Why Retiring Early Is Surprisingly Not as Good as It Sounds

You might dream of an early retirement and count down the days until you don’t have to answer to your boss anymore. However, retiring early might not be as great as you think it will be. Although it would be nice to finally relax and kick off your shoes, there are some downsides to calling it quits a few years early. If you don’t prepare properly, early retirement could have a negative impact on you — financially, emotionally, and physically.

Are you thinking about making a grand exit ahead of schedule? Here are 10 reasons why retiring early is surprisingly not as good as it sounds.

1. Your Social Security benefits will be lower

Social Security shouldn’t be your only plan, but it will play a role when it comes to your monthly income during retirement. If you retire early, one thing you’ll want to keep in mind is your monthly benefits will be a lot lower. If you decide to collect your Social Security benefits as soon as you’re eligible (currently age 62), your benefit amount will be 25% less than if you waited until the normal retirement age, according to the Social Security Administration.

2. Your health insurance won’t be as good

When you retire, your health insurance options won’t be as good. Without a good health insurance plan, you’re going to run into a ton of issues. Employer-sponsored health insurance is your best deal in most cases. This is especially true if you have a chronic illness. Most of the time, leaving the workforce before normal retirement age means you’ll need to use the Health Insurance Marketplace to purchase a new health insurance plan.

3. You’re at increased risk for depression

If you opted for extreme retirement, it’s likely you won’t have many people to socialize with during the daytime hours. Your former co-workers and friends are probably still working and occupied with things related to work life. When you suddenly go from working around others to spending time by yourself most week days, it’s not uncommon to feel depressed and lonely. The likelihood someone will become clinically depressed rises by 40% after retiring, according to research conducted by the London-based Institute of Economic Affairs.

4. It could speed up your death

Does early retirement lead to early death? It’s possible. There has been a noticeable pattern of some folks who retire and then die soon after. For example, one study of Shell Oil workers revealed workers who retire at age 55 are 89% more likely to die during the 10 years after retirement than workers who retire at 65. However, workers who retired after age 55 had a reduced mortality risk. In addition, a study conducted by Oregon State University found even workers who identified as being unhealthy lived longer when they remained in the workforce.

5. You could experience cognitive decline

One of the benefits of going to work every day is it keeps your mind sharp. This is because you spend much of your time solving problems, putting out fires, and collaborating with your teammates. However, once you exit the work force, you’re not putting those cognitive skills to work. Consequently, you might not be as sharp once you retire. The Health and Retirement Study found a link between retiring early and cognitive decline. Some experts refer to this decline as mental retirement.

6. You might not be emotionally prepared

Are you really prepared to retire early? You might think you have it all figured out, and you can’t see any downside to leaving work years before your peers. But you might be surprised to see how tough the transition can be.

Blogger Mad Fientist said the reality of being retired hit him like a ton of bricks on his first full day as an early retiree. “You would have expected it to be the best morning ever but it was actually the only time in the entire first year that I freaked out about the whole thing. … I was staring into the vast unknown and the immense gravity of the situation freaked me out much more than I expected,” he said on his blog.

7. You might have to eventually work again

Extreme early retirement might sound great now, but don’t forget your money will now have to last a lot longer than if you had waited. Your ability to make your dollars stretch as far as they can will be more important than ever. And if you happen to overspend or miscalculate how much you need, it could mean you might have to return to work.

If you find yourself in a place where you have to go back to work, don’t despair. Although it’s usually by choice, plenty of retirees return to the workforce. A CareerBuilder survey found 60% of workers 60 and older said they would hunt for a new job after retiring.  

8. Your social network will shrink

Retiring early comes with some major lifestyle changes. At times, it will seem like you’re on a completely different wavelength than the people you used to socialize with regularly. When your friends, family, and former co-workers are talking about the work projects they’re managing or a recent office event they attended, you might feel a little out of place. What exactly are you going to contribute to those conversations?

It could only be a matter of time before you start to see your once vibrant social network start to shrink. A studypublished by the Center for Retirement Research at Boston College revealed people who remain in the workforce have larger social networks.

9. You’re at increased risk for suicide

Retirement can be a lonely time. Unless you’ve prepared for your social life after retirement, you could experience significant loneliness during what should be one of the best times in your life. Unfortunately, these feelings of being alone lead some retirees to become so overwhelmed that they attempt suicide. More than 7,000 people age 65 or older died by suicide in 2013, according to Centers for Disease Control and Prevention research.

10. You just might hate it

You could end up bored, lonely, sick, and depressed. That’s not much fun, is it? Running the rat race isn’t necessarily a joyful experience. But when you suddenly go from one extreme to the next, it could be a shock to your system. Also, if you truly enjoy your work and you’re in good health, retiring early might not make much sense.

Ben Carlson, founder of A Wealth of Common Sense, said he enjoys his job, so he didn’t plan to retire early despite the fact that many personal finance bloggers have made a big fuss about leaving the workforce ahead of time. “A running theme with most extreme early retirement stories I read is that the people hate their jobs — they work too many hours, hate their employer, and have high levels of stress or no work-life balance,” Carlson wrote on his blog.