Here’s a list of ten of the biggest fears of those who aspire to retire early (as expressed in discussions held at the Financial Freedom Discussion-Board Community), accompanied by my comments on whether these fears are justified or not.
Retire Early Fear One is of seeing large increases in the cost of health insurance or health care.
This is a legitimate fear. It’s not only that health care costs are rising so fast. What makes this problem so serious is that health-care costs are to a large extent unavoidable. I can do without vacations in a pinch. I can do without a new car in a pinch. I can’t do without an operation on my knee if it is producing throbbing pain.
This is not an issue that affects only those planning to retire early, of course. All workers are at risk of suffering the effects of rising health-care costs. Those planning to retire early may in some cases end up better off than those who are not because they are more likely to engage in serious analysis of how the problem affects them personally as part of the effort to craft their particular Retire Early plan.
Retire Early Fear Two is of seeing cutbacks in Social Security benefits or increases in taxes enacted.
What out lawmakers are going to do in years to come is a big unknown. Changes in the law affect all workers, but those planning early retirements worry more because they are not still in the workforce (at least not to the same extent as those not early retired) and therefore do not have available to them as many options for coping with legal changes.
Some aspiring early retirees deal with this fear by not counting on receiving any Social Security benefits. Do that, and you can view anything you get from Social Security as a nice extra. An alternate and more moderate approach would be to count Social Security income in your plan, but not to the extent that you would if you expected benefits to remain at their current levels.
Retire Early Fear Three is of finding that, once a resignation is handed in, it will not be possible to return to the workplace earning the same salary.
You don’t lose your work skills when you hand in a resignation. In theory, you should be able to return to the workplace at the same pay level if at some later date you changed your mind. The practical reality is that this is generally not possible. Jump off the step on the Ladder of Success you now stand on, and you will probably be pushed down to a lower step in the event that you someday elect to return to the climb.
My way of dealing with this one was to “retire” only from corporate employment, but to continue working full-time doing work I truly love. I can’t today return to my former pay level. But I continue to develop my work skills and to make new contacts. So I enjoy better prospects than many retirees who stopped working altogether of returning to a reasonably appealing step on the ladder if I suffer reversals.
Retire Early Fear Four is of incurring financial responsibilities for children that one did not at an earlier time anticipate in one’s financial planning.
My wife Boo and I had our first child nine months before I handed in my resignation from corporate employment. We had our second child 20 months after I handed in the resignation. Hey! You’re not supposed to be having children after you retire, are you? Oh, well.
If you retire very young, there’s a chance that you are going to have children after you retire. Even if you go for a retirement beginning only a bit earlier than the conventional age-65 retirement, there’s a good chance that your planning effort will begin at a time when there is still a possibility of having children. So this is a matter that a good percentage of those planning early retirements need to look at.
I’ve seen articles that look at the question of how much it costs to raise children. It’s a good idea to take the financial costs of having children into consideration in putting together your plan. My personal view, however, is that the financial considerations should not be primary. The purpose of money is to enhance life, so financial goals are secondary to life goals. A decision to have children is so core a life goal that it cannot be analyzed properly by looking only at numbers.
If my obligation to support my children causes me to need to return to corporate employment, so be it. I’d rather go back to cooking chicken at a fast-food place than miss out on the life enhancement that I have gained by taking on the responsibility for raising my two boys.
I have hopes that the two boys will end up being a financial plus. My concern that I do right by them pushes me to work harder at writing books and marketing books and building web sites and all that sort of thing. The added motivation to earn money that comes from having children translates into added wealth over the long term. according to this sunny way of looking at things. We’ll see.
Retire Early Fear Five is of needing to pay for college for one’s grown children.
This one hits me where I live. Some point out that there’s no obligation to pay for the expenses of college for one’s grown children. I think that’s so. I still intend to do it if there is any reasonable way to pull it off, however. My parents paid for my college. It would not seem right to me for me not to make a serious effort to do the same for the next generation of Bennetts.
