Advantages and disadvantages of early retirement
This detailed article examines the key advantages and disadvantages of early retirement. Retirement is a transition in life that can bring both excitement and unease. For those considering an early retirement, the decision can be even more difficult. Although the idea of having more free time to pursue hobbies and travel is enticing, there are still many other factors to consider.
Early retirement comes up with both advantages and disadvantages that must be weighed carefully. It is important for anyone planning early retirement to think about how it can impact on their finances, health, and lifestyle. Once they understand the potential impacts, they can then make an informed decision about whether an early retirement is the best decision for them.
What is early retirement?
Early retirement is when an individual retires before the traditional retirement age. It is a decision that is usually made to pursue a desired lifestyle. It can be achieved by having the right financial planning and setting aside the necessary funds.
Most people in the UK retire once they start receiving their state pension. The current state pension age for both men and women is 66 (Archer, 2022). However, this is due to rise to 67 by 2028.
There are also many people who would like to have access to their pension pot before the age of 66. They can do so when they are at least 55 unless they have ill health conditions. To them, this may be an opportunity to stop work early, which is widely known as early retirement.
In the USA, the normal retirement age is between 66 and 67 depending on when people were born. People can decide to retire as early as age 62; however, such a decision may result in a reduction of as much as 30% retirement benefits.
The idea behind early retirement is to shorten the work life and spend the rest of life enjoying the benefits of not having to work. However, anyone considering early retirement should have a plan in place for how they support themselves financially.
Some people plan to draw on savings, investments, and other assets to fund their early retirement. On the other hand, many may decide to rely on the state pension only.
Advantages of early retirement
As early retirees have more time to do the things they enjoy, such as travel and hobbies, they may be less stressed out and happier. They will also have the flexibility to take care of their loved ones.
Early state pension
Early retirees will not have to wait until they are 66/67 to begin collecting state pension. Depending on an individual’s financial situation, this could be a significant advantage.
More energy to pursue passions
Retiring early may allow people to pursue things they are passionate about. They will have the flexibility and time to travel around the world, explore hobbies, and take on new projects (Archer, 2022).
Many early retirees take up new activities such as running, biking, and swimming, or explore more leisurely activities such as yoga and tai chi (meditation in motion).
Focus on health and wellbeing
One of the biggest advantages of early retirement is that early retirees have plenty of time to focus on their health and well-being. This may include exercising regularly, eating a healthy diet, and getting plenty of sleep. More importantly, they do not need to deal with difficult bosses anymore, and they will be away from office politics too!
Many early retirees use their free time to volunteer in their community. It can help them make a difference in the lives of many people and be part of something bigger. It can also help them stay connected to their community and build meaningful relationships.
Disadvantages of early retirement
Less income and savings
Early retirees have less time to save for retirement. This can put them at risk of running out of money in old age. In many countries, the state pension is very little, while in some others, it is non-existent.
Feelings of emptiness
Hartman (2022) states that as many people place a large portion of their identity in their work, they may experience ‘feelings of emptiness’ if they retired early.
Loss of status
Early retirement means that some people will lose a sense of status attached to their jobs. Imagine the idea of being called former CEO, President, Prime Minister, Chancellor etc.!
Retiring early may negatively impact on a retiree’s mental health. If they are lonely, and not socially active, this can lead to depression and anxiety.
Deciding early retirement
Retirement is a big decision. It is important to take the time to consider its potential impacts so would-be retirees can make an informed decision. If they are considering early retirement, it is important to assess their financial situation, health, and lifestyle. Indeed, it is crucial to have a plan in place.
Retirement planning is a process that requires dedication and diligence. Before retiring, people must ensure that they have enough saved up to sustain themselves throughout their retirement years.
Summary of the advantages and disadvantages of early retirement
Retiring early can be a liberating experience. It gives people the freedom to pursue activities that they have always wanted to. With the right planning, they can achieve their goals and enjoy the freedom that comes with it.
However, would-be retirees also need to remember that early retirement may present certain challenges for them. Therefore, they should save as much money as possible before retirement and perhaps invest in stocks, bonds, and mutual funds.
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Lat update: 12 January 2023
Archer, F. (2022) Should I retire early? The pros and cons, available at:
https://www.thetimes.co.uk/money-mentor/article/should-i-retire-early/#What-age-can-you-take-early-retirement? (Accessed 22 December 2022)
Hartman, R. (2022) The Pros and Cons of Early Retirement, available at:
https://money.usnews.com/money/retirement/aging/articles/the-pros-and-cons-of-early-retirement (Accessed 22 December 2022)
Author: M Rahman
M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.