15 Good Reasons To Retire Early

 One of the advantages in achieving Financial Freedom is the choice to retire early. No matter the age, retiring early has lots of benefits and is something everyone should consider. 

There are several reasons why people are invested in their job and feel they could never retire. Maybe they do not have enough passive income producing assets. Or their lifestyle has inflated too much, and their expenses are out of control. Or they prefer the perks provided by their employer. Or their identity is wrapped up in their work title, and they hate being a “nobody.” 

No matter the reason for continuing to work, there are several good reasons to retire early.

Retire Early Because Your Time Is Limited

None of us are going to live forever. After having worked hard all your life, do you want to spend the golden years of your life still working?

The primary reason people retire early is that life is uncertain. As you get older, the risk of dying increases. You don’t know how long you will be alive. Life expectancy is lower as you age.

Health starts declining with age as well. 

Better to stop working once you reach your financial number, considering the declining health and mortality factors.

Early retirement can reduce regrets. I have always advocated being aggressive in your career, retirement accounts, and investments so that you have a more significant nest egg sooner rather than later.

Compounding your retirement savings is one of the best reasons to start saving for retirement early. 

Retire Early To Stay Healthier

The most common reason people retire early is health concerns. Either due to physical or mental exhaustion, people reach a breaking point.

Although your job might not involve manual labor, don’t discount the effect of mental stress. Stress is toxic. If you hate your job, retire earlier than planned. That’s because hating your job affects your physical and psychological health.

Long-term stress can cause several health issues such as heart disease, high blood pressure, diabetes, stroke, obesity, anxiety, lowered immunity, cardiac arrest, etc.

A life of constant stress adds up. Continuing to work through your retirement years can take a severe toll on your physical and emotional health. For the sake of your health, recognize when to call it quits, and enjoy some well-deserved rest.

When you are young, you could eat junk food, ignore exercise and still survive. However, as you get older, the health problems start to increase. 

Lack of time when working means you have no time to exercise or eat healthier. Retire early, and you can use your additional free time in retirement to improve your health. 

After early retirement, you will have more time to prepare home-cooked meals, go for walks, or regularly visit the gym. Maybe pick up a new hobby like tennis or basketball.

You will start sleeping better, too, as you won’t have the stress of your old job and no longer have to wake up early for anything.

One of the most significant retirement benefits of being healthier is you may live longer!

Consider early retirement for health reasons and plan for being mentally, socially, and physically active.

Retire Early To Enjoy A More Active Retirement

I was in Lake Berryessa over the weekend and met a 65-year-old guy learning to ride a jet ski for the first time in his life. As we got talking, he mentioned always wanting to learn but decided to postpone it till retirement. Now he wishes he had retired early. 

Retiring earlier offers the likelihood for a more vibrant and fun retirement as you will be younger than the average retiree. Younger retirees can join in more strenuous recreational activities such as running, hiking, swimming, etc. People who retire early can also travel more broadly, including many countries, which would be more challenging for older individuals.

Many people postpone retirement until failing health forces them to, and at that point, many activities they wanted to do are no longer feasible.

It is best to retire when you live a healthy life versus accumulating more to spend only a fraction of your life in leisure care retirement.

Retire Earlier If You Can Afford It

First, make sure you have a good handle on your personal finances and have run the numbers using various free retirement calculators.

Talk to a fee-only financial planner or even three to better handle your retirement drawdown strategy or early withdrawals from retirement accounts. It would be money well spent as you tackle complex topics like your safe withdrawal rate. Ask them to create a financial freedom checklist to track your retirement goals.

Or you might have a real estate portfolio as part of retirement planning ideas. Real estate investing can provide a steady cash flow as long as you have baked in vacancies, repairs, non-payment of rent, etc., in your calculations based on your local real estate market. 

If you want to simplify your retired life but still want real estate income consider investing in hands-off real estate assets like REITs or real estate crowdfunding. You get passive real estate income without hassles of tenants or toilets.

You might be surprised to know that your retirement savings are in better shape than you expected. If you’re debt-free and your retirement income is in line, there’s little reason to continue working if you don’t want to.

The average American is not prepared for retirement. But given that you are reading this article puts you far ahead of your peers.

If your retirement plan can afford it, there is no reason not to feel comfortable taking the retirement plunge. 

Retire Early at 55 Or Later Based On Your 401(k)

When working, one of the most valuable employee benefits is investing in a 401(k) towards your retirement goals. 

Early withdrawals from retirement accounts such as IRAs or 401(k)s before age 59.5 generally come with a 10% penalty. However, there are some exceptions to help people retire early. Per the IRS rule, if you leave your employer after age 55 or later, you can access your 401(k) or 403(b) funds without penalty. If you are a qualified public safety employee (federal, state, or local government), you can access these accounts anytime after age 50.

Of course, you need to pay taxes depending on how much you withdraw in a given calendar year. But given that you should be in a lower tax bracket at retirement compared to when you were working is one of the main reasons I recommend investing in traditional 401(k) vs. Roth 401(k).

Additionally, the Rule of 55 doesn’t work for individual retirement accounts (IRAs) or former employer 401(k)s. You’ll have to wait until age 59.5 to access those assets without penalty.

As long as your current employer accepts rollovers, one workaround is to roll over the funds from your former 401(k) and IRA plans into your existing 401(k). Access to the funds should help your retirement goals.

Check out this case study on how to retire early with 401(k) and no other funds required.

Retire at 62 Or Later Based On Social Security Retirement Benefits

One of the common myths I see with Social Security is that everyone should delay collecting Social Security till age 70. 

Retirement is one of the reasons to take social security early.

Your social security benefits indeed increase by about 8% for every year that you delay collecting beyond your full retirement age. But you may not realize that delaying Social Security to postpone retirement is not always a great idea.

