There are many reasons why retiring early is bad. I’m all about the Financial Independence, Retire Early movement but there’s a right time to retire early and there’s a wrong time to retire early. Too many people retire early just to find out it’s not as easy to go back to the position they once had.
Too many people think early retirement is the best thing since sliced bread. I get it. I wholeheartedly think that early retirement IS the best thing since sliced bread. However, that doesn’t mean that there are no flaws and/nor negatives to early retirement that you can or should ignore.
When I first started my Corporate America journey, there’s nothing more that I looked more forward to than early retirement. After working one too many nights, I was sick and tired of working the corporate America lifestyle already and I was only 2 – 3 years into my career.
I wanted to quit with $300,000. Surely, I’ll be able to figure something out, right? Not always. You are right to be disgruntled about your 9-5. Many people are, with an estimated 85% highly disliking their jobs. However, early retirement is not the only answer there is to solve your issues.
There are numerous reasons why retiring early is bad. The least of which is that many people retire without fully understanding how much they actually need. They think they would be satisfied with a BaristaFIRE lifestyle and think they can just work 20 hours a week and do things they enjoy for the rest of their time.
What is Retiring Early?
Retiring early is when an employee steps away from formal employment work and retires earlier than the traditional retirement age of 65 to focus on their passion projects or spend more time relaxing. The projects could range from their real estate interests to working on the house.
Or anything else that they couldn’t get around to while they were working.
It’s a great idea in concept. There’s many people who would much rather do something else during the day rather than help a corporation become even richer than they already are. Myself included. However, the more I work at a company who truly values their employees, the more I realize how flawed that line of thinking could be.
I realized that I didn’t dislike the idea of working, I disliked the idea of working at the companies that I worked for. My prior boss was one of the worst bosses you could ever possibly have (80% of analysts left within 6 months of each other at one company I worked for).
Or their working hours became inhumane and the company refused to compensate the workers for their time. Then when the workers would leave, all the company has to do was find another warm body to fill up that spot. Great. Therefore, I desperately wanted to retire early.
However, I didn’t fully understand and comprehend the bad things that comes with retiring early. I didn’t see the flaws and the possible reasons why retiring early is bad. I’m so glad that I didn’t make the leap as quickly as I know I could have. As a result, I am at a place of happiness.
Why Retiring Early is Bad: 6 Reasons
One reason why retiring early is bad is that you can’t SMASH that social share button and share this article with your friends! Your friends could be retiring too early and might not realize that early retirement is not for everyone.
Here are the reasons that many fail to consider when they think about quitting their job earlier than expected.
1) You Don’t Know What to do With Your Time
Here is this 30-year old who feels completely lost with his life after retiring early. He has absolutely no idea what he wants to do with his time. If you are the type of person who actually does not know anything productive to do with your time after retiring early, then that’s one reason why retiring early is bad.
I just couldn’t believe it. There’s an endless stream of things that people can pursue and endless stream of passion projects that someone can pursue in their free time. Some passion projects can actually even make money, too.
Some people just do not have the capability to imagine productive work outside of their day jobs that they can pursue.
You could blog, Youtube, do some passion side hustles without feeling any of the financial insecurity. However, some people just absolutely cannot figure out anything to do with their time. That’s when retiring early is a mistake and not a good idea.
This part is important.
2) Lower Social Security Benefits
There are social security benefits that you’re leaving on the table if you do not fulfill the minimum requirements for social security. Will social security be still around in 30 – 50 years? That’s unknown. However, you already put in money into the system so far.
It would be nonsensical to give up all that money that you worked to already put in.
The minimum required credits are 40 credits that you need to be eligible for the benefits. That’s 10 years worth of qualified work at a certain income level ($1,510 per credit for 2022). Part time jobs also count. My part time job that I worked at Sears in High School also counted.
Some people make such obscene money that they’re even OK giving up the Social Security benefit. That would be OK, maybe, but even then it’s better for you to have it and not need it than need it and not have it. Lower social security benefits is one reason why retiring early is bad.
3) You Might Not Live as Long
It’s no secret that men who work longer live longer. The life expectancy for employed males is higher than unemployed males. Sure, that’s not the sole cause of life expectancy but this correlation cannot be ignored. Some people actually genuinely do not know what to do with their life after early retirement.
