Pros and Cons of early retirement 

Pros and cons of working and retiring.

By Bongiwe Zwane-Maseko 

Financial experts say it is prudent to start planning for your retirement from your first day of employment. The sad reality is that many of us do not. 

For many Emaswati, this is almost impossible because the salaries they earn are depleted the day after payday but experts say this is even more reason why it is important to start saving early so that you save over a longer period. Given the stress burden that comes with employment, more and more people are opting for early retirement. These days it is not uncommon to find people retiring at 55, instead of the stipulated 60 years for several reasons, including fatigue and health problems. 

Early retirement may initially reduce fatigue, stress, and depressive symptoms – especially if people were in very stressful or physically demanding jobs. However, it doesn’t seem to have any beneficial effect on your chance of developing a chronic illness. This is according to a 15-year study in France. However, if you retire at 55 or earlier it could be a health risk. Various studies show that, over the long term, early retirement is associated with negative effects on physical and mental health.

Before you decide to opt for early retirement, you might want to ask yourself these questions:

  • Will I have a companion to spend early retirement with?
  • Do my retirement plans align with my partner’s?
  • How do I plan on spending my time?
  • How much money am I likely to spend each month?
  • Will I have enough income to cover my expenditure?
  • Is it likely that I could run out of money in retirement?
  • What if I need to earn more money after I’ve retired?

According to All For Retirement, deciding to retire early isn’t a bad idea but if you’re not careful, you may end up regretting that you didn’t work longer. So make sure to think through your decision carefully – and plan. Find out what an E100 000 pension pot gives you. If you are set on taking early retirement, it is important to make sure that you will have enough money to cover your desired lifestyle. This isn’t just about whether you are happy scraping by on a shoestring budget or would prefer a more comfortable retirement; you also need to take into account factors that aren’t within your control. Here are a few pros and cons of early retirement

Pros of early retirement

  • Retirement means you can finally say goodbye to deadlines, office politics, and difficult bosses 
  • You have enough time to travel, explore hobbies, and take on new projects
  • If you retire before you reach 60, you are young enough to enjoy travel and activities
  • Retirement is less stressful than working and you have more time for exercise and sleep
  • You have more time with your loved ones, plus a chance to meet new people
  • You can escape daily commuting and other work-related costs
  • It is a chance to try something else, such as consulting, volunteering, part-time work, or studying

 Cons of early retirement

  • You have to make sacrifices to save enough to retire, whether that’s cutting living costs or working harder for extra income
  • If you’re retiring before 55 you might need to fund an income gap before you are allowed to access your pension
  • You may have a lost sense of status attached to your previous job
  • There will be less time for some of your retirement savings to benefit from investment growth
  • You could become bored and less active
  • Lack of structure, stimulation, and social interactions can damage health
  • Lots of free time means your expenses could shoot up
  • If you run out of money it might be difficult to return to work when you’re older and have an employment gap
  • You may underestimate how long you will live, and the cost of care in later life
  • Your savings need to stretch for longer and will be at the mercy of inflation, unexpected expenses, and stock market storms. Remember that without the income from a job to provide a buffer against these eventualities, your savings will be all you have.

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