Am I retiring too early? Not if you know it in your gut it’s the right thing to do. Intuition and gut feelings guide everything in your life. If your heart’s telling you it’s the right thing to do, then it’s a good idea to take the leap of faith. If it doesn’t work out, you can always find another job.
The biggest drawback to early retirement is you may go back to the workforce working for a boss 10 years younger and get paid a fraction of what you were getting paid before. Your desirability factor is also down because companies don’t like gaps in employment.
However, in either case, you don’t want to lead a life like the 99%. You want to live a life on your terms the way you want to live your life. If you’re even thinking about early retirement in the first place, it means you already have enough funds to think in that direction.
When you’re poor, you don’t even think about early retirement. All you care about is earning more money to provide for your family. When you’re rich, you start to think about how to use that money to improve quality of life. One of the ways to improve quality of life is early retirement.
Am I retiring too early? While every answer depends on your personal situation, there are 9 factors to consider when making that decision. This question is a huge life decision and making a mistake on it is an extremely expensive decision.
Knowing what to expect on early retirement is a necessity.
Am I Retiring Too Early? 9 Ways to Tell
Am I retiring too early? Below are the 9 ways to tell.
1) You Know it In Your Gut
Your gut is wonderful. They have a way of telling you whether something just doesn’t feel right and surprisingly, your gut is right most of the time! There’s been many times when I ignored my gut to have bad news eventually come my way. Something just feels off to your body.
Your body responds to your thoughts. People get PTSD because of what goes on in their mind. Our bodies subtly communicate with our mind that it knows what we’re going through. Am I retiring too early? When your gut tells you you are or aren’t, that’s when you know.
I accepted employment at one company when I knew in my gut something felt off during the interview process. Everything I feared during the interview process came true after I accepted the job. It was the worst thing I ever did in my entire life. I’ll never ignore my gut ever again.
Your gut is a great guiding North Star for your life.
2) Am I Retiring Too Early? Your Portfolio Balance
You are not retiring too early as long as you have the financial standing to withstand prolonged and sharp bear markets. Am I retiring too early? Everything depends on your investment portfolio. The bear market of 2022 convinced many early retirees to go back to work.
Their portfolio just couldn’t handle the declines every day. 2022 was the worst year ever for US bonds. The Fed decimated many people’s investment portfolios throughout the year, including mine. As long as your portfolio is back-tested to withstand even the worst prolonged bear markets in history, you will be OK.
To be even safer, you could even lower your annual withdrawal rate to 3.5% and see how your expenses vs withdrawal rates work out over time. Many people don’t stress test their portfolio to the worst case scenarios such as a financial crisis. Many retired at the height of the bubble in 2000.
Only to find out the tech bubble popped and another bubble popped in 2007 – 2009. It’s difficult to regain employment after almost a decade gap.
3) Is Your Health in Order?
Your health is the number one thing you control but at the same time, you don’t control. You could try to be the healthiest human alive but if your genetics don’t support it, then it doesn’t matter. Many people get cancer out of nowhere no matter how much they avoid radiation.
No matter how much they eat well, sleep right, and exercise daily. It’s just a fact of life. However, certain health conditions are curable. Modern medicine made miracles happen and prolonged people’s life expectancy to the moon.
That doesn’t mean it cures every disease and health problem out there. I personally have a bad neck and stomach problem. I cannot digest foods easily as others and it keeps me up at night because of it. Therefore, I factored that into my costs because a Colonoscopy and Endoscopy alone costs $1.6k, even with insurance.
Am I retiring too early? Not if you already accounted for rising health expenses in your calculation. It can only get more expensive to afford health costs, going forward.
4) Can You Afford Your Kid’s College?
The entire cost of your children’s college isn’t on you. Your children may even be great and figure out how to earn the money for college on their own. However, if you can afford your kid’s college even after early retirement, then there’s a good chance that you are not retiring too early.
If you have a college education, there’s nothing wrong with your children getting a college education as well. There’s also nothing wrong with them going to community college to get the basics out of the way cheaply. Am I retiring too early? Not when you can pay for your children’s education costs.
They deserve to have a good start to their life. Even if you can’t afford all of their bills during college, you can at least pay for some. Colleges are only getting more expensive and while there are good alternatives to college, it’s best to plan for the worst and have the best happen.
It doesn’t make sense to punish your children’s intelligence and use it against them by not paying for college.
5) You Don’t Have a Plan for What to do Next
Am I retiring too early? Yes, if there’s no plan on how to fill your time during early retirement. Like with everything else, you will have to search for things to do instead of letting the hobbies find you. There’s an infinite number of options and choices for hobbies.
However, the burden of finding what interests and entertains you is still there. Too many people want to retire early because they want to play golf all day long. After a while, golf is boring. We crave new things to do every day, which is our downfall.
it’s why social media is so enticing because there’s always something new on our timeline to scroll and engage in. In other case, as long as you have a good plan for what to do next, then that’s a good sign early retirement is a good thing.
