In the United States, the usual age for retirement is 65, which is when most folks can get their full Social Security benefits. However, lots of people are tempted to quit working well before that age. Many Americans are retiring earlier than they originally intended, whether it's by their own choice or due to other reasons. According to the 2023 Retirement Confidence Study, the typical age at which workers retire is 62 years.1
Let's take a look at why many Americans choose to retire earlier than they initially planned and go over some of the advantages (and things to think about) when retiring early.
Why Do People Retire Early?
The choice to retire early is often influenced by a combination of personal decisions and outside factors. Let's explore why some individuals might retire earlier than originally planned.
A major factor driving early retirement is health-related issues. If health problems make it difficult to continue working or if someone wants more time to focus on their well-being, early retirement can be a viable choice.
Job Loss or Job Dissatisfaction:
Early retirement can sometimes result from work-related factors. Losing a job, especially later in life, can lead to early retirement, particularly when finding new employment is challenging. Similarly, experiencing burnout, stress, or dissatisfaction with a job can make early retirement more appealing.
Many individuals opt (or are required) to retire early to care for their loved ones. They might need to support an aging parent, spouse, or family member with health issues. The desire to spend more time with family can also strongly influence the decision to retire early.
For some, careful saving and smart investments may provide the financial stability needed to retire early. Those who have saved enough to sustain themselves without working may have the freedom to retire on their own terms.
Pursuit of Passions:
Lastly, many choose early retirement to pursue their passions, hobbies, or personal projects that they couldn't fully engage in during their working years. This might include traveling, starting a business, going back to school, or simply enjoying a more relaxed lifestyle.
The Benefits of Retiring Early
Early retirement comes with many advantages. The most obvious one is having more time to enjoy the things you love. These extra years of freedom can lead to a fulfilling life that might be hard to achieve when you're working full-time.
Moreover, retiring early can be beneficial for your health. Retirement typically means less stress, more opportunities for physical activity, and the chance to focus on eating well. Multiple studies have found that retirement can lead to better mental and physical health.2
Considerations of Retiring Early
While the idea of retiring early may be appealing, it comes with its own challenges. One significant factor to think about is money. If you retire before the full retirement age, you might not get your full Social Security benefits. This means your monthly income could be less, which can affect how you plan for your retirement finances.
Healthcare is another important thing to consider. Most Americans become eligible for Medicare at age 65. If you retire before that, you'll need to figure out how to pay for your healthcare. If not planned properly, this can put extra strain on your retirement savings.
Early retirement is a goal for many, and it can be achievable with careful saving and planning. But it also involves several things to think about. Whether or not you can afford to retire early depends on your living costs, the income you expect to have during retirement, and how much you've saved up.