By David Ning
Pretty much everyone, at one point or another, has wished for an early retirement. The freedom and flexibility of not worrying about how to make a living is certainly very appealing. But once you start down the road of saving for early retirement, you may find these surprises waiting for you.
Your career can still feel very long. Even if you plan to retire at 45, which is considered an incredibly young age to stop working, you are still going to be working for two decades. And early retirees need to keep their living expenses lower and save significantly more of their paychecks than people planning to retire at a more traditional retirement age if they want to leave the workforce for good. It can be difficult to maintain the focus and commitment required to save enough to retire at a young age.
Working so hard could make you want to retire even sooner. The more you think about a life in which you don't have to go to work, the more you will want to move up that date. Instead of retirement at 45, you may want to quit your job at 42, or even 40. But each time you move up your retirement age, you will have to work even harder to earn and save more. Don't work so hard that you become burnt out and unable to meet your goal.
You might be afraid to quit. Even if you have saved enough money, you might find yourself apprehensive about leaving your job. Doubts will creep in about being able to afford your expenses for the rest of your life, and you may find yourself wanting to work longer to beef up your finances so that you can better weather the possibility of running out of money. There's no way to know what inflation will be over the next five decades or if there will be another significant financial downturn. Staying in the workforce a few more years can seem safer than beginning to spend down the savings you worked so hard to acquire.
Other people may not be happy for you. Once you finally get the courage to draft your resignation letter, not everybody will be happy for you. People who didn't save as diligently as you or were unable to save due to their life circumstances may be jealous of your freedom from working. Other people may assume that you got lucky and inherited money or won the lottery and neglect to realize the hard work you put in to get to early retirement. Early retirement will make you different from most of your peers, and their responses could range from bafflement to envy.
It's scary to spend down your life savings. After you retire, you may hesitate to withdraw more than the growth of the portfolio because you don't want to see the value of the stash go down. After spending two or three decades building it up, in can be difficult to watch your account balance get smaller every year. It's important to determine a sensible withdrawal strategy that meets your risk tolerance and has a high probability of lasting for the rest of your life.
There will be parts of work you will miss. Some jobs are interesting and stimulating. But even the worst jobs have pleasant moments. Many people develop relationships with the co-workers they see every day. The challenge of the work itself, the camaraderie at the office and even the complaint sessions at lunchtime will become good memories you will likely miss.
The freedom of having enough financial assets to choose a lifestyle without a job far outweighs these minor nuisances. But it's worth thinking through the emotions you are likely to experience when you no longer go to a job each day.