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Advantages and Disadvantages of Retiring Early

Aman Khanna

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Retiring ahead of schedule is an exciting proposition, and you too may have thought about giving up your job early and pursuing your passions. However, it takes a lot of planning and wise financial decisions that will enable you to retire early. Like most situations in life, retiring early also has its own pros and cons. Here are some of the most important ones.

Advantages of Retiring Early

  1. Trading in work Pressure for peace

The peace of mind obtained after retirement is what all working people yearn for, be it dealing with work pressure, commuting, or pitching for a promotion. You may also want to retire early to get rid of the monotony of your job. Early retirement offers you this privilege. Retiring before you touch the age of 60 or 65, helps you trade in a job you dislike to one that inspires and excites you.

  1. Improving your Health

Retiring before schedule not only means you enjoy mental peace, but also means you have more time to dedicate to your physical health. The lack of stress post retirement could be the reason why your health improves. The fact that you have more time to exercise and eat healthy could also have a positive impact on your overall wellbeing.

  1. Pursuing your Passions

Ever wanted to do something you excel in and loved but never found the time? Whether it is learning classical music or indulging your green thumb, helping out a charity institution or teaching underprivileged women to earn a livelihood, your passions may be many. Early retirement gives you the option to do what you love.

  1. Having more Time on your Hands

Retiring early does not mean having only the time to pursue your passions. You could also dedicate some time to your family and those who depend on you by taking up additional responsibilities. This could be taking up the environmental concerns of your neighbourhood or driving your grandchildren for their tuition classes.

Disadvantages of Retiring Early

  1. No more Salary

The one major hurdle all early retirees face is the absence of a salary. The lack of regular and timely remuneration can add to the pressures and challenges that can ensue from retiring early.

While you may have resources that you can fall back on, not making your financial plan taking inflation, emergency expenses, and rising healthcare costs into account can be difficult to overcome.

One way to beat this is by investing your EPF money into a safe company FD such as Bajaj Finance . Choose a non-cumulative FD and you will get monthly interest payouts that are fixed and not dependent on market fluctuations.

  1. Retirement Savings need to Last Longer

The earlier you retire, the more savings you need to accumulate. This means you need to do your retirement calculations right, and begin planning for it from an early age. For example, experts recommend that if you are planning to retire at 52, you will need to build a retirement corpus of 12 to 15 times your annual income in order to sustain your lifestyle.

  1. Reduction in Employee Benefits

Retiring early means you automatically waive off certain employee benefits and perks you were entitled to when you were working. Not only does this mean you won’t get a bonus every year, but it also means you may not get certain medical or entertainment privileges. Do take this into consideration when planning for an early retirement.

  1. Boredom and Lack of Social Interactions

Retirees often feel isolated and purposeless when they retire. This is because they no longer enjoy the camaraderie of meeting their colleagues at work, and spending time with them after work hours. Since the job responsibility is no longer in the equation, they could also end up feeling bored, which may lead to depression.

This is especially true of early retirees, but you can combat it by making sure you create a new set of roles and responsibilities for yourself. Ensure that you either create a friend circle of people who have retired early like yourself, or meet with your working friends every so often.

All said and done, it is best for you to choose early retirement only after knowing what the disadvantages are and finding ways to combat them. Prudent financial planning and a plan of action for your personal time are the foundations on which your early retirement decision can stand on.


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