Woodstock Financial Advisor – Third Act Retirement Planning —

Should I retire early? (Pros and cons)

So many people work hard for most of their adult life in order to be able to retire. They dream of retiring and imagine what it’ll be like to be retired. Yet they really don’t have any goals for retirement. They don’t know what they’re going to do with their time. They don’t know how much money they’re going to spend. They have no idea what Medicare is going to cost, or how much Social Security they’re going to be receiving and how that Social Security is going to be taxed. How much of that money will they actually be able to take home after taxes? They can’t answer that question. 

Most people over the age of 50, who have at least saved some money and have been working for most of their life, are asking themselves how much longer they want to work. Can I afford to retire early? Do I want to work 10 more years, 20 more years, five more years? 

The Benefits of Retiring Early

The way I see it, the pros of retiring early would be lower stress and more time with your friends and family. As you look at the stories of the lives of some of the richest men that have ever lived in America, they repeatedly say at the end of their life that all this money didn’t make them happy. 

They wish they could go back and have more time with their children and their families. They wish they had treated their wives better. They wish they had been a better dad or granddad. You see that time and time and time again. In fact, there was a study on the income levels of the happiest people in America. They found that the people who reported the highest levels of happiness had an income around $70,000 per year for a household in 2020. That’s right in the middle class. As we look at the pros of retiring early, if you could manage it without much financial stress, how much would it be worth it to you to retire, spend time with your family and friends, at the cost of maybe traveling less or not having a vacation home or an exotic car, or whatever your more luxurious goals may be? It’s certainly something to consider. 

Disadvantages To Retiring Early

On the other hand, there can certainly be disadvantages to retiring early as well. Retiring when you’re not financially secure can easily lead to a stressful retirement. Here’s an example. Let’s say you retire at 55, and for seven years you pull money from your investments to live. Then you start taking Social Security at the age of 62, and by that time, it’s going to be at the lowest level. You’ll get to a point where you have inflation during all these years, and you really didn’t save up enough to do what you wanted to do in retirement. Maybe you wanted to take your children or grandchildren on a nice trip every year and you can’t really afford to do that. Maybe you’re just under stress. Maybe you can’t even afford all the things that you need: health insurance, a mortgage payment, and of course you’re paying for food and clothing and all the things that you want to do. You just can’t do it. You end up putting yourself in a situation where your expenses are too high. 

So while there are certainly benefits to retiring early, it’s important to have the financial planning in place to be able to support the life you want to live. Consider the pros and cons carefully when making a decision about when you’ll plan to retire. You can set up a short 20 minute call with me to discuss whether or not you should retire early or how early you can retire at this link: https://calendly.com/thomascloud/retirement-ready-success-call. There is no cost of obligation. Also I encourage you to watch my free retirement video: https://go.thirdactretirement.com/strategy.   

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