The Pros and Cons of Retiring Early
Should I take an early retirement or not? Many of us face this question and by reading the details we will be sharing in the following sections you will be able to make the right decision. There are pros and cons of taking an early retirement and we will be sharing those details so that you can decide whether retiring early will be right for you.
Should I take an Early Retirement?
You will have to examine financial viability of your decision as well as analyze effect it would have on your lifestyle before actually retiring early. Let us go through all the details in the following sections.
Why Someone Would Takes an Early Retirement
There could be different reasons someone would select early retirement. It could be the desire to modify lifestyle a person has or it may be due to some health reason. But there are certain negative aspects of retiring early and you need to be aware of them before taking the final decision. Let us look at what those negative aspects are.
Negative Aspects of Retiring Early
Right from getting a lesser pension to lower chances of availing state pension, these factors make early retirement a less advantageous proposition.
Lower Pension: Pension package is going to be smaller when you plan to retire early in comparison to what you can expect to get when you retire at normal retirement age.
Lower Chances of Availing State Pension: You become eligible for state pension after you are into your mid-sixties. Thus, when you are retiring early, you may end up with less income than you expected and find it difficult to meet your day to day expenditures.
Positive Aspects of Retiring Early
People planning to retire early should not be disheartened since there are several positive aspects of early retirement that make it an exciting option to select.
Many times employers add specific incentives which make early retirement attractive for employees. These incentives include:
- Employers oftentimes add a large lump-sum amount for increasing defined contribution pension fund's value.
- Pension benefits are also formulated in such a way that the retiring employee receives benefits similar to what he or she can expect to get during a normal retirement.
What are the Aspects to be Checked Prior to Deciding to Retire Early?
If you are really serious about retiring early then there are certain points you will have to examine at the time of taking a decision. Let us look at what those points are.
- What would be my total income if I retire early?
- What would be the pension I would be earning after taking an early retirement?
- Will there be a built-in increment on a yearly basis in the payouts that I would be receiving from defined benefit pension plan?
A Final Note
To conclude it can be said that there are advantages as well as disadvantages of taking an early retirement. Thus, it will be important to analyze all the factors so that it becomes easier to take the right decision.