The FIRE movement (financial independence, retire early) has inspired many to find ways to retire sooner. People cannot wait to leave their desks at work and travel the world, but they forget to consider the negative effects of retirement.
Retiring early could be bad for your health, and could have a negative impact on your social life. By knowing about these risks, you can address them beforehand, and make the most of the next stage of your life.
Retirement is Bad For Your Health
Multiple studies have found that retiring early could cause your physical and mental health to decline. Harvard found that the mortality rates of retirees dropped by 11% if they retired at 66 instead of 65. Work helps you stay active and socially engaged, which helps maintain your cognitive abilities.
Another study showed that early retirees who collect social security sooner also increase their mortality risk by 20%.
Correlation is definitely not causation, and more research is needed to determine a definite link. Either way, it’s important to keep your mind and body active after retirement. This can be done by exercising more, as well as joining social groups.
You Could Lose Your Health Insurance
Retiring early normally means that you no longer qualify for your employer’s health plan. You can qualify for Medicare once you turn 65, meaning you’ll have to find private health insurance if you retire before 65.
Health care costs are constantly rising, and it’s difficult to know how much this will cost in the future. Whatever you do, make sure you still have health care. Going without it will lead to tax penalties, and just one incident could ruin your retirement plans.
You’ll Lose Friendships
Have you ever had time off in between jobs? It’s relaxing over the first week, and slowly you realize that all of your friends and family still have work. What will you do with the free time?
It turns out that your social life will improve only if all your friends and family also retire. Since many of your friends and social interactions happen over work, your social life will significantly decline once you retire.
Your Life Has Less Purpose
Work is a significant part of your life, and many of your successes are tied to it. From winning a deal, to accepting a promotion, to mentoring employees, there are several things you’ll do every day that give you meaning.
Once you retire, you’ll need to find new ways to fill that void. Ideas could be to write a book, write a blog, or join the boards of companies and non-profits.
You Could Run Out of Money
The longer you’re retired, the longer you’ll rely on your retirement savings. Stock market shocks, or an increase in your costs due to health care or tax changes, could devastate your retirement plans.
Make sure you follow the 4% rule for retirement. The earlier you retire, the larger your nest egg should be to account for future stock market shocks or standard of living changes.
Your Spouse May Not Want to Retire Early
What if you want to retire, but your significant other doesn’t? You could run into problems if you’re both in different places with your professional life.
Ideally, you will want to coordinate with your spouse so you can enjoy retirement together. If not, have a plan on how you an enjoy your retirement time, while your working spouse does not feel left out.
Negative Effects of Retirement – The Bottom Line
Retiring early has become the dream for many, but it’s important that you consider the negative effects of retirement that can arise.
Retiring early could be bad for your health, your social life, and overall sense of purpose. Furthermore, there are financial risks when you rely on your retirement savings for a longer amount of time.
Make sure you have a plan on addressing these before retirement. Plan with your spouse and family on how you will make up for your social life changes, as well as how you’ll stay active. Finally, ensure that your savings will be built for the long haul.
Another option could be to work part time. Doing so will give you social interactions, some form of income, and access to health care. Working part time could give you the best of both worlds, so definitely keep it in mind.
Early retirement is the envy for many, and you will make the most of it by addressing these negative effects head on.