Many people dream of retiring early and freeing themselves from the daily grind. But a large number of workers assume early retirement just isn't possible, and therefore they give up on that goal, rather than working harder to achieve it.
What constitutes retiring early? For some folks, it could mean leaving the workforce at 50 or 55. For others, it could mean bowing out in their early 60s. The Social Security Administration considers 66, 67, or somewhere in between to be the full retirement age for today's workers, so for the purpose of our discussion, we'll define "early retirement" as any age prior to 66. With that in mind, here are a few reasons to bid adieu to the workforce as early as possible.
1. You'll have more energy to enjoy your leisure time
Maybe you've saved well for retirement and plan to spend your days traveling the world. Now, imagine yourself trekking the globe at age 63, as opposed to age 73. Chances are you'll have more energy in the former scenario. It stands to reason that the younger you are, the better your health is likely to be, so you might as well give yourself a chance to enjoy your savings and newfound free time before your body starts working against you.
2. You can follow your true career-related dreams
Many people think retirement means not working, but in reality, a large number of retirees continue to earn income in some way or another. In fact, seniors 65 and older boast the highest self-employment rates in the country, according to the U.S. Bureau of Labor Statistics.
Retirement is a great opportunity to start a business venture you've always wanted to pursue, whether it's opening up a bed and breakfast or turning your love for painting into an income source. Last year, 55- to 64-year-olds accounted for 24% of new entrepreneurs, so if you're itching to pursue your passion, retiring early could pay off financially in a big way -- because the sooner you start focusing on a job that makes you happy, the sooner you can start earning money at it.
3. You may have more income sources to fund your lifestyle than expected
For many folks, the single greatest impediment to retiring early boils down to money, or the lack thereof. After all, pulling the trigger on retirement without a sizeable nest egg could backfire down the line.
On the other hand, you may have more income at your disposal than you'd think. As long as you wait until age 59-1/2 to retire, you'll be eligible to take withdrawals from your IRA or 401(k) without having to worry about penalties. Furthermore, if you hold off on retirement until age 62, you'll be allowed to collect Social Security, albeit at a reduced rate.
Of course, the typical senior can't survive on Social Security alone. But if you have a healthy amount of retirement savings, and perhaps another source of income, like a hobby you've chosen to monetize, retiring early might be more financially feasible than you previously imagined.
4. You can't predict the future
The Social Security Administration reports that the average 65-year-old man today will live until 84.3, while the average 65-year-old woman will live until 86.6. But these are just averages, so while some men will make it to 94, plenty of others will pass away at 74. Though the current state of your health can give some indication of how long you might live, there's ultimately no way to predict when your time on Earth will come to an end.
That's why it pays to retire as early as possible, provided you're in a strong enough financial position to do so. Pushing yourself to work a few extra years is a noble and responsible goal, but if you've been looking forward to retirement your entire life, and you can make it happen sooner rather than later, you might as well go for it. And while it's true that retiring early could lead to boredom, if you find that's the case, there's always the option of returning to work on a part-time basis to give yourself something to do.
Though early retirement isn't an option for everyone, don't assume that it's impossible for you. With enough planning, you can retire early and reap the many benefits that follow.