The Retirement Corporation of America

The Personal Aspects Of Early Retirement

There is more than money involved in the decision concerning when you will retire. The financial side of early retirement is important, but so are the personal considerations. Here are some of those considerations to think about:

#1: Health: Are you healthy and able to keep working, or do you have physical problems that have made continuing on the job difficult? Maybe you were doing physical work—which you can no longer do at peak capacity. One possibility would be to simply retire. Another would be to find something less stressful—full time or part time. It might not pay as much as you are earning now, but it would keep money flowing in so your retirement savings could stay intact for a few more years.

A second health consideration would be something serious that could bring an early death to you or your spouse. No one likes to think about such things, but health is a major consideration in retiring early. If you have reason to believe either you or your spouse won't live long in retirement, then you might want to consider retiring early, so you can spend more time together during the remaining years.

#2: Career status: How satisfying is your work? What are your career prospects? If you stay on the job, could you reasonably hope for a further promotion and a fatter paycheck? Remember, the more you earn in those later years, the bigger your pension is going to be.

Consider early retirement only if your career has stalled with no likelihood of future raises or promotions. Even then, consider part-time work with your present employer, or with someone else who can put your skills to good use.

#3: Family situation: Are your kids grown and educated? Are they on their own and are you free of financial responsibilities to them? If there are still substantial bills to be paid—to educate your kids, make the down payment on a house, or to help with the expenses of a disabled grandchild—then you probably shouldn't be thinking about early retirement.

Remember that you shouldn't be handing money over to your kids that you need to finance your retirement. Your kids can borrow to pay for college, but you can't borrow to pay for retirement. Don't even think about early retirement if there are substantial family responsibilities to be financed.

#4: Your attitude: Some people need a job to feel complete. They would work until 80, if they could. Beyond bringing in money, the job brings recognition, a sense of identify, and a feeling of being part of the group. But, for other people, work represents time that can't be spent enjoying life.

If work takes away from your ability to enjoy life—rather than adding to it—you are a legitimate candidate for early retirement. However, you would have to make sure you could afford to retire early, and still live the good life, before you actually did it.

Before making a final decision, you have to be brutally honest. Do you really feel that work is cheating you out of what you really want to do—or are you just bored with the job, or irked at your boss? You don't want to make a spur-of-the-moment decision. You want to think through all your reasons for wanting early retirement. Be sure to bring your spouse into the decision-making.

Before you make a final decision, think through exactly what you will do when you are free to enjoy your retirement. It can't be something vague, like: "I'll finally get caught up on all the projects around the house," or "I'm finally going to go fishing whenever I want to." That isn't planning; it is wishful thinking. Once the honeymoon phase passes, retirement could turn into a long period of boredom and depression if you aren't mentally and financially prepared.

If you take early retirement so your time is your own, you must have a well-developed plan for spending that time. Maybe you will go back and earn the college degree you never received, or maybe study for a new career: as a teacher, a consultant, or volunteer for some worthwhile cause in which you have a long-abiding interest.

Only take early retirement to make your time your own, and if you can put that time to work in a way that will satisfy you and hold your interest well beyond the end of the honeymoon phase.