Womoneya

Increasingly we are seeing a lot of people wanting to retire early.

I understand that corporate life can be quite strenuous with work pressure, targets, office and home dynamics, and if you stay in a metro, then travel adds to the stress. Plus, in the VUCA (volatile, uncertain, complex, and ambiguous) world that we are living in, one can never be sure of their employment in their organization.  

What does retirement actually mean? It means ‘giving up work,’ ‘ceasing to work,’ or ‘stopping working.’ So effectively a period where there will be no salary coming your way. On the other hand retiring early has a different meaning altogether, because it’s not just about giving up work; it’s also about starting something new, passion projects, pursuing hobbies, etc., and traveling, all of which will require money.

Whilst your retirement period is most likely to be around 20 years (assuming you retire at 60 and live till the age of 80), if you plan to retire earlier, assuming 45, then you are looking at 35 years of no income.

But will you stop spending? Obviously not; they may not spend as much due to a slowdown in income and hence lifestyle, but still there will be constant expenditure.

And the inflation monster will inflate your lifestyle costs. Just to give you a perspective…

For aspiring early retirees, understand that your 40s and 50s are the periods when you have the maximum responsibility with growing kids and their demands and aging parents and their care. It’s the period when the maximum spending happens.

The earlier you retire, the more aggressively you need to save money. This is because your money will have less time to grow and will have to support you for a longer amount of time. If you aspire to retire early, you could look at alternate income sources apart from salary right from the start.

Pursuing early retirement may also mean sacrificing now to have more later. Are you prepared for it? Also, if you sacrifice too much of what you love right now, it could drain much of the joy out of life. You need to decide whether you truly want to retire early or enjoy a more balanced lifestyle right now.

Be clear on what you want to do post-retiring. Early retirement does not mean only ceasing to work; it also means lots of time on hand, so a lack of routine or structure could lead to boredom and frustration. Work often provides social interactions and a sense of purpose. So if you plan to retire early, have a concrete plan for some passive income or supplemental income.  

So here are some pros and cons of early retirement.

Here’s the truth: life gets better when you have money. Financial security gives you the freedom to live on your terms and the peace of mind that your children and loved ones are taken care of.