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5 Reasons To Retire Early (And 5 Reasons Not To)

Have you heard of the F.I.R.E movement? Last week I shared all about what F.I.R.E means (financially independent, retired early for a quick refresher). 

Retiring early might seem desirable for a lot of reasons. More time for stuff you want to do, not being tied down by a job… but there are also reasons to not retire early. Like with most things, there are pros and cons with everything. Below, we’ll discuss five reasons to retire early and also five reasons not to. Many of them will depend on your personal preferences and your financial situation, of course. But it’s good to take a step back and look at the bigger picture.

5 Reasons To Retire Early (And 5 Reasons Not To)

5 Reasons To Retire Early

1. You’ll have more time to do what you want.

The one thing about retiring earlier than what others traditionally do? You’ll have more time to do what you want.

You don’t have to rely on vacation days to take that trip to Thailand. Or you could spend full summers with your kids. Or maybe you’ll want to spend your time volunteering

A lot of people argue at while we can always make more money, the one thing we can’t get back is time. Time, once spent, is truly gone forever. Retiring early gives you more time for the things that matter most to you.

2. You wouldn’t have to work if you don’t want to.  

The idea of F.I.R.E is that you no longer have to be traditionally employed. The annual returns from your portfolio are able to cover your annual living expenses. In turn, that means you don’t need to bring in any additional earned income annually as long as you are living below your means.

You wouldn’t have to have a job of any type to bring in regular income. This means you could take on projects you wanted to take on, start your own business or do things like consulting. It can open you up career-wise to pursue things for more than just money.

5 Reasons To Retire Early (And 5 Reasons Not To)

3. You’ve paid off your debt.

The thing about being financially independent is that you no long have any debt. It’s unreasonable to live off of the returns of your portfolio when you’re still paying money back to someone else. 

For one, the amount you need to have saved in order to make this work is recommended to be 25x your annual spending. So to even save that amount of money while you still have debt is a challenge

Further, much of the debt that people take on has significantly higher interest rates than what you would see from your investment returns. It’s not practical to put your money in a place that’s not going to grow as fast as more interest is going to accumulate. 

4. You have excellent credit.

Now, an excellent credit score isn’t *required* to retire early, but it’s definitely something you’ll want to consider before you do.

This is mainly because you won’t be able to continue saving up large amounts of cash for big purchases like a house or a car if needed. With a reduced income you’re limiting your future financial options. 

Having a good or excellent credit score gives you move financial freedom, especially if you do end up needing to do something like take out a mortgage in your early retirement. 

If your credit isn’t in the best place, whether you’re retiring early or not, it’s something you should address sooner rather than later.

Your credit plays a huge role in your life, and is especially something to consider if you’re going to retire early. If you haven’t checked your credit report recently, that’s a good place to start — and here’s how to do it

If you do find any unfair negative items on your credit report, I recommend reaching out to the credit repair professionals at Lexington Law for a free consultation. Click here to get started. 

5. You won’t be location-bound.

If you retire early, you’re essentially free to go wherever you want whenever you want. You won’t have to live in a specific location due to your job because you don’t have to be a certain place at a certain time.

This can be really freeing because you can move to lower cost of living area to make your money stretch further.


5 Reasons Not To Retire Early

1. Your spending will always have a limit.

The F.I.R.E movement suggest having your annual living expenses below $10k per adult in your family. I don’t know about you but I’m not sure I’m ready to commit to that for my entire life. 

I want to enjoy my life now and when I’m retired. To me, that isn’t always being frugal. I like to put my money towards things that matter to me. Some days that might be travel and other days it might be dinner out with friends. And some days it might be saving extra money for a house.

Retiring early means you’re not being in any more earned income on a regular basis. If you’re someone who doesn’t love frugality, early retirement may not be for you. 

2. You might be lonely.

Leaving an office environment that you spend 40+ hours a week at and going to a completely different schedule could feel overwhelming.  

Your relationship with your coworkers also provides a daily sense of community around a common goal. If you don’t replace those relationships and that connection in some way, you might feel lonely. Going from having people around you most of the day, checking in with others, working towards a goal together, and having daily chats can leave empty social space if you don’t have a way to fill it.

5 Reasons To Retire Early (And 5 Reasons Not To)

3. Loss of a sense of purpose. 

While your job isn’t your identity, it gives you a built-in sense of direction and goals for every day. As someone who is providing value and skills to your company, you matter to them.

Working on something and working towards goals gives us a sense of purpose. Without this daily direction, you might feel like you’re wandering. 

Not have a job to be at can also take away your daily schedule. You’ll probably go through a transition period of feeling like you have a lot of freedom to wake up whenever you want and do whatever you want. Then you’ll realize that a schedule is great for productivity. Even working on your hobbies might not be as fulfilling as it seems like it might be. Without a plan for what your retirement looks like, you might be wandering until you find your bearings.  

4. You have a family (or want one in the future).

Having children is expensive. Some estimates bring the total cost to around $250,000 per child through age 18. And while it might not necessarily need to be that expensive, kids do add a cost to your monthly expenses.

And while that’s not to say you can’t become financially independent and retire early with children, because as you can see here, some families are doing it, it might not be possible on such an accelerated timeline. Plus, it can be scary to think that you might not have what you need to take care of your child(ren).

5 Reasons To Retire Early (And 5 Reasons Not To)

5. Health reasons.

Now this is one that might go in both camps depending on your perspective. But if you have great health insurance through your current job, it might be a huge plus to not retire early to take advantage of those resources.  


Of course these aren’t all of the reasons to retire early or not to retire early. And a lot of it will depend on your personal situation and what matters to you. Retirement also doesn’t have to mean you aren’t doing anything with your time or not making any money at all. You might have just decided to retire from your current career path. What matters to you the most is what’s best to put your time, money, and energy towards.