Many of us are counting down the years until we reach retirement age, often saving aggressively for early retirement. While research shows that retirement can improve your health and overall life satisfaction, retiring early can also have its share of pitfalls if not thought through.
Here are three things to consider when you’re planning for early retirement.
1. Do You Have Enough Money?
If you retire before the age of 65, you’ll need to cover your expenses for an extra 10 to 15 years without the help of Social Security benefits. Problem is, when you retire early, it can be difficult to know how much money you’ll need exactly and the rules of retirement planning change regularly.
Inflation, medical complications and other unexpected costs can eat into your nest egg. If you choose to retire early you’ll likely receive less money from Social Security and your company pension too. To help weather unexpected costs, build up a significant financial buffer or cut back on work slowly. It’s often beneficial to work part-time during the first 10 to 20 years of retirement. Doing so will help supplement your income and keep you socially active too.
2. Will You Enjoy Post-Retirement Life?
Gerontologists now refer to the retirement years as “the third age” of your life. But rather than taking it easy, they say, it’s a time to cultivate interests and activities similar to those when you were working. Once you retire, you may actually miss the intellectual challenge and purpose you got from your work. For this reason, you’ll want to actively find ways to stay engaged. Volunteer work and community service are activities that many people find fulfilling.
Or try retirement on for size by taking a sabbatical or an extended vacation. If you find that you miss or crave intellectual stimulation, continue working part-time until you’re retirement ready.
Something else to think about is the impact retirement has on your relationships. If you’re not used to spending so much time with your spouse or partner, it can create tension and conflict at home. Talk to your loved ones about your plans and find ways to respect each other’s personal space and routines.
3. How Will You Stay Physically Active in Retirement?
As the body slows, so does the mind. Almost any form of daily exercise will help keep your mind as sharp as it was before retirement. In fact, numerous studies have found that physical activity, such as resistance training and cardiovascular exercise, support cognitive functioning in older adults. Colin Milner, CEO of the International Council on Active Aging and a leading authority on the health and well-being of older adults, encourages soon-to-be retirees to put a healthy living plan in place before stopping work. This includes working with a nutritionist to develop a healthy eating plan and a fitness trainer who can create an exercise regime that’s right for you.