Disadvantages of Early Retirement You Can’t Ignore

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The disadvantages of early retirement is real. The biggest disadvantage of early retirement is that your identity is stripped away from you. Whether we like it or not, we associate ourselves with our work more than anything else. That’s how we introduce ourselves to others.

When we meet someone new, we don’t introduce ourselves as a “Dad”, “Mom”, or a “Son”. We introduce ourselves by our line of work. Whether we’re a CEO, Manager, or an Analyst, we introduce ourselves using our job titles, for better or worse.

That’s the reality of the world. Our identities are entirely linked to our work. There are many early retirees who end up going back to work and the 9-5 just because they realized how much they need that identity or structure. Then they go back and work for a boss 10 years younger than them.

For 30% less pay working 30% more. That’s just not right. We like to say, “we can always go back to the workforce” but will the workforce be good as you had it before? That’s why it’s necessary to consider all aspects of early retirement, not just the positive ones.

If I ever retire early, I know exactly what I would do. I would create a lifestyle business so that I never stop working and making my way into the world. I also want to make sure that I am truly OK giving up the money and the stability that comes with a 9-5.

Disadvantages of early retirement isn’t something that you should ignore. There is such a thing as retiring too early.

What is Early Retirement?

Early retirement is when we leave the workforce and the 9-5 earlier than the government recommended age of 65, 62 if you really push it. However, many people recognized just how much they don’t want to go through that model and decided to retire earlier.

Much earlier. Decades earlier. Some are retiring at the age of 30. Or even younger. With the internet, the possibility to retire early has never been more accessible. The information to retire early in the first place is readily available and implementable by many.

There are people who say, “it’s not early retirement if you make money in your free time”. That’s just not true. You can absolutely make money during early retirement. It could be as simple as just working on your hobby that happens to make money.

Early retirement means different things for different people but a pre-requisite does not mean that you have to stop making money altogether. It means leaving the traditional 9-5 work force and maybe working on things that you enjoy working on.

Not for the sake of making money but for the sake of your own personal enjoyment. We can design our lives as we see fit, instead of fitting the narrative that the government has in store for us. That’s just not how it works. As soon as people learn this lesson, they break away into happiness.

However, with that said, we cannot ignore the disadvantages of early retirement.

Disadvantages of Early Retirement

Below are the concrete disadvantages of early retirement that people cannot ignore. Changing early retirement is not a simple as people think or make it out to be.

1) Early Retirement Leads You to Lose Your Identity

Disadvantages of early retirement include losing our identity along the way.
Our identity is heavily tied to our jobs.

Whether we like it or not or whether we’re willing to admit it or not, we associate our identity with our jobs. We’re doctors, investment bankers, lawyers, analyses, nurses, and anything and everything in between. The disadvantages of early retirement leads you to lose your identity.

When I meet someone for the first time, I introduce myself with my job. i don’t introduce myself with where I came from or where I’m at. It’s just the truth. Therefore, if you are considering retiring early, you have to think about this negative.

Early retirement isn’t a magical farm land with unicorns and rainbows. There are dark sides and bad sides to early retirement as well. Too many people think and expect one thing and experience a completely some other thing.

After a year or two of detoxing from traditional work, it just may not be what we want after all.

2) Disadvantages of Early Retirement Means Losing Structure

Disadvantages of early retirement include losing structure in our lives.
Structure is valuable to us.

Day to day, you lose structure with your schedule. Sure, you can motivate yourself to follow and stick to a work schedule after early retirement. However, all of that is easier when you are forced to come into work at a specific time. Or on a specific day. Or a hundred other things.

There is a bit of structure that comes with paid and traditional employment that you lose out on if you retire early. That’s one of the disadvantages of early retirement. Some people absolutely cannot motivate themselves to work, no matter how hard they try.

If you want to break way from traditional employment, you have to know yourself very well to make early retirement successful. Whether I like it or not, the structure motivates me to get up. It motivates me to put in the work every single weekday.

Whenever I take PTO and the structure is taken away, I’m just not that productive. The forced structure motivates me to be more productive.

3) Early Retirement Means You Are 100% On Your Own

No employer to depend on for income. Even though you can make a lot of money from entrepreneurship, it’s not the easiest thing in the world. The world’s most successful and richest YouTuber is likely Mr. Beast. It took him four and a half years of full time work before he started to become successful.

Not when he became successful, but when he started to become successful. Not everyone can work on their side business for four and a half years straight before making any real money. There are many people who went the early retirement route, thinking their lifestyle business will keep them afloat.

Then they had to go back to work after 2 years because their entrepreneurship ventures didn’t work out. The disadvantages of early retirement include being 100% on your own. The freedom can be quite liberating but it can also be quite scary at the same time.

It’s a risky route that few succeed at.

4) It’s Harder to Relate to Others

If your friends are still in the workforce, they’ll talk about how they got a raise, a promotion, and a killer bonus. They’ll talk about how far up they’re moving on in the world. Why? Whether we like it or not, work is our identity. We spend 1/3 of our lives at a full time day job, at a minimum.

The disadvantages of early retirement is that you may lose the connection you once felt with your close friends. Their life priorities may be different than yours because you retired early. The disadvantage of early retirement is that you may be disconnected from the working world.

It’s just not that easy to connect and relate to the bonus that your friend got when you were out sailing by the sea in the coast of France just this past weekend. It’s two completely separate and different subjects that are hard to connect and relate to one another.

Your true friends will never care about things such as that. However, true friends are rare and even rarer these days.

5) Early Retirement Could Make You Lose Purpose

Disadvantages of early retirement include losing purpose in our life.
We crave a sense of purpose and direction.

