Feel the Odd One Out
If you have a social circle of friends a similar age, then taking early retirement can often put you on the backfoot. If you’re still waiting for your friends and colleagues to retire at the normal age, you might feel bored, lonely or even like you’re missing out while they’re still working.
Health Considerations are Even More Vital
Early retirement can often result in a lackadaisical attitude towards your overall health. Because you’re retiring younger than intended, you might then spend more time lounging and enjoying the unexpected free time, thinking you have longer to plan a retirement health routine. Actually, the sooner the better!
Social Life Changes Can Be Abrupt
Retiring early will likely make you lose touch with a lot of people you were working with. If they are still employed for years to come, you may feel like you can’t see them as much as you’d like with all your new spare time. Relationships will be harder to maintain.
You’ll Need to Plan for Unexpected Costs
It’s so important to have a financial plan – but early retirement means that these costs can hit you sooner. If you have Medicare, you can expect this to cover two-thirds of healthcare costs, according to Investopedia, but this only comes into play over a certain age.
Relationship Dynamics Will Change
Especially if you live with other people, your relationship dynamics are going to change abruptly with early retirement. If a partner is still working to the usual retirement age, this might affect your routine or even cause friction. Being at home more often also means boundaries need to be set.
You’ll Need to Make Housing Decisions
Living situations can change drastically in retirement. If you have changing health requirements, you might need to downsize or spend a lot of money on mobility aids in the home. You’ll also need to think about whether you want to relocate, all of which have financial implications.
The Longevity Risk
Not only will you need to plan financially for a longer retirement than you originally thought, but you’ll need to put in place health and wellness strategies as soon as possible. Early retirement can often lead to an earlier sedentary lifestyle. You should also look to update any wills or estate plans.
Continuous Learning Will Be Important
Keeping your brain active during retirement is imperative, and with early retirement, it’s better to get those plans for continuous learning in place as soon as possible. Keep your brain active and look into learning resources, workshops, or new hobbies straight away.
The Tax Implications
Forbes explains that retiring early might mean you’re subject to a 10% penalty tax if you want to withdraw from your accounts early. There are many tax implications associated with retirement, but you will need to double-check how to arrange your finances for early retirement and minimize tax on your savings.
You Should Start Thinking About Travel Plans Straight Away
Early retirement provides the benefit of traveling to places you might not have been able to at an older retirement age – so you’ll want to make sure you don’t miss any opportunities. You never know what’s going to happen health-wise, so plan for what you want to do, while you can do it!
You’ll Likely Need to Update Legal Documents
Legal planning is essential in retirement, but early retirement means you’ll likely need to review and update any legal documents after leaving work. You should establish power of attorney and take the necessary legal steps to now protect all your assets and finances.
Volunteer Work Can Be a Game-Changer
You might be put off by the idea of any work when you’re planning early retirement, but volunteer work will be a valuable focus. Steven Barrett for LinkedIn explains that volunteering in retirement can help you find purpose and avoid social isolation.
You Might Even Look into Part-Time Work
Some people can be surprised to find they yearn to return to work after retirement. It’s an effective way to balance out leisure time and still have a little money coming in. A lot of retirees find they’re at a loss with so much free time that they welcome the work routine!
Retirement Doesn’t Have to Be Permanent
If voluntary or part-time work doesn’t fit the bill, it’s also a reality that a lot of people who take early retirement might even return to full-time work at some point. Many people believe retirement is a permanent decision, but it’s not the case – if you wanted to re-enter the job market, you could.
You’ll Need a Life Purpose
And, ultimately, you’ll need a new life purpose with early retirement. Making this decision changes everything emotionally, physically and mentally. You will need to work on finding new purpose, passions and what you’re looking for from this next stage in your life!