That’s shocking. There’s a million things that I can think of to do if I retire early or if I’m forced into unemployment. Regardless of which, it’s no secret that employment helps you live a fulfilled life because it gives you a sense of purpose. That’s why early retirement is bad.
Some people need that structure within their lives of people telling them what to do in order to be productive. We, as humans, have a dying need to realize self actualization. Self actualization does not happen if all we’re doing is sitting on the beach and doing nothing.
We need to be doing something for society and for ourselves.
4) Bad Financial Planning
Many consider the 4% withdrawal rule to be the bible rule of the financial independence, retire early movement. However, remember that it’s not foolproof AND past results are not indicative of future success. Many FIRE’d people actually went back to work in 2022 because of the bear market.
Furthermore, who knows how much worse this bear market is going to get? Your needs today do not reflect the needs of tomorrow. Bad financial planning is why retiring early is bad. Many people discount how much things that they will need in their life.
A house is a necessity for some people. Kids are a necessity for others as well. The 4% rule is dangerous and it’s looking more like 3% or 3.5% is a better withdrawal rate than anything else. Financial planning can’t be ignored.
I would have been absolutely slaughtered and decimated in the bear market of 2022 without income.
5) Regretting it is Expensive
Once you leave the game, it’s not a guarantee that you can go back to the high position that you fought so hard to get to. When I left an industry, one of my bosses said, “yeah, you can always just come back to the industry if you want to”. I tried going back to the industry.
However, companies offered me untenable job offers that came with pay cuts. Yes, I “could” have gone back to the industry but realistically, could I really have? And on top of a pay cut, let’s not forget you might have to work for a boss who’s 10 years younger than you.
Someone who has much more potential than you, as well, and could likely surpass you.
Why retiring early is bad? Too many people don’t think they can regret the choices they’ve made. Many people who joined the Great Resignation are now regretting it 2 – 3 years later. It only feels good temporarily but it may not be a viable choice and decision over the long term.
Regretting that choice is expensive.
6) You Could Feel a Lack of Purpose
Whether we like it or not, purpose is very important to our mental psyche. When we lose a sense of purpose is when we start feeling unfulfilled, unnecessary, and most of all, unhappy. This is why retiring early is bad. We need to feel like we are useful to society, world, and to ourselves in order to feel fulfilled.
You could find your own purpose your own way outside of work, absolutely. However, many people do not know how to do such a thing. There are millions of projects that I want to pursue if I am ever retired early.
Therefore, a lack of purpose is the last thing that I’m concerned about when it comes to early retirement.
However, there are many people who failed to plan for this event. They are so focused on how much they dislike their current role they haven’t considered that the new place they are headed to could be even worse. You don’t want to do something like that.
Why Retiring Early is Bad: It’s Not for Everyone
I personally believe early retirement is a great thing. I don’t want to continue to work until 65 without at least having the option to retire early. Many people work until 65 and beyond because they have to, not because they want to. That’s why retiring early is bad. Don’t think it is the best thing since sliced bread.
There are cons that many people are discounting when they go down the FIRE lifestyle. That FU money that you amassed might not really be FU money that you amassed because it didn’t see events like the 2022 bear market happening. There are always holes and flip sides to everything.
It’s definitely not a bad thing to go back to work after retiring early. However, it is a bad thing to go back to work because you have to and not because you want to. I used to think that early retirement was the best thing ever. I still think early retirement is a great thing but I think so in a much more cautious way.
Many people have enjoyed successful and fruitful early retirement. However, that doesn’t mean that many people also haven’t suffered an unsuccessful early retirement. All is not what it seems like as is with social media. I used to want to retire early at the age of 35 at the latest.
However, after snagging a dream job that I wouldn’t trade for anything else in the world, I do not want to retire that much early. There’s much more things that I want to accomplish and pursue before getting there. I’m so glad I saw the reasons why retiring early is bad before I actually went ahead with the idea.
Why Retiring Early is Bad: 6 Reasons Shortlist:
- You don’t know what to do with your time
- Lower social security benefits
- You might not live as long
- Bad financial planning
- Regretting it is expensive
- You could feel a lack of purpose
