Is Early Retirement A Good Idea?

Early retirement. 

A dream that many people wish to live. 

But is it worth it? 

49.9% of Americans want to retire early. And this figure has risen from 47% in 2019 [1]

So, if an increasing number of people wish to do the same thing, does that make it a viable option? 

Not necessarily. 

You may want to retire early to get out of a monotonous work life, a dead-end job, a toxic work environment, or simply live in some remote area of an exotic country. 

But the questions remain: is it practical for your circumstances, is it the best decision for your personal goals and, overall, is retiring early a good idea? 

In this article, we will explore the concept of early retirement with some of its pros and cons, so you know more about what each option entails and can potentially make an informed decision. 

How Early is Early Retirement?

When people talk about retiring early and enjoying their life, we usually assume they are talking about retiring at 40 and pursuing their passions. 

However, that may not always be the case. 

Early retirement is relatively subjective. 

Officially, retiring any time before you are 65 is normally considered early retirement in the financial circles [2].

Public Opinions On Early Retirement

A few economic experts term early retirement as the biggest financial mistake people can make [3]

On the other hand, some people living the FIRE (Financial Independence, Retiring Early) life can’t stop blowing the trumpets of retiring early.

So, what’s the right way to go?

Let’s try to look at this rationally and weigh the pros against the cons.

Pros of Early Retirement

Early retirement has to have some pros. That’s why so many people envision it as their ultimate goal. 

Here are some of the pros early retirement enthusiasts are often seen touting:

Pro #1: More Time to Focus on Your Health

Working often means spending 8-9 hours a day in an office, toiling away on your desk. Add to that commute time, 7-8 hours of sleep and some time for the next day’s preparations, and you barely have any time left for yourself. 

This is why, when they get out of work for good, people find themselves with an ample amount of time that they previously never had. 

They might be able to sleep on time and wake up late with no early morning meetings to get to. 

Additionally, staying at home more often or just having more free time may also reshape your eating habits. 

You’ll no longer be in a rush to get your lunch during busy work hours and you may even try out planning and eating healthier meals. As a result, an early retirement might treat your body to a healthier diet. 

More importantly, you may have more time and freedom to do things you could never do while at work, like going on sunny vacations or simply walking in the park and soaking in nature. 

On top of all that, leaving work may also reduce work-related stress.

All these factors that early retirement life tends to offer may positively affect your overall health. 

However, these perks are not guaranteed. 

This is why the science world is also divided on the health benefits of retirement. 

Some studies claim retirement can uplift your health, while others claim it can bring it down. 

We will talk about that in a bit. 

Pro #2: More Opportunities To Travel and Live a Life of Your Dreams

Many people retire early to enjoy the semi-nomadic life and travel from country to country. 

When you don’t have to get to the office anymore and aren’t limited to just the conventional two week vacation, you can enjoy the freedom of traveling wherever you want to and live however your heart desires. 

Pro #3: An Opportunity to Explore New Ventures

Early retirement may leave you with enough free time to look into new ventures. 

Once you retire with a comfortable amount to support your day-to-day expenses, you may have more flexibility to explore newer avenues, try out alternative work options, and turn your passion into your profession. 

Do you have ideas that can change the world but no time to work on them? 

Do you have a skill you love practicing and wish to monetize? 

Early retirement may help you do things you never could while working full-time. 

Pro #4: More Time for Family and Relationships

A regular job often keeps people away from their families. 

Even if you are lucky enough to be in the same city as your loved ones, you may not have enough time to foster your relationship while working full-time. 

With early retirement, you may have the option of watching your kids grow, spending time with your significant other, or taking care of your parents. 

All of these factors appear emotionally fulfilling and make the idea of early retirement almost dreamy. 

But there may not be any surety that you will get to enjoy all of that if you retire early. 

So, is early retirement worth it? 

Let’s check out the cons before deciding. 

Cons of Early Retirement

Every coin has two sides. 

Here’s the other side of the dreamy concept of early retirement:

Con #1: Your Health May Take a Hit

Contrary to the normal picture painted about early retirement, your health may plummet once you retire. 

A 2018 meta-analysis involving 700,000 people hinted at profound health implications post-retirement due to decreased social interactions [4]

Many people often struggle to transition from the busy and organized work-life to the relatively unstructured post-retirement phase. 

Especially those workers who had a thriving social life at work face the challenge of adjusting to the loneliness that may arrive once you step out of the office for good.