I personally want to work on a side business during early retirement. I can’t ever see myself staying still and doing nothing just to fill the time.
6) You Like Your Work
Am I retiring too early? Yes, if you like your work. 9-5’s are hard to come by in the first place. Great 9-5’s are almost impossible to come by in the second place. They are worth their weight in gold. No matter how much we dislike our jobs, there’s things we like about our jobs as well.
Too many people focus on the 1% negative while ignoring the 99% positive. I personally found the job opportunity of a lifetime in 2022. It’s such a good opportunity that I constantly get the imposter syndrome at new job.
If you like your work, then you are retiring too early. Even if you start your own business, there’s no guarantee you’ll like your own business. There’s always a chance you won’t even generate revenues close to your 9-5 salary.
Let alone profits. The entrepreneurship route isn’t always all glory. There’s many failures and tears along the journey to success.
7) You Haven’t Talked About it Enough With Your Spouse
Am I retiring too early? Yes, if it’ll surprise your spouse. Early retirement isn’t something you announce to your family like a nothing burger news. It’s something that takes planning and constant communication to when to go for it and the motivations for doing so.
Your spouse is the person you trust the most. They shouldn’t be surprised. They should also be planning early retirement with you because you guys are building a life together. It’s one thing if you are retiring early by yourself but it’s another if you are retiring early with a family.
It’s not just you who the decision affects, it’s everyone who’s the closest to you in your life. Your spouse and family deserves to know what your next plans are. They may even help plan for early retirement. Maybe they’ll pick up overtime shifts to contribute to the retirement fund.
There’s no rule that says you have to burden the decision alone. Your family can help plan alongside you.
8) Am I Retiring Too Early? Not if You’re Sure
It’s not the time to confuse excitement with fear. Early retirement is fear inducing because it’s uncharted territory. However, if you’re sure of early retirement already, then now’s not the time to be afraid but rather embrace the excitement that’s ahead.
Am I retiring too early? If you’re sure, then it could be the greatest thing to ever happen to you. Too many people think “what if it doesn’t work out?” instead of “what if it does work out”? That’s a huge difference in mindset. I personally have a business idea I want to start.
I’ve never been more sure of anything else in my life. At some point in my life, I’m going to start the business. It fills me up with excitement. When you’re that sure about a decision that it’s not a matter of if you’ll start it but a matter of when, then you have to take the leap of faith.
It just may be the best thing that’s ever happened to you, ever.
9) You Haven’t Tried a Mini Retirement
Am I retiring too early? Yes, if you haven’t taken a mini-retirement while working a 9-5. Companies are offering sabbaticals as a part of their benefits package. They know employees are burned out and need a break after five years of service.
Sabbaticals are a great way to dip your toe into early retirement and see where it goes. A mini retirement is a great way to find out the answer. PTOs don’t count. In America, PTO is not really PTO. It’s just taking a small break away from work where Americans still answer emails throughout their vacation time.
Sabbaticals are a prolonged (2+ months) period away from work.
Sabbaticals are a great way to see if you’ll even like early retirement in the first place. Some people travel 2 weeks every 6 months and think they’ll enjoy early retirement. Travel gets boring after a while and for doing it so often.
A mini retirement is a way to gauge whether early retirement is right for you and your family.
Am I Retiring Too Early? It’s a Real Thing
I’ve seen it time and time again. Many people in their mid 30s are fed up with work and want to retire early. Then after 2 years, they find out it’s not all cracked up to be. They actually want to go back to work. They realized that the 9-5 was not the cause of their discomfort.
Once they do go back to work, they appreciate the 9-5 even more. Am I retiring too early? It’s a real thing because many people are getting smarter with their finances. People realize they could be a millionaire by 35 and are planning accordingly.
Then once they have the financial footing to be a millionaire, they make the leap of faith to early retirement and realize it’s not what they wanted. Early retirement isn’t all it’s cracked out to be, especially if you have a 9-5 that you love.
There’s also the other side of the coin with early retirement.
Those who retired early by 40 and realize that it’s the best thing that’s ever happened to them. They ask why they haven’t retired earlier and wonder what they were so afraid of all this time. Am I retiring too early? It all depends on your planning skills.
If you have a good early retirement planning strategy, then there’s nothing wrong with early retirement. I personally would consider myself retired if I have the financial footing to withstand unemployment for the rest of my life, even when I’m working a 9-5.
That’s when I know I’ll truly enjoy work without the added stress. A successful early retirement is more than possible with the right mindset and choices.
Am I Retiring Too Early? 9 Ways to Tell Shortlist
- You know it in your gut
- Am I retiring too early? Your portfolio is dwindling
- Is your health in order?
- Can you afford your kid’s college?
- You don’t have a plan
- You like your work
- You haven’t talked about it enough with your spouse
- Am I retiring too early? Not if you’re sure
- You haven’t taken a mini retirement
