7 Biggest Misconceptions About Early Retirement
October 22, 2021
We’re all guilty of having rose-colored glasses about retirement at one time or another. When people think of retiring at a young age, they often envision themselves on a beach with a mixed drink and their toes in the sand. But in reality, retirement might be completely different from what you’ve dreamt about.
According to a recent survey, the Employee Benefit Research Institute found that 11% of today’s workers are planning on retirement before they’re 60. Now, there’s absolutely nothing wrong with that, and that’s wonderful if you’re able to swing it! But if you’re serious about early retirement, just make sure you think it through before you make any moves.
Here are some often overly optimistic thoughts that people often have about retirement, along with a more realistic approach.
- Misconception: I won’t have to worry about big bills when I’m retired!
Reality: Health care is a big expense.
Medicare doesn’t kick in for health coverage until you’re 65. If you retire then, do you have a plan for health insurance? Unfortunately, costs for health care soar as you age. Make sure you will have enough income to cover the bill.
- Misconception: I’ll be able to save money during retirement!
Reality: You may end up spending more in retirement than you did while you were working.
Many people assume that they will save gas money without a daily commute, plus they’ll spend less on breakfast and lunch on the go. But truthfully, when you’re young, healthy, and free from working, you might end up splurging more than you intended on leisure activities.
- Misconception: I’ll have my house paid off by the time I’m retired!
Reality: You may still have a mortgage to think about.
Many homeowners hope to have their mortgage paid off before they retire. But people are buying homes later in life nowadays, and almost half of retired homeowners between ages 60-70 are still paying for a mortgage. Plus there’s still utilities, taxes, maintenance, and yard care to think about.
- Misconception: I’ll just get a part-time job if I need one!
Reality: A part-time job may not be as easy as you hoped for.
Especially if you are retiring from a corporate job, you might have a hard time transitioning to part-time work if you end up needing the extra income. Part-time jobs often come with inflexible schedules, low pay, and hard work.
- Misconception: I’ll get to spend so much time with my friends when I’m retired!
Reality: You might be the only one who has free time.
If you retire before all of your friends do, you may end up spending most of your days alone. Make sure you’re okay with that.
- Misconception: I can’t wait to have more free time when I’m retired!
Reality: You might have more time on your hands than you’ll know what to do with.
What do you plan on doing with your newfound freedom? Are you a person who can kick back and relax for hours if you don’t have anything to do, or do you need to be busy? Try to plan a week-long mock schedule for yourself to visualize the reality of it, and see if you’re able to fill your time.
- Misconception: I’ll be able to spend so much time with my spouse!
Reality: Retirement sometimes creates a rift in relationships.
Sadly, divorce rates in older couples have sharply increased in the last couple of years. Many people aren’t used to spending so much time with their partners and don’t always thrive without time to themselves. Or if you retire before your significant other – how will they feel about that? Will they be happy for you, or resentful?
If you’re thinking about early retirement – I’m really not trying to burst your bubble. It’s best to sit down and make a realistic plan for what you’ll do when you’re retired before you jump into it. Consider your budget, expenses, how you will fill your time, and how your partner feels about the plan. Then, if you’re still in the clear – then cheers to your retirement!
Disclaimer: please note that this article is not legal advice and should be used for informational purposes only. If you need legal advice you should retain an attorney licensed in your jurisdiction. The opinions expressed in this guide are solely those of the author, who is not an attorney.
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