Why You Shouldn’t Retire Early

When Early Retirement is a Bad Idea

Here’s something odd to hear from us: Early retirement might not be right for you. Yes, I know that sounds confusing coming from two people who did retire early. We did a good job saving and investing throughout our careers and were able to step away from our corporate jobs last year.

Obviously, we’re big believers in becoming financially independent and having the freedom to retire as early as you want. So why are we suggesting that early retirement might not be the right goal for everyone?

Even though it was right for us, there are many reasons why a person shouldn’t retire early. These include giving up your career, facing financial risks, being too focused on money and more.

Loss of purpose

Let’s start with the potential loss of purpose that may come with stepping away from your career. For many of us, our careers give us a sense of direction and accomplishment. This is especially true if you’ve spent many years developing your expertise and get a lot of satisfaction from your work. It might be difficult to recreate the same sense of purpose after retiring early.

This was definitely one of my concerns. My career meant the world to me and I had spent many years not only focused on my job but also building my network and establishing myself as an expert in my field. For a very long time, I was resistant to the idea of retiring early given the huge personal investment I made in developing my career. Also, I hadn’t put any thought into what I would do if I wasn’t working. In fact, it was only when I was facing burn out that I finally became receptive to the idea of doing something else with my life.

That said, stepping away from work may leave a large gap in your life, especially if you’re passionate about the work that you do. Unless you’re someone who is very self directed, it might be hard to fill that 40 hours a week with equally satisfying activities or projects.

If you don’t have something specific to retire to, if you haven’t figured out the focus for your next stage of life, retiring early might not be the right choice.

Social isolation

The next reason that early retirement may not be the right choice is the potential for social isolation. When you step away from work, you’re not just leaving your job, you’re also leaving all the casual interactions that are built into your day-to-day. Whether you love or hate your colleagues, having them around helps fill in the day with social interactions that you might find difficult to replace.

Above and beyond your workplace relationships, let’s talk about your friends and social circle. Most likely, you would also be retiring ahead of your friends. Even though you have all the time in the world, your friends are still holding down their jobs and may not be available to meet up during the workweek.

It’s extra challenging if you are planning to travel full time like us. When we retired early, we left the city we’d been living in for the past six years in order to travel full time. This meant saying goodbye to all the friends we’d made during that time, although of course we stay in touch.

As nomads who are moving to a new city every month or two, it’s extra challenging to maintain social connections or even build new ones. Sure, we have a lot of virtual relationships with people in different time zones but it’s not the same as spending time with your best friends in person.

The potential for social isolation might be an even more important consideration for an extrovert who needs a lot of social interactions throughout the day. But whether you’re an introvert or extrovert, it really requires an active effort to build new social connections as an early retired person.

Financial risk

The next reason to second guess whether early retirement is right for you is the financial risk involved. Feeling comfortable to retire early is really dependent on having a strong grasp of your future expenses and budgeting for them accordingly.

However, the reality is that it’s really difficult to accurately forecast all of life’s costs like expensive healthcare or unexpectedly caring for dependents. Plus there’s always the possibility of external events like high inflation or a prolonged recession.

If you want 100% certainty that you can manage any unexpected costs that come your way with no impact on your lifestyle, then early retirement may not be for you.

Focused on finances

The next reason you might not want to retire early is if you have concerns about being overly focused on your finances for the rest of your life. Retiring early usually means living within an annual budget that you set for yourself. For someone with a very high net worth, this might mean working within a larger annual budget in their retirement. For someone who retires with $500,000 net worth, this might mean a smaller annual budget. Either way, you’re working within a budget for the rest of your life.

This means being mindful of how much you are spending each month. Some people enjoy being so focused on their finances and tracking spending and playing with spreadsheets. We personally love it as it gives us a sense of control over our finances.

For other people, being so focused on finances can really suck the joy out of everyday living. Not everyone is comfortable having to constantly review their spending and possibly modify their habits to fit within a budget.

If living within a budget for the rest of your life doesn’t appeal to you, if you want to feel more free with your spending, you might not want to retire early just yet.

Living for the future

The final reason you might not want to retire early is that the journey to get there can create a mindset where you are living for the future and not today. When you’re so focused on a goal that is 5 or 10 years away, it can really overshadow your day to day life.

Once we had decided on our goal to retire early, I became very focused on counting down the weeks until I was done with work. I created a wall with post it stickers that each represented a week of work. Every Friday after work, I got a lot of satisfaction from taking down another sticker and tossing it in the trash.

In retrospect, this wasn’t the healthiest attitude towards the passage of time. While it’s natural to look forward to a life change, counting down can be like wishing away time instead of finding a way to enjoy life now.

Of course, for those who just want some of the freedom of financial independence without the potential risks or deprivation associated with early retirement, there is an alternative.

As we have discussed, retiring early can often mean making a lot of sacrifices today for the sake of a future where you never work again. An alternative to this is focusing more on financial independence and less on the early retirement side of the equation.

Slow FI

This concept is called Slow FI, which is explored in a lot of detail by our friends over at the Fioneers. Essentially, you prioritise happiness today over extreme sacrifices for the future. This could mean working part-time or taking regular sabbaticals or taking a lower paying job that you enjoy versus earning more at a job you hate.

It will take you longer to reach financial independence but you’re hopefully getting more joy and satisfaction along the way. You’re still working towards your financial goals but not in such a hurry to get there.

Why You Shouldn’t Retire Early