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Retirement is a goal everyone strives to achieve, and the sooner, the better. After working hard and setting aside money for years, you deserve to enjoy your golden years. But what if the opportunity to step away from the workforce comes sooner than you expected? While most dream of early retirement, are there drawbacks?

Before examining the pros and cons of early retirement, it’s helpful to identify common events that can speed up your retirement date.

Causes of Early Retirement:

The most common reason people can retire early is they met their savings goals. Once the kids are grown and move out, most find they have significantly more money to put toward their savings. Or their investments provided greater returns than anticipated.

However, other common denominators contribute to early retirement:

  • Early Retirement Package: Businesses looking to reduce staff often present employees near retirement with a monetary incentive to exit the company early.
  • Housing Market: Many future retirees plan to downsize as part of their retirement strategy. If home values are up significantly, it could present the opportunity to sell your home earlier than anticipated.
  • Windfall: While you dream about winning the lottery, the most common financial windfalls come in the form of an inheritance.
  • Business Sale: If you’re a business owner, a too-good-to-refuse offer might present itself unexpectedly.
  • Health: Unfortunately, people are often forced to retire early due to health reasons. This might include one’s personal health or caring for a spouse or aging parent.

Pros of Early Retirement:

Aside from the obvious, sleeping in late and watching The Price is Right whenever you like, there are several benefits to getting a head start on your retirement years.

  • Health Benefits:

Because your professional career often lasts decades, people tend to overlook the toll working can have on their health. And it’s not just physical, but mental too. Early retirement allows you to escape the high stress and anxiety levels of today’s workplaces.

  • Pursue Passions:

Many retirees use the extra retirement years to pursue their passions and interests. That might include volunteering your time for a cause you admire or traveling the world to experience new cultures with your partner.

  • Start a New Career:

The thought of retiring early to begin a new career might sound counterintuitive. However, many people dream of starting a business or working for an organization they respect. When salary isn’t the key driver, you’re more flexible in the opportunities you pursue.

  • Enjoy Family & Friends:

Opening your schedule to have more time to spend with those you love is a true blessing. It’s a great feeling to take a step back from the face-paced world and enjoy your family, friends, and community.

Cons of Early Retirement:

One might wonder how there could possibly be drawbacks to retiring early. However, there are things to consider, especially concerning the financial repercussions of ending your paychecks ahead of schedule.

  • Mental Health:

While working can cause heightened stress and anxiety, leaving the workforce can also impact your mental health. Typically, this happens through a lack of mental stimulation. Many retirees find they aren’t tested mentally enough or begin to miss interacting with more people regularly.

  • Loss of Sense of Purpose:

 Many people identify themselves by their careers. For example, if you were a teacher or service member in the military, you may feel like part of your identity is missing once you retire.

  • Financial Challenges:

Retirement can be 20-30+ years outside the workforce. You’re relying on your savings to provide for you during that time. Deciding to retire early requires you to extend those funds even further. With proper planning, it’s possible, but there are things to consider.

  • Social Security: Deciding when to begin taking your Social Security benefits is a significant decision. For example, if you were born after 1960, full benefits start at age 67. If you take Social Security at the earliest age of 62, your benefits could be up to 30% less.
  • Health Insurance: Medicare begins at age 65. If you retire before then, you’ll need to acquire your own healthcare coverage. You’ll want to obtain quotes before you decide to retire to ensure you have the funds available to cover this additional expense.
  • Market Fluctuations: The economy can significantly affect how long your money lasts in retirement. If you’re considering early retirement, you’ll want to ensure your retirement plan protects against fluctuations, such as recessions or periods of high inflation.


When you’re presented with the opportunity to retire early, it’s hard to say no. Yes, there are both benefits and drawbacks, but that doesn’t mean you can’t find some middle ground.

For example, you might decide to retire but pursue other income-generating opportunities, such as consulting or working part-time. Some couples will have one spouse retire early while the other continues to work for a few more years – solidifying their savings.

Finding balance is often the best strategy.

We’re Here to Help!

Deciding when to retire is a significant life and financial decision. If you’re interested in learning more about retirement planning or would like a second opinion on your strategy, we’re ready to help.

Please stop by any of our convenient branch locations or call 1-800-531-8456 to schedule an appointment with a member of our investment team today.

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Each individual’s financial situation is unique. We encourage you to contact United Texas Credit Union when seeking financial advice on the products and services discussed. This article is for educational purposes only; the authors assume no legal responsibility for the completeness or accuracy of the contents.

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