As per the Social Security Administration, if you live to the average age, you get the same total amount whether you claim early or later. The question you need to answer is, “Would it be better for you to start getting benefits early with a smaller monthly amount for more years or wait for a larger monthly payment over a shorter timeframe?”

After all, starting to collect social security early means smaller checks but many more of them. The more sizeable social security check you receive for delaying is because the Social Security Administration knows that you will be alive for a shorter time to pay the benefits.

As with everything in personal finance, you need to decide on the best time for you to claim. But don’t dismiss retiring early at age 62 to collect Social Security as a lousy option.

Retire Early If You Can Work Part-Time

It can be scary thinking of various worst-case scenarios about people retiring early. Images of a frugal living retirement plan flash through your mind.

Retirement does not have to be a binary decision.

After running your numbers, if your nest egg needs additional funding and the social security benefits don’t cover the difference, part-time work can be an option. 

If you’re not interested in retirement because you imagine being bored and unproductive, you can test it out with part-time work.

If you can work part-time, you have the best of both worlds. You could shift gears to the slow lane and get more work-life balance. 

Less stress compared to working full time. And you have more free time to spend with your family and friends.

The extra income from your part-time job can supplement your living expenses or add to your retirement savings. And you can delay tapping into your nest egg. Maybe you can even use that money to build generational wealth for your family to live comfortably.

You might be able to negotiate to stay at your current job (assuming you like it there, working part-time for a few years. 

Retire Earlier If You Are Unhappy At Your Job

If you can’t tolerate your job anymore, then it might be time to retire. 

Even if your job is excellent now, you never know when you encounter mergers and acquisitions, rightsizing and downsizing, competition from younger people, a new boss, boredom from 30 years of doing the same job, etc. Based on market data, older workers do face discrimination when deciding to continue working.

Staying in a toxic work environment is not great for your mental health and well-being. Make sure you have the basics of personal finance covered.

Retire Early To Pursue Your Dream Job

As part of maximizing our Human Capital, we often pursue careers that offer the highest hourly rate even if it was not our first choice. Although I don’t hate technology jobs, given an option, I might have chosen a different major in school and consequently another career.

Or you might start working in your desired field, believing it would be your dream job. Well, the position changes over time, and we change over time. Most jobs involve some bureaucracy or other quirks that come with the job and become worse as time goes by. 

Perhaps you would like to pursue other occupations or entrepreneurial ideas—working as a National Park volunteer or operating bed and breakfast near the Smokies or a scuba dive instructor. With financial freedom, you have the opportunity to follow your passion to a more fulfilling career. Retirement careers are more common than you know.

Retire Early To Care For Family. 

Many people retire early to care for their family members. As we get older, our parents are in their twilight years. They have developed some chronic health issues needing a lot of support. 

It might be better to pursue early retirement to care for your loved ones instead of hiring strangers.

I am fortunate that my parents are in great health. But being there for them when needed was one of my primary reasons for pursuing early retirement

Retire Early To Save Your Family Life

Even if your parents or family members live healthy lives and do not need long-term care, they would appreciate you being available to spend time with them.

Continuing to work in your twilight years will result in additional stress, which carries over to your family life. Retiring early can lower your stress, and you will be a more cheerful person whose company others would enjoy.

I wish I did not work so hard is one of the top 5 regrets of the dying. Devoting so much time and energy to work and not enough to your loved ones might haunt you forever.  By retiring early, you will have more time for your children and partner to create everlasting memories.

Retire Early And Pursue Your Passion

If you wonder what to do in retirement, remember to utilize all those work skills for your passions. 

Causes you have always been interested in can benefit from your time and expertise—volunteer for projects close to your heart. Join a non-profit. You might even take up football coaching for kids or volunteering at a food bank.

There are several ways to enjoy retirement at your own pace and contribute to society.  

Retire Early If You Want To Learn New Things

If a subject has always fascinated you, taking early retirement gives you the time to learn about new topics. 

You could choose classes and pursue formal education. Or it could be informal research at the local library. 

Learning for individual development can be satisfying.

Retire Early If Your Health Insurance Is Covered

Some government jobs qualify for receiving benefits such as healthcare even after retirement. A few bluechip companies also have similar health insurance coverage after retirement.

With the passage of the Affordable Care Act (ACA), obtaining coverage for health care is no longer a significant concern. The exchanges have subsidies if you have a lower income and can’t afford the total price. The advantage of the ACA is that pre-existing conditions are included, and you can’t be discriminated against based on your health history.

Before ACA, you had very few options for health care until Medicare kicked in unless you qualified for social security disability insurance.

Retire Early To Start Living Your Dreams

As a kid, I am sure you grew up with dreams. We are often so busy that all our dreams and goals are pushed to the back burner when working. Working 40+ hours during the week leaves us with hardly any breathing time on the weekends. Not to mention, it is impossible to pursue longer projects over two days.

Early retirement is the time to fulfill your dreams. It could be RV trips to all the national parks or lounging all day with a novel. 

I am sure everyone has items on their bucket list. If not now, when?

You can now check off all the projects on your list. If you start a particular activity and figure out that you do not enjoy it as much as you thought you would, go ahead and switch it up. 

Final Thoughts On Top Reasons To Retire Early

Based on your circumstances, you could be influenced by one or several reasons to retire early.  There are several benefits of early retirement.

Don’t jump into early retirement without planning. At the same time, there is no reason to delay planning if you have all your bases covered.

Retirement planning could involve a combination of drawing down your nest egg to social security retirement to real estate investing.

When pondering the “when can I retire” question, make sure you plan your financial, emotional, social, and retirement activities. 

Taking a short sabbatical or mini-retirement might be a good idea to test the waters before taking the plunge.

Readers, are there any early retirement reasons which resonate with you?