I put the boys’ college fund at risk by quitting the higher-paying corporate job. My hope is that I will make up for that by providing them the excitement about work that will come from watching a dad that truly loves his job go about his daily activities.
Retire Early Fear Six is of learning somewhere down the road that one needs to provide financially for one’s parents.
When several generations lived in the same place, this issue was not so complicated. We gained in recent decades the freedom to seek opportunities elsewhere, which is in many ways a good thing. One big downside, however, is that the aged are sometimes left without the resources they need. When you are not even seeing your parents daily, you sometimes do not even know what they need until there is a crisis that brings the matter to your attention.
This is an issue that affects early retirees and regular retirees alike. It gets discussed among aspiring early retirees because aspiring early retirees are engaged in a more intense effort at planning their financial futures. That’s a good thing.
I don’t think that concern over the need to provide financially for one’s parents is generally a good reason to reject the Retire Early concept out of hand. There is often a financial loss associated with leaving a corporate job. Our parents will in some circumstances suffer some downside as a result of our decisions to leave corporate jobs. The other side of the story, however, is that the more intense planning that follows from a decision to retire early may lead to a result in which one’s parents are better cared for than would otherwise be the case.
Retire Early Fear Seven is of experiencing boredom.
This is not a problem for me. It is a problem for many others. Please don’t think of retirement planning as strictly a financial exercise. The idea is to plan for a new way of living. You need to give a good bit of thought to what you will be doing in retirement before handing in a resignation.
If you don’t have a clear idea of how you will fill your days in retirement, you are not prepared to hand in a resignation. That’s my take.
Retire Early Fear Eight is of finding oneself feeling constrained in having to stick to a budget for many years or of discovering that the need to pay careful attention to finances after retiring rules out engaging in travel later in life.
At age 40, it might sound appealing not to have to go to the corporate job any longer. At age 60, the idea of having enough money to spend years seeing the world might be the more attractive option. My view is that the concept of “retirement” needs to be redefined. We need a more flexible definition in which we “retire” from some aspects of our work lives (those we don’t enjoy) and not others (those we do).
I don’t have money in my budget for lots of travel. But I haven’t given up on the dream that I will be able to enjoy lots of travel. It depends on how well my writing business goes. I retired from corporate employment and all that goes with it, but I continue to work and to earn an income. That means that I did not need to make final decisions as to whether my wife and I will be able to see the world when we are old or not.
Retire Early Fear Nine is of experiencing friction with one’s spouse because of differing views on whether early retirement provides a sufficient sense of life purpose.
Whatever form of retirement you seek, you are planning a big change in how you live. You must spend lots of time talking through the implications with your spouse. My wife and I took weekly two-hour walks doing this for years before I felt confident enough of her buy-in to hand in a resignation.
There were a lot of payoffs that followed. I not only gained my wife’s buy-in for my retirement plan. I came to appreciate her more and she came to appreciate me more. We know each other better as a result of those many two-hour walks. Those many two-hour walks offered us a fantastic value proposition.
Retire Early Fear Ten is of suffering the loss of social interactions that previously took place at one’s place of work.
It’s a good idea to seek a gentle transition from the corporate life to the post-corporate life. We can’t help but rely on the workplace for many of our social interactions, given the amount of time we spend at our places of work. If you are going to give up going to the place of work, you need new means of attaining the level of social interaction that is best for you.
It can almost always be done. Perhaps you will join an internet discussion-board community. Perhaps you will get involved with a charity. Perhaps you will join a running club. Perhaps you will get to know your neighbors better. The key is to spend some time thinking this aspect of the Retire Early project through. The money issues are important issues. They are not the only issues.
The best way to ease your Retire Early fears is to check them all out to the best of your ability. Don’t hand in a resignation without first being sure that you have thought through every possible downside of a decision to retire early.