Early Retirement Reality Check
Even if you like your work, there are times when alphabetizing the spice cabinet would be preferable to traveling a crowded train with hundreds of sniffling passengers. You could be considering early retirement as you wobble in the car next to a guy who has biked four hours to the station.
Unfortunately, not everyone is suited for early retirement. Indeed, it is not for most people. According to a poll conducted by the Employee Benefit Research Institute (EBRI), just 11% of today’s employees want to retire before 60. The reality of early retirement might be quite different from the dream for many of those who take the jump. Before you decide to retire early, consider a few things.
1. Health care is expensive.
If you were sick as a child, likely, you’ve already been diagnosed with an ailment or two. And if you’re like many people in their 20s and 30s today, those health problems don’t just go away when you turn 65. Believe it or not, most insurance companies won’t cover treatments for conditions present before your policy. And if you get sick after your policy begins, expect to pay extra for your health care.
Medicare doesn’t kick in until you’re 65. You’re on your own for medical expenses unless you buy a private insurance plan that will cover pre-existing conditions or take out an expensive rider to cover that risk after you retire.
2. Tapping your nest egg earlier can be costly.
Depending on how you invest your assets, you could see a significant drop in your portfolio’s value if you begin to liquidate at age 50. For most people, tapping savings represents a large percentage of their net worth, and the loss of that investment can be enough to derail any dreams they have of retiring early. Suppose retirement is still years away, and you’ve got no other sources of income. In that case, the best strategy might be to keep working and investing as usual.
3. Housing expenses don’t retire when you do.
When you retire early, it’s relatively common to move to a less expensive area. But don’t assume that your housing costs will go down as well. It’s pretty common for people to spend more on housing in retirement than they did when working full-time.
How much should you save? A benchmark rule of thumb is to replace 80% of your pre-retirement income. If you’re 35 and earn $70,000 a year now, aim to have about $56,000 saved by age 65 to continue living on about $10,000 per year from then on.
4. Extra income can be hard to come by.
Being your boss and setting your hours can be a great perk of early retirement. But unless you had already planned on working part-time, it’s unlikely that you’ll get the same kind of paycheck after retirement as you do while at work. That extra cash can make paying for health care and housing expenses easier without dipping into savings.
5. There’s a lot of time to kill.
Many people discover that they have a lot more free time as retirees than they ever expected. If you’ve been used to working 10-hour days for the last few decades, spending your days fishing or golfing can feel like an empty experience. As a result, some retirees find themselves longing for the structure of their old work schedules. Working part-time can be an excellent way to fill these hours and provide income at the same time.
What’s more important  not going to work every day or having enough money to pay your bills? Many early retirees find that there are tradeoffs involved in living the life they once dreamed about. Reality is often different from fantasy  but it can still be a rewarding life.
6. You may need to make new friends.
It can feel strange to have all day long to do whatever you want suddenly  and no one else around. But it’s a common experience for retirees who leave behind their co-workers, supervisors, and colleagues when they retire early. And even if you had a solid social network within your work environment, the chances are that most of them will be working still while you’re retired. So if the idea of playing golf every day on your own doesn’t appeal to you, consider starting a new hobby or taking up some volunteer activity in your community so that there’s someone else around during your afternoons and weekends.
7. Retirement can be tough on couples.
Many retirees find that they miss the structure of a work schedule, a shared social network, and a sense of meaning in their lives. If you’re married, your partner could experience similar feelings  even if they are happy to be retired. That can put added stress on your marriage as you both sometimes struggle with competing desires for time alone versus togetherness. In some cases, it might be helpful to take up new activities or hobbies separately so that each person has their own set of friends and social interactions outside the home.
Contact Information:
Email: [email protected]
Phone: 6122163911
Bio:
Mickey Elfenbein specializes in working with Federal Employees relative to their retirement benefit plans, FEGLI, TSP, Social Security and Medicare, issues and solutions. Mr. Elfenbein’s mission is to help federal employees to understand their benefits, and to maximize their financial retirements while minimizing risk. Many of the federal benefit programs in place are complicated to understand and go through numerous revisions. It is Mr. Elfenbein’s job to be an expert on the various programs and to stay on top of changes.
Mickey enjoys in providing an individualized and complimentary retirement analysis for federal employees.
He has over 30 years of senior level experience in a variety of public and private enterprises, understands the needs of federal employees, and has expertise built on many years of high-level experience.
