Early retirement – Heaven or Hell?
You might have lots of good reasons for taking early retirement but have you considered the pros and cons?
The opportunity for a fresh start
Putting the brakes on your full-time career doesn’t mean slowing down completely. More retirees than ever are working throughout their retirement. Many take on part-time jobs in a completely new field while others keep engaged with consulting roles in their native industry. Some even decide to get more qualifications, studying subjects that they care about rather than ones which are totally career related. As long as you have sufficient funds in your pension pot then early retirement affords you the opportunity to work because you want to work, not because of financial obligations.
The opportunity to invest in family and personal relationships
If you’re in the position for an early retirement, chances are your hard work came at the cost of long hours and time away from loved ones and family. Retiring in your fifties may allow you to spend more time with your family and if you still have children living at home, become a more involved parent.
The opportunity to do what you want
Long working days followed by tired nights often mean that we lack the time and energy to do the things that bring us pleasure. Early retirement affords the opportunities for travel, new hobbies or picking up on old interests which have been neglected. Imagine having the time to write a book, join a club, take some exercise every day or just relax when you want.
You’re likely to receive a smaller pension than if you worked until normal retirement age. Both your occupational and state pension will probably be affected. You also can’t draw your State Pension right away. The earliest you can usually start taking a workplace pension is 55, but you won’t get a State Pension until your mid to late 60s, or later depending on your current age.
Social interactions and self image
Most of us draw at least part of our feelings of self-worth from the job that we do. We may pretend that status in not important to us but many people have complained after retirement that they felt less respected because of the loss of job status. You may also lose friends when we don’t have that common bond of work and you will certainly lose the day to day interactions with colleagues that provide interest and colour to life.
Lack of structure and activity
One of the real risks of early retirement is becoming lazy and allowing life to lose all structure. There is always another day, so why do it now? The outcome can be that good intentions to remain active and engaged fall away. As we get older we need to continue to be mentally and physically active and it needs a real commitment to maintain this vitality in retirement.
It is a totally personal decision. For some people, early retirement is the best thing that could have ever happened to them – less stress, more time, more fun. For others, early retirement can be a time of loss – of friends, status, money and life structure. Our advice is to think long and hard before you make this major step. Talk to your family and check your pension pots and savings.
If you would like professional financial advice on pensions, savings, investments or retirement planning, Age Concern Liverpool work with Co-operative Wealth who provide all of these regulated financial services. To access them, give us a call on 01704 542 993.