17 Important Things No One Tells You About Early Retirement

Many people underestimate their choice to retire early. The number of years in front of you may not look like much, but living through them will be a different ball game. Here are 17 things you may not have heard about early retirement.

Adjusting Isn’t Easy

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It’s a complete change of lifestyle, and adapting to your new retiree status may take a while. You wouldn’t immediately feel comfortable sitting on the couch and reading a magazine all day. There will be times you’d long to go back to that work life, and that’s normal.

Try Not to Take Money Out of Retirement Accounts Early

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Be wary of the 59½ IRS rule. What does it entail? Well, from the IRS itself, “you can withdraw or use your traditional IRA assets at any time. However, a 10% additional tax generally applies if you withdraw or use IRA assets before you reach age 59½.” A $100,000 withdrawal will cause you to lose $10,000 to the IRS.

Only Consider It With a Good Passive Income

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A huge number of retirees have only their savings to rely on. But depending on only your savings to get you through your retirement years isn’t the best financial advice. For many reasons, it’ll be better to make sure you have a passive income that covers your expenses or, at least, preserves your savings.

You’ll Spend a Lot of Money

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Yes, you may think that you have enough money to last a lifetime and wouldn’t need to work again. But things can get more expensive than you may have expected. Budgets may not be enough to cover large unexpected costs, and you may be caught in a tight spot, especially if you don’t have a passive income.

Healthcare is Still Expensive

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You may have heard of retirees enjoying federal health coverage through the Medicare program. Well, the catch is that, per Medicare itself, health insurance through Medicare is only available to individuals 65 years of age and older. Retiring early means you still have to deal with high healthcare costs.

You’ll Still Have a Mortgage to Deal With

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Unless you have a house fully paid for, contributing toward a mortgage payment can become a bit of a headache. There’s no benefit you enjoy on your payments by retiring, and stopping the work that brings in a steady income makes it more difficult to meet mortgage and property tax obligations.

You Won’t Be Forced to Retire Because of Money

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If you think making a lot of money will be the only thing that makes you retire early, then you’re mistaken. Yahoo Finance reports that 40% of people are forced to retire because of other reasons like company downsizes and personal health issues.

You May Be Forced to Work Again

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As scary as it may sound, you have to understand that you may have to go back to work. This may be either out of financial necessity or out of dissatisfaction in your social life. Forbes says that about 20% of retirees “unretire” to go back to either part-time or full-time roles.

New Friends Are Almost Necessary

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Unless you plan to retire alongside your best buddies, you’ll probably need to find new friends to spend some time with. Everyone else still has a job or commitment they can’t abandon when you’re free, and it can quickly get lonely.

You Spend More Time With Your Partner

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For those married or cohabiting, early retirement means you no longer spend long hours per day apart from your significant other. Whether good or bad, what this means for you depends on your relationship with your partner, and you should always take this into consideration.

You Have Too Much Time on Your Hands

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After retiring early, especially at a relatively young age, it’s very easy to start feeling unproductive. You have so much time on your hands that everything on your bucket list could be checked off within two years. You’ll need to engage in more activities to protect your mental health from the effects of boredom.

Physical Exercise Will Be Very Important

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Exercise will (or should) be your physical and mental therapy. With the utter free time you have, it wouldn’t be hard to lose yourself to terrible lifestyle choices. Exercise will keep your body in shape and also help against anxiety and depression.

You May Have a Fresh Start at Life

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Early retirement and the boredom that comes with it can push you to do things you never imagined. You may decide to engage in volunteer work that you have never thought of before or join clubs you didn’t even like prior. Just be ready for whatever new experience life has in store for you.

You Lose Compound Interest

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When you save using an IRA, you earn compound interest that’s tax-deferred over the years. Retiring early means you stop compounding your savings and may lose some cool cash. For instance, $2 million of savings compounded over ten years at 5% will give you an extra $1.25 million. Retiring at 55 years of age means you lose this money from your retirement years.

You’ll Get a Lot of Stick For It

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“Why are you doing this?” “I think it’s better not to have retired now.” These are the types of phrases you’ll hear from people close to you, and you might feel discouraged by your decision. Understand that it will take a lot of mental strength to be unfazed by these almost certain criticisms.

You Can Retire At Any Time

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While, when it comes to retiring early, most people opt to retire at age 62 or in their 50s, there’s really no perfect time to retire. For you, retiring early can mean you stop working in your 30s or even your 20s. That’s okay as long as you have enough money to fund your lifestyle for decades, as Yahoo Finance says.

It Isn’t For Everyone

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You’ll need a lot of mental (and mostly financial) fortitude to thrive as an early retiree. Not many people have this. It’s not just about having $10 million in the bank. Are you great with financial planning and mentally ready to stay within budget so you don’t blow it all away?

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