Retiring Too Early: possibilities and pitfalls
“People make the decision to retire based on an economic state rather than a life state,” ~ Retirement Coach, Mitch Anthony.
Retirement, imminent or distant, probably calls for more decision-making than any other sphere of your life. For years, you may look forward to it, believing that you will be finally free of stress and anxiety, and able to do what you’ve always wanted.
But what is that exactly? Very often the freedom is the real draw, and what you will be doing on a day-to-day basis is not entirely in focus. Many people make the mistake of thinking purely about the finances they will have gathered for the purposes of retirement: pension, investments, policies, savings, etc. If the attention has been on affordability and not on how you will occupy your time, you might find yourself very disappointed with your new status when it finally comes around.
Planning more than the money
Retirement actually requires a great deal of planning way beyond just the finances; some say you should be planning what you’ll be doing at least 10 years before you stop working. Of all aspects of retirement, whether eagerly awaited or dreaded, early retirement may present the most difficult of choice – simply because retiring early may mean you are still young enough to work, and not old enough to enrol in a home for retirees.
Retiring early may present some sense of success in an individual’s life, but it may also mean that eventually you are forced to take up some other employment, either to pass the time or supplement a retirement plan that is beginning to look less healthy as each year passes. These are questions you must consider ahead of time, regardless of whether you are retiring debt-free and no longer supporting kids and parents:
- Are you retiring financially well-heeled but with nothing to do?
- Are you retiring with a good financial plan but hoping to start a new career?
- Are you retiring with a modest nest-egg, but going to look for a job of some kind to help supplement your income?
- Are you retiring reluctantly on a shoe-string, hoping to figure it out as you go?
This latter scenario – whether supported financially or not – tends to report that adjustment is difficult for such people, who tend to portray more boredom, anxiety, restlessness and feelings of uselessness in their new situation. Depression and suicide rates tend to rise in the early retirement ages between 45 – 64, proving that concerns around retiring too early are valid. Without a job, many feel they are losing their identity; work is often tied up with a sense of meaning and purpose – and looking back, you could find that it almost doesn’t matter whether you liked your job or not, you’re still going to miss the connection, action and camaraderie.
A holistic approach
Retiring early should not remain a goal for its own sake – it should be planned with concentration and attention to detail. Hoping that your interesting hobby might be turned into a money-making business may not be realistic – not unless you have already made an effort to study small business management, have a business plan and a strategy in mind, and have set up connections, mentoring and support networks.
The issue with early retirement is that the younger you are, the more frustrated and bored you may feel. Older people retire with more satisfaction, happy to be settled in their lifestyle they feel is deserved after a long working life; they usually find enough purpose in enjoyable creative projects and helping others such as family and friends. Ambition to succeed has dimmed, and there is more acceptance in an older person. Retiring young should mean that you may still be planning something adventuresome as well as practical. It’s not a good idea to spend half your pension travelling the world if you have no plan for when you settle back home again.
Retirement is seen as progress through three managed phases:
- planning (finance and occupation) of around 2 – 5 years before you retire
- transition of around 2 – 3 years, testing imagination against reality
- acceptance, establishing identity with your new situation, including reframing your sense of purpose and building new relationships. Retiring early is usually much more than just planning the money, and then off to the beach.
There’s a great upside to engaging life’s challenges after retirement:
If you are emotionally grounded going into retirement, you are more likely to make better, more mindful financial decisions in these years. And in fact, retired life may require less money than you expect. The key focus is always to find purpose and ways to feel relevant – what are you good at, and what do you like to do? And all these thoughts and decisions should lie in the pre-retirement years. Your plan of how to live, is exactly how you will experience this new stage of your life – and the younger you are, the more comprehensively you have to plan.
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