Beware These Three Risks of Retiring Early

Written By Mary Beth Eastman
Last updated January 28, 2021

Note: We receive a commission for purchases made through the links on this site. Our sponsors, however, do not influence our editorial content in any way.

August 27, 2018

Simple. Thrifty. Living.

For many people, retirement promises a slice of heaven on earth. It means putting the 9 to 5 grind behind them and pursuing the activities they truly enjoy. Seniors frequently retire at the first possible moment. Unfortunately, if you retire too soon, you may find your golden years far from heavenly. Before you take that important step, you need to know the risks of leaving the workforce prematurely.

When you retire early, you see reduced Social Security benefits. In fact, those born in 1960 will lose 30% of their monthly payment if they retire at  62, the earliest age possible for them. If they retire at 67, they will get what’s known as their “full retirement benefit.” Postponing retirement after that will get them 8% more each year until age 70. If you are in good health, waiting makes good financial sense.

The longer you live, the more money you will need to maintain an adequate lifestyle. Retiring early may lead to little or no savings later on. With the help of a financial adviser, you need to calculate how much money you will need to meet your expenses if you live until age 90 or even beyond. If you work longer, you will be dependent on your retirement plan and additional savings for a shorter period of time. You will also continue to add to your savings and retirement funds. Even a few more years in the workforce can make a huge difference in your financial situation.

Various studies have show a correlation between early retirement and the onset of Alzheimer’s Disease.  When you delay retirement, you keep your brain active and continue to learn new tasks, conditions that help keep your brain functioning at a higher level. Retirees also have high rates of depression, addiction, and suicide. Those who retire early must pursue other interests and remain socially active in order to combat this retirement phenomenon.

Early retirement is not always a bad idea. If you have the necessary funds saved, an active social life and other interests, you can enjoy a healthy and secure retirement. For many seniors, waiting until they are 65 or older is the best option.

About the Author

Mary Beth Eastman

Mary Beth Eastman serves as the content manager for Simple. Thrifty. Living, where she is dedicated to helping readers use money and credit wisely. Mary Beth believes that access to the right financial information paired with a growth mindset are essential tools for getting out of debt and building wealth. Mary Beth has a degree in Journalism from Bowling Green State University and has focused her 20-year journalism career on putting readers front and center, carefully considering their concerns and presenting information that will help them in their everyday lives. She has won numerous statewide journalism awards. Her writing on personal finance as been featured on numerous websites in addition to Simple. Thrifty. Living, including Huffington Post and Lexington Law blog. Mary Beth resides in Pittsburgh, Pa., with her family and two rescue dogs.

  • No comments yet. Be the first to get the conversation started. Here's some food for thought:

    Do you have any thoughts?

Submit a Comment

Your email address will not be published. Required fields are marked *