Would you like to retire early? So many people have this goal, and for a variety of reasons. For some, it’s a matter of getting away from a hectic work schedule and the pressures that come with it. For others, it’s an opportunity to spend quality time with family and pursue hobbies.
Many people, however, struggle with the idea of ​​early retirement, whether it’s part of financial insecurity or guilt. But if early retirement appeals to you on any level, here are three reasons to do it.
1. You can afford it
Many people have been slacking on their retirement savings all their lives. Example: The average American aged 50 to 55 has $124,831 tucked away for the future, according to the Economic Policy Institute, which isn’t a lot at this stage of life.
When we apply a 4% annual withdrawal rate to this balance, which is recommended by countless financial experts, this results in an income of just under $5,000 per year. Of course, there’s Social Security to consider, too, but the point is that many older Americans are woefully unprepared for retirement in terms of savings. If you’re not one of them, however, then there’s no reason you shouldn’t feel comfortable retiring in front of your peers.
Let’s imagine that instead of being in your early to mid-50s with about $125,000, you’re sitting on $2 million instead. Now you don’t want to start withdrawing from your nest egg at 4% per year if you retire at 50, because this formula is designed to ensure that your savings don’t run out for 30 years and chances are you’ll live in your 90s and therefore you will need them to last longer than that. But even if we cut that withdrawal rate in half to 2%, you’re still seeing $40,000 a year in retirement income from your nest egg alone. And that, combined with Social Security and other sources of income, can allow you to live a very comfortable lifestyle.
2. You can still make money
Many people see retirement as a time when you stop working. But in reality, retirement is the perfect time to start a business or turn a favorite hobby into a money-making opportunity. If you’re worried that you can’t afford to retire because your nest egg isn’t that robust, but you want the ability to live on your own terms and control your own schedule, then it’s definitely worth quitting your job and do something else for a living. And remember, the more satisfying you find your work, the more motivated you will be to keep doing it.
3. It will be good for your health
There are studies out there that show that working longer can lead to a longer life. Not only does going into an office offer mental and physical benefits, but the social aspect alone can make getting away for a longer period of time a worthwhile option.
On the other hand, the wrong job can easily put you in a situation where your work harms your health. Excessive stress has been unequivocally linked to high blood pressure and heart disease, while excessive sitting (which tends to happen with office workers chained to their desks for hours at a time) can cause weight gain and other medical problems. So if you think your health will improve once you stop working, that’s reason enough to retire sooner rather than later. Or, to put it another way, the longer you stay in a job that is harmful to your health, the more likely you are to die young and lose your pension altogether.
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Early retirement is not for everyone, and for some people, such as those with no savings, it is a difficult goal to achieve. But if you have the power to make early retirement work for you, it’s definitely worth leaving the workforce early and enjoying the lifestyle you’ve dreamed of for years.
CNNMoney (New York) First published September 26, 2018: 9:42 am ET