Additionally, you may fall victim to mental health problems if you find that you have no passion to pursue, no hobby to enjoy, or overall nothing to look forward to. 

This may be why retirement tends to increase the chances of clinical depression by 40% [5]

Moreover, all the benefits, like sleeping early and maintaining a healthy lifestyle, depend on your self-discipline and dedication. 

Some people retire and sink into an extremely unhealthy lifestyle. They sleep late, sit on the couch all day, and ruin their diet. 

This kind of lifestyle threatens to destroy your health instead of building it up. 

Con #2: Maybe More Expensive than You Think

Your expenses may not reduce once you retire. Hence, you will likely need a regular income stream to sustain a comfortable lifestyle. 

You need to have enough assets to get you through the rest of your post-work life, and that could be anywhere between a decade, or two, or even more. 

The average lifespan in the US is around 79 years [6]. So if you retire at 50, you may have close to 29 years left to live, based on data. 

And while some people build a retirement fund just for that, the amount needed to be stashed away in this account might be way more than what most people are able to afford.

Additionally, early withdrawals from certain retirement funds, like 401(k)s, come at a price. 

You may have to pay 10% of the withdrawn amount as a penalty if you retrieve the amount before you are 59 ½ [7], and then there are taxes as well since this amount may be treated as taxable income. 

Con #3: Lower Social Security Benefits

You receive your full amount of benefits from the SSA when you reach what it considers the “full-retirement age” [8]

Your social security benefits are reduced by a percentage if you retire early and start getting the benefits [9]

On the other hand, delaying your retirement and your reliance on social security may mean increased benefits. 

If you retire early but delay getting social security to increase your benefits, you may have to pay for all your expenses from your own pocket. 

And that may be a huge challenge for some people. 

A Lot of Savings and A Frugal Lifestyle

The average cost of living in the more affordable US states, like North Carolina, is around $38,000 [10]

A 30-year-old North Carolina resident planning to retire early at 50 years of age would need to have at least $760,000 saved into their account to potentially be able to support the basic cost of living. 

And to hit that number, they will need to save at least $3000 every month. 

Of course, this is just an example that does not consider many factors like inflation, but you get the idea. 

Saving for early retirement may require you to work excessively.

You may have to tolerate less-than-ideal work environments because you cannot leave your job. You might find yourself continuously searching for better-paying jobs, while also living frugally and saving every penny possible. 

Ask yourself, is it worth living with all the added stress so you can retire early and potentially have a more comfortable life later on? 

What if you live a frugal life and save to retire at 50 and pass on before your fiftieth birthday? 

Would the frugal lifestyle be worth it then? 

That’s, of course, a far-fetched thought, but no one can deny the possibility of that happening. 

Final Word

Whether retiring early is a good idea or not depends entirely on you. 

Many people may find the cons of early retirement worth tolerating for its pros, while others may regret getting out of work too soon. 

But for most people looking to reduce their workload and focus on the better things in life, there might be a third option. 

You may look for work that is less stressful and more flexible. That way, you might be able to get the best of both worlds. 

Regardless of when you retire, you need to prepare for the next phase of life, both financially and mentally. 

At Dayton and Sydney, we have the financial experience to help you plan for your retirement. Get in touch with one of our financial professionals today so we can help you build a retirement plan designed to focus on your goals and potentially enable you to achieve them. 


[1] “Why are Americans retiring earlier?”, The Economist, Sep 28th, 2021.

[2] “What Age Is Considered Early for Retirement?”, Dana Anspach, the balance, Jan 10, 2022. 

[3] “A Harvard-trained economist says ‘early retirement is one of the worst money mistakes’—here’s why you’ll ‘regret’ it”, Laurence J. Kotlikoff, CNBC, Feb 1, 2022. 

[4] “Retire or keep working? The healthy answer isn’t that simple.”, Marta Zaraska, The Washington Post, Dec 19, 2020. 

[5] “Why retirement can be bad for your health”, Caroline Parkinson, BBC, May 16, 2013. 

[6] “Life expectancy (from birth) in the United States, from 1860 to 2020”, Statista.

[7] “Calculate Penalties on a 401(k) Early Withdrawal”, Claire Boyte-White, Investopedia, Feb 14, 2022. 

[8] “What Age Is Considered Early for Retirement?”, Dana Anspach, the balance, Jan 10, 2022. 

[9] “What Age Is Considered Early for Retirement?”, Dana Anspach, the balance, Jan 10, 2022.

[10] “Cost of Living in North Carolina”, SoFi, Dec 2021.

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