The Good, the Bad, and the Ugly of Retiring Early

By Daniel S, Miller, CFP®

That’s the dream isn’t it? Retiring early, not a care in the world! No place to be at any certain time and no one to answer to! Bring on the golf course! Sounds awesome, right? When it comes to retiring early, some of these benefits may seem obvious. You now get to live your life without the constraints of work, and you are able to pursue your own interests on your terms. But there may be other good reasons for retiring early, and for some, there may be reasons why retiring early is not the greatest idea.

So, what are some good reasons for considering to retire early?

Your Dedication is Gone

One reason you might consider retiring early is that you are simply not dedicated to working anymore. The fire is gone, Elvis has left the building! You may no longer be emotionally vested, or interested in your work or the company you work for. If this happens your performance may deteriorate and your company may suffer. It might be time to look elsewhere.

Working Took its Toll

In some professions, such as construction and law enforcement, the physical and emotional demands of the job can become too much for some workers over time. After a few years in a high risk or physically demanding profession, your body and mind may have simply had enough. Seeking a new path may very well be warranted. Either retirement or a switch to a less demanding field.

Your Finances Have Become More Flexible

Many people may not realize just how expensive it is to work until they are no longer working. While in the workforce you may incur expenses such as wear and tear on your car, transportation expenses such as gas or bus passes, work clothing costs, daycare and miscellaneous medical costs for work-related injuries. If you have planned well and your finances will allow you to retire early, then you may find that your resources may go much further than when you were working. The key at this point is to avoid filling this void with other spending due to your new found spare time. Unfortunately, this can potentially lead to the “Ugly” side of retiring early. The part where you may have to go back to work!

So, what are a few good reasons to not consider retiring early and to stay in the workforce longer?

Your Health May Suffer

Studies have shown that for some people, retiring early means abandoning the daily physical activity working required. And in our society here in the U.S. it also may mean giving up a big piece of their personal identity. Many people identify very closely with what they do, for who they are. This can be very difficult for some people to let go of. Their whole persona may be wrapped up in the work they do. No one thinks of them as just “Jim their neighbor”, they think of them as “Jim the attorney at ABC Law Firm’. This loss of identity can be very difficult for some people. Studies have shown that for some retiring early can cause physical and mental problems that can become very serious over time.

You May Lose Your Social Circle

After years of working, you may tend to take for granted the notion that you will see most of your friends at work five days out of the week. But when you stop showing up in the break room to discuss the latest news of the day, you may find a big void has developed for you. Even people who think that the people they work with are only acquaintances, may suddenly find that the loss of that familiar social circle they developed at work can be devastating. The question now becomes, where will I go to fill this social void?

Your Plan Didn’t Turn Out Like You Hoped

Retiring before normal retirement age can be challenging for anyone. But if you didn’t plan well, or there were unforeseen circumstances that put you behind the eight-ball, that can make it very difficult. When someone retires before the age of 65, they may run the risk of losing out on health insurance. Medicare automatically kicks in for most Americans when they turn 65, but what would you do until that age? What about your financial resources? Did you work with someone to help plan out your retirement income? Are you sure your money will last as long as you will? Unfortunately many people also forget to take inflation into account when they plan their retirement. That may make retiring early even more financially challenging!

There are almost always two sides to every story, and that includes the one that goes along with retiring early. The idea of walking away from work before the age of 65 may sound appealing, but there are plenty of variables to consider before you make that decision. If you do wish to retire early, I believe you should talk about it with your family first to make sure that they are on board. Then work with your financial adviser to see if you have prepared your savings and retirement income properly. Are you prepared to live without a paycheck for the rest of your life? This is the question that must be answered. Remember, getting to the golf course can wait a little while if it has too!

Sources: http://money.usnews.com/money/blogs/on-retirement/2015/02/05/6-reasons-y...

http://www.bankrate.com/finance/retirement/signs-ready-to-retire-early-1...

*Material presented is not intended as tax advice. For specific tax advice, please contact your own qualified tax professional.

Daniel S. Miller, CFP® is President of Miller Financial Group, Inc. with offices located in Bellevue, NE and Red Oak, IA. Dan and his team serve clients throughout the country as they prepare for the next stages of their financial lives. Dan is a published author of the book “Retirement Built to Last: Planning for When the Paychecks Stop” and has had articles published in the Wall Street Journal, Financial Advisors IQ, Successful farming and The Hill. He is also a dedicated husband, father, and advocate for the financial planning process and financial education.

Dan Miller, David Eads, Kaleb Robuck, and Marcus Taylor are investment adviser representatives of, and securities and advisory services are offered through, USA Financial Securities Corp. Member FINRA/SIPIC. A Registered Investment Advisor located at 6020 E Fulton St., Ada, MI 49301. Miller Financial Group is not affiliated with USA Financial Services.