Retirement Planning: Why early retirement is not always a good idea?

Retirement Planning: The idea of an early retirement, followed by a long vacation, adventure thrills, and spending time on your hobbies, appears ideal. Professionals in their late 20s and early 30s may think of achieving financial freedom by the time they reach 40 and spending the rest of their lives on what they have always aspired to do. While it may appear to be an ideal situation for many, practically, it may be impossible, boring, and unchallenging.

In this write-up, we will tell you why an early retirement can be a bad idea for youngsters.

High-flying lifestyle

When we are in our early 40s, our expectations of life are quite different from those of someone in their early 60s. Our income, lifestyle, and luxuries in life make us accustomed to a life that requires a good flow of money to cover expenses.

Once you retire early and your source of income is the return on the investments you made before retirement, you may not be able to afford the same level of lifestyle as that of pre-retirement.

Change in life expectations 

Your definition of financial freedom can also change with changes in factors such as inflation, government policies, and your requirements.

The rule of 25X is the thumb rule when it comes to retirement savings, where you need to save 25 times your annual expenses.

Taking into account risk factors such as inflation, rising costs of living, and market fluctuations, the amount can be quite large, and one may lose interest after saving money aggressively for some years.

Early retirement can lead to boredome

Once you retire, you may have some immediate goals like travelling, buying a car or gadget, or learning new skills.

But just a few years down the line, they may not look attractive to you, and you may slip into boredom.

The mid-40s can not be a good stage to fill boredom in your life. You may have all the time in your life but nothing to do in particular.

What can be an alternative?

If you feel that your current job, business, or vocation will make you tired enough to take early retirement from your life.

Try to find ways to ease the work pressure in your life.

You can learn some new skills, take advantage of advanced technology or the internet, opt out of mundane work, and choose creative work.

It will reduce work pressure on you, and you will find work more productive and life more meaningful.

As long as your life is meaningful, you can work as long as you want, and you may not find reasons to retire early in your life when you may have many more years to work.