A lot of people have the goal of being able to retire early. After all, it might seem like a great thing to be able to take control of your schedule at a time when you still have the energy to travel and be active.
But early retirement isn't always a sound financial or social move. And in these circumstances, it's a decision that could result in a lot of stress and unhappiness.
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1. Your home isn't paid off
Going into retirement mortgage-free isn't a given. Many people are buying homes at a later age these days, resulting in situations where there's a lingering mortgage balance for folks in their 60s.
There's no rule stating that you're doomed to struggle financially if you retire while owing money on a mortgage. But if you're going to retire early, it's best to have as few expenses as possible. And if you still have a mortgage, that's just another expense your savings will need to cover.
Depending on how early you retire, you may not be eligible for Social Security right away. So in that case, you might have a few years of living solely on savings. But if you have the expense of a mortgage, your nest egg might get spent at a faster rate than what you're comfortable with.
2. Your health is poor
If your health isn't the greatest, you might crave an easier lifestyle that doesn't involve you reporting to a job every day. But early retirement often means having to pay for health insurance until Medicare eligibility kicks in at 65. And private insurance could be expensive for a few reasons.
First, if you have known issues, a lower-tier health plan could leave you on the hook for thousands of dollars in medical spending each year. A higher-tier plan might pick up more of your healthcare tab, but then you're spending more on premiums. Either way, healthcare could be very costly until Medicare becomes an option.
3. You're the only one of your friends who's retired
Retirement can be a rewarding period of life. But it also has the potential to be a lonely one. So if you're the only person in your social network who's in a position to retire early, you may find that you're starved for company, and that you don't really end up getting to enjoy your downtime because you have no one to travel or do activities with.
Of course, there's always the option to try to expand your network. And you might meet new people through the various activities you do. But be careful with early retirement when no one you know is in a remotely similar boat.
There are plenty of good reasons to wrap up your career early. And if you've saved well for years and can afford early retirement, then it's a goal you deserve to pursue. Just be mindful that early retirement could be more challenging when you're coming in with a mortgage balance, health issues, and no friends in the same situation.