Whether we like it or not, we like making money. We see making money as a good thing and as a way to have purpose in our lives. Money is a way to keep score and the more money we generate, the more it says about our place in society.

The disadvantages of early retirement comes when you walk away from paid work altogether. As a result, when we don’t get paid for our time, we lose a sense of purpose. Money isn’t just a way to keep food on the table. Money is a way we recognize how important we are to the world.

There’s a reason why it’s called net worth. It shows the world how much we are worth and money is a way to indicate and signal that information onto the world. I don’t think I would ever stop working. Making money is just too much fun and it gives me a sense of purpose.

There’s a reason why unemployed people are depressed. Not earning money doesn’t make us feel a sense of belonging and purpose.

6) It’s Hard to Reverse Early Retirement

No one ever talks about this. If you were clearing $200k as a Vice President and then you suddenly walk away from the job altogether, it’s not that easy to come back to that salary level. Or even the job title level. Opportunities are limited and they are even more limited the more you go to the top.

One coworker got laid off in the coronavirus crash of March 2020. It took him one year to find any job and it took him another year and a half after that to find the job that he really wanted. The disadvantages of early retirement is that it’s not that easy to reverse the decision.

People say “you can always come back to work”. Yes, you can always come back to work. But it’s not going to be like how it was before. Once you get used to making $200k, it’s hard to get used to making $100k. Reversing that decision is not as easy as people think that it is.

The negatives are out there.

7) Early Retirement Makes you Feel Unstable

Even if a job is never 100% stable, that doesn’t mean that it isn’t the most stable form of earning money out there. We don’t know what the future holds and something like the financial crisis of ’07 – ’09 could happen within a week of you retiring early.

Many people retired early at the start of the 2022 bear market crash only to have to go back to work due to the bear market crash of 2022. Early retirement is an unstable life where you don’t get any stable income coming in. Let’s not even forget the lack of benefits.

Healthcare costs in the United States are unlike anything other countries have ever seen. The disadvantages of early retirement is that the stability is gone. You are 100% responsible for your life and no one else is there to take care of your financial and insurance needs.

The freedom is great but it also completely depends on you. You are giving up stability for freedom and it may not be the best decision.

8) Finding a Significant Other May be *Harder*

There’s a story of a guy who does nothing all day because he’s already so rich. His grandparents owned oil royalties that he inherited and therefore he had no need to work. One girl he was dating broke up with him because she didn’t think he was going anywhere with his life.

Even though he was richer than any of the couples she was comparing herself against, she still broke up with him. The disadvantages of early retirement is that finding a significant other may be harder after you become rich because they don’t think you’re doing anything with your life.

Take the story of livingafi. His wife cheated on him after retiring early because she thought they weren’t moving up in life anymore. Your love life may be even harder after achieving the early retirement life because society has a funny way of punishing people who don’t fit the mold of normality.

It’s not all peaches and cream.

9) Running Out of Money is a Real Possibility

Many people think black swan events don’t happen. The coronavirus pandemic wiped out so many people in just a single month. The bear market crash of 2022 wiped out so many people over the year. The disadvantages of early retirement is that you may run out of money.

Running out of money is scary. You think you planned your finances to a T but then find out you actually didn’t. There’s also the case of dealing with inflation when inflation is running at record highs. It’s impossible to prepare for every global scenario that dampens your finances.

The disadvantages of early retirement is that you may run out of money. And then have to decide to go back to work at a 50% pay cut working for someone 10 years younger than you. No one ever likes to talk about the dark sides of early retirement, just the good ones.

10) Disadvantages of Early Retirement Include a Potential Earlier Death

There are many studies that show that men who retire at 55 have a higher chance of dying than men who retire at 65. Whether we want to admit it or not, we biologically enjoy working. There’s something about creating something meaningful for the world to enjoy.

Work gives us a sense of purpose and makes us mentally healthy and fit. Therefore the disadvantages of early retirement is that it may lead to an earlier death had we just kept up with the rest of the population and worked until 65.

Even if it’s not a standard 9-5 work, there’s now more ways than ever to earn money. The self actualization that comes with working and acquiring more money just can’t be ignored. Early retirement may not always lead to an earlier death but it is a possibility.

This is why I will never stop working in some way, shape, or form.

Disadvantages of Early Retirement Can’t be Ignored

Before you delve into the Financial Independence Retire Early movement and go all-in on it, there are disadvantages of early retirement to consider and never forget. Too many people retire early and find out that it’s not what they wanted.

So then they can’t go back to their salary level that they worked decades to build. Or they find out the new company is the worst company with the worst culture. Whatever the case is, there are downsides to retiring early.

I’m personally building a side business or getting ready to do something to have a lifestyle business to work on after early retirement, if I even retire at all. I’m building the side hustle while I’m working because I don’t want to start something when my back’s up against the wall.

The macroeconomic factors haven’t been keeping my mind at ease either on that I will keep stable employment over the coming months and years. It’s not something that I want to count on because employment is on an “at-will” basis.

The disadvantages of early retirement can’t be ignored because it’s better to not make a mistake than to make a mistake and try to fix it. It’s a lot harder route to do so that way. Measuring twice and cutting once is the right way to go.

Don’t let all these financial influencers try to convince you otherwise. Retiring early is not all sunshine and rainbows.

Disadvantages of Early Retirement Shortlist

  • Early retirement leads you to lose your identity
  • Disadvantages of early retirement means losing structure
  • Early retirement means you are 100% on your own
  • It’s harder to relate with others
  • Early retirement could make you lose purpose
  • It’s hard to reverse early retirement
  • Early retirement makes you feel unstable
  • Finding a significant other may be *harder*
  • Running out of money is a real possibility

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