To retire early sounds great to a lot of people and it can be an attractive option if you don’t like your job, you think it will be better for your health or you’re simply looking for a change in lifestyle. Whatever the reason, you also need to consider the dangers of early retirement. Let’s take a look at some issues that might come up if you make this decision in a hurry.
Imagine retiring at 38 with the aim of spending the next three years traveling the world and experiencing other cultures. Now you’re 41 and the excitement is waning, funds are getting low and you’re simply just bored. You start to re-consider going back into the work force but most employers wouldn’t risk hiring a 41-year-old with a 3-year employment gap. They would assume you’re out of touch and will look for someone with a more consistent employment history.
You now have all the extra time to do pretty much anything you like but this doesn’t apply to your friends and family. They still have jobs and will be too busy most of the time to hang out with you.
“I’m running low on cash”
The phrase ‘expect the unexpected’ applies to most things in life, especially when it comes to finances. This could be in the form of a medical emergency or a bulldozer tearing down your house…ok the latter is less likely but you get the point. If you jump into early retirement without a plan for adequate recurring income you will need more money eventually. It may be wise to consider additional voluntary contributions to your RSA.
It might be difficult to raise a family
Raising children costs money and unless you have quite a large sum in your cash reserves, raising a child after you retire early will undoubtedly be challenging, especially if you weren’t initially considering starting a family in the first place.