There are many reasons one might want to retire early. Some may want to travel, some may want to sit and dream, and yet others might want to work on a startup or hobbies. Whatever the reasons might be, be prepared if the plan does not pan out. But more importantly remember that early retirement is not for everyone. I know a lot of people who have realized that early retirement is not for them. They don’t know what they would do if they retire early. For them, work is the thing that keeps them busy. That is a very good reason not to retire early and I am glad these people have a clear idea. While a few others want to retire early because the thought of freedom to do whatever you want sounds nice, or they are in a very stressful job. These kind of people can land up in trouble if they don’t have a plan.
While I don’t have solutions or even advice for every kind of individual, there are some broad aspects you need to keep in mind before retiring. Some of you might think that this is a problem that only early retires have to grapple with, but it is not true. Every individual who plans to retire at some point in life have to figure it out. Just that the late retirees have more time. Take for example my dad who retired a bit early, because his company was offering him good incentives for voluntary retirement. He retired at 55 instead of the usual age of 60. I don’t think you can call 55 as much of an early retirement, you can just call that retirement.
After retirement he used to be super frustrated because he would have a lot of free time on his hands and didn’t know what to do. How much time can he spend reading newspaper, watching TV and talking to neighbors and friends? The social aspect was especially painful because most others his age were still working, so they are still quite busy during the weekdays. He did not have a plan for retirement and that caused a lot of stress. He picked up some small habits like gardening or helping out at home but still had too much of free time. He is constantly on the lookout for some work to do at home or outside. Otherwise he feels like he is being a unproductive member of the family.
While I don’t have such a problem at all even though I have retired much earlier, I have to figure out what to do for the next 15-20 years before I get to the stage he is at. What it also tells me is that no matter whether you want to retire early or late, have a plan for what you will do afterwards. Thankfully, health is on his side, so at least he did not have to worry about that. Imagine how you would be at 60 and for some, even if you have a plan, you may not be able to execute if your body does not allow you.
If you are thinking you will travel around the world and keep yourself busy, then don’t bank on it. There is only so much travel you can do and it is a huge strain on the finances because it is becoming more and more expensive each year. If you are thinking of just sitting and dreaming, how long can you do that? There will be some good 6-8 hours of free time everyday. If you are planning on a startup, the competition is intense and you will have to work long hours and be nimble if you want to fend off competition. I know there are some successful startups by elder generation like BigBasket which were successful but those are rare. If you are planning to bank on hobbies, will they last your lifetime?
While everyone’s experience will be different, personally, so far I did not have a single dull moment in the last 5+ years in retirement. I know people who are as young as me who struggle to figure out what they will do if they retire early. To them, I only have this questions – what is your plan for when you retire? Think about it. No matter what age you plan to retire, what will you do after that? Perhaps you want to continue to work until you drop dead. Perhaps you will pick up a hobby before you retire. Perhaps you will plan to travel. What ever your plan, make sure it lasts a good 30 years. Maybe you want to spend time with friends, but if your social circle is still going to work, you may feel left out.
This is especially important for those who want to retire early. I understand that it “sounds” fun to retire early because you will not have to work and work is not something that you associate with positive sounding adjectives. If you are planning to retire early without a plan, then don’t even think about it. However, whether you plan to retire early or not, you have no choice but to plan what you will do when you retire. And that is just about the time aspect. You still have to consider the financial aspects of retirement.
You might imagine a certain corpus will be sufficient for retirement, but the costs always keep going up. Will your corpus be able to keep pace with inflation? What if your post retirement plan needs a lot of money like doing a start-up or stock trading? What if your kids what to go for foreign education which you did not plan? What if the travel expenses have shot up which you were planning to do?
That is not all. It is possible that your partner has other plans and may not want you to retire early. Or think about what activities you plan to do after retirement with or without your partner? Your partner might want more space after retirement because they now have to get adjusted to you being around them for a good 8 hours more than they are used to. Alternatively, you partner may be looking forward to doing things together with you after retirement for which you are not prepared to. May be your kids expect you to spend more time with them and you don’t want to, or what if it is the other way around and you kids don’t want you to poke your head in their life but you have too much free time and have nothing better to do?
So far I did not have any problem with either time, health, expectations or finances since retirement. But it has just been 5 years. Assuming a 80 year typical life span, I still have another 35 years to go. Even as I type this post, I can see myself being extremely busy for another 5 years. Regarding finances we have have to see how the markets behave but so far I don’t see any risks given my corpus size and how it grew in the past 5 years. I am trying to maintain my health as best as I can, but unexpected events are always possible in spite of best efforts. Finally, I have met all the relationship’s expectations thus far. No one has gone crazy with me around the house all day and no one has driven me crazy either. Never cared for or had any social status. If you know of more risks post retirement do share so others can be prepared for retirement whenever that happens.