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The pros and cons of early retirement

Upstox
By Upstox News Desk

4 min read | Updated on November 28, 2024, 13:22 IST

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SUMMARY

If you are weighing early retirement options seriously, it is important to evaluate the pros and cons of early retirement in detail to make an informed decision and prepare yourself accordingly. It’s important to note that early retirement needs a long-term investment strategy and financial commitment.

Early Retirement.webp

Early retirement may sound a dream come true, but if not planned in proper way might prove to be a challenge.

Early retirement is gradually finding many takers, especially among young professionals, with the changing dynamics in the personal finance space. Many working professionals, both salaried and self-employed, would have at some point in their service years thought of early retirement. The luxury to choose what you want to do in life and use your time as per your goals in life is too attractive to be ignored, and early retirement could be a much needed step in this direction.

Early retirement may not be really as rosy as the picture it presents? Is it really going to meet your expectations or throw your finances off guard? If you are weighing early retirement options seriously, it is important to evaluate the pros and cons of early retirement in detail to make an informed decision and prepare yourself accordingly.

Advantages of early retirement

No deadlines and office pressure: The most common reason for considering early retirement could be usually due to a tough, hectic and unhealthy working environment. Slowing down in a never-ending race doesn’t sound like a viable option and can only prove to be mentally more taxing. Early retirement, therefore, seems to be the only way out to set your own pace and attain mental stability and peace.
Sufficient time for family and kids: Early retirement gives you the chance to spend more time with family. You can become a more active parent or spouse, help your children with their education or extra co-curricular activities, strengthen your bond and create precious memories.
More time for travel: Early retirement also gives you ample time to travel around. You can plan trips anytime during the year, which can also help you save cost as you can avoid the holiday rush months. Travelling in India or abroad not just rejuvenates you but also introduces you to new ideas and ways of life.
Pursuing a second career: Early retirement gives you the time to pursue your passion and make it your second career. As money is not the prime agenda this time, the journey can be truly satisfying and can give you the opportunity to achieve our dream goals.

Disadvantages of early retirement

Compromised present for a secure future: Early retirement means that you need to save more currently so that you have enough money to cover your desired lifestyle for a lengthy period.

Such savings can only be possible by cutting living costs and investing aggressively. This can create a tight financial situation in your prime years and keep you away from the fun and small joys of life. This also needs a long-term financial discipline to build the desired corpus fund.

No structure of the day: Those who opt for early retirement often struggle with the fact that there is no structure to their day. They lose their routine, indulge in unhealthy habits and lifestyle and end up ruining the actual purpose of early retirement.
Missing the social circle: One of the biggest challenges of early retirement is that you miss the social aspect of work. Going to the office means meeting new people, eating out and travelling around, all while you are earning money. Once you are retired, all these activities look like extra expenses that can be avoided. Also meeting someone, apart from family, on a daily basis becomes impractical and can trigger the feeling of loneliness.
Financial woes: If your finances are not robust, early retirement may become a nightmare instead of a dream coming true. Early retirement means a higher number of non-working and non-earning years, which makes the dependence on savings quite high. Any unforeseen expenditure or emergency during these years can shake your planning and put you in a spot.

How to plan for the challenges of early retirement?

Early retirement can be a good idea if you take the best from both the worlds. If you have saved enough, you can switch to a part-time role or become a freelancer so that you can choose to work as per your convenience. This would maintain some income while also giving structure to your day and keeping away boredom. If you choose not to work at all, make sure you conduct a proper assessment of your possible expenses in future and save and invest accordingly during your service years.

It’s important to note that early retirement needs a long-term investment strategy and financial commitment. You may also have to make some lifestyle changes to cut on unnecessary expenses to save more. The key to success here is to start early and to follow the investment strategy without fail.

About The Author

Upstox
Upstox News Desk is a team of journalists who passionately cover stock markets, economy, commodities, latest business trends, and personal finance.

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