6 Reasons You Shouldn't Retire Early

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How Retiring Early Could Hurt Your Health

By Jeff Rose

Early retirement is a dream for those who don't like their job. But as tempting as early retirement might be, it's not always the best option. Retiring early could obviously have a negative impact on your finances, but also on your social life and even your health. Here's why it's not always a good idea to retire early.

1. It Might Be Bad for Your Health

Retirement could contribute to declines in your physical and mental health. A 2013 study from the Institute of Economic Affairs in the United Kingdom found that retirement increases the probably of having at least one diagnosed physical condition by 60 percent and suffering from clinical depression by 40 percent. And the negative effects grow over time as the number of years spent in retirement increases. Retirees don't always have a reason to get up and go somewhere, and that could lead to a sedentary lifestyle that reduces their level of physical health.

2. It's More Difficult to Maintain Friendships

A lot of socialization occurs on the job or after work, and workplace friendships sometimes fade away when you retire. It takes more effort to meet people in retirement, and some retirees lack social interaction, which can contribute to deteriorating mental and emotional health.

3. You Could Lose Your Health Insurance

Retiring early means you no longer have access to the health plan offered by your employer. If you retire before you qualify for Medicare, you will have to find private health insurance to cover you until you turn 65. The website healthcare.gov can connect you to the health insurance marketplace in your state, but you'll have to do some research to pick an appropriate plan and, of course, pay the premiums. Going without health insurance carries the double risk of incurring significant health care bills if you develop a serious condition and the possibility of a tax penalty for going without health insurance.

4. You Could Run Out of Money

An earlier retirement means a longer time relying on your assets and a greater chance that you will run out of money. If you don't have a solid nest egg or a way to supplement your income with part-time work or your own business, there is a chance that you will wind up in financial trouble. Unless you have a good way to manage your money and cut costs, you need to be careful about retiring early. Stock market shocks, increased costs and other financial issues could be devastating to your retirement savings. It's much easier to fund a 20-year retirement than a 40-year retirement.

5. Your Life Might Lack Purpose

Another consideration is what you will do all day without your job. Many retirees find it difficult to find a purpose. While a few weeks of down time will certainly be relaxing, then you need to decide what you will do each day that gives your life meaning.

6. Your Spouse Might Have Other Plans

Another problem arises when you retire early, but your significant other doesn't. The fact that you are in two different places with your lives can result in challenges for your relationship. Some people like to coordinate retirement with their spouse so that they have someone to spend time and share adventures with.

How to Retire Early the Right Way

Of course, these early retirement problems can be overcome with the proper planning. The key to a successful retirement is figuring out what you want to accomplish with your life during retirement, creating a retirement planning checklist and developing a thoughtful plan to accomplish your goals.
In order to make early retirement work, you need to look ahead and decide what you will do with the extra time. You might want to travel, volunteer or devote more time to your family.

You can also use early retirement as a way to do work you enjoy, and do it on your own terms. If you use the time to start a business you will have more income, can afford health insurance and have a new purpose all at the same time. In some cases you could also include your significant other in your business venture.

Just quitting a job isn't usually enough for most people. Instead, your early retirement needs to have a purpose, and it needs to be properly funded. If you are able to put that together, you will be more likely to succeed.

Jeff Rose is a certified financial planner, U.S. combat veteran and the founder of GoodFinancialCents.com.
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