Retirement is a serious financial responsibility and lifestyle change.
You should start saving for retirement as early as possible so that you can live comfortably from retirement until death.
And if you are considering retiring early in life, then you must consider everything that can go catastrophically wrong.
Half of Americans aged 50 today will live past age 80. As much as 25% will live past 90.
If you retired in your 40s, would you have enough money saved to pay your expenses for 50 years?
If not, you could live long enough to be in advanced age, broke, and in declining health.
Are you retiring early for its own sake? Or do you have an early retirement fund?
Even if you do, you will need to have even more money in an early retirement fund than a traditional one.
A good plan is to save as much money as you can in a retirement fund that can then be supplemented with Medicare and Social Security when you qualify.
What will you do if you retire early? How will you spend your time and money?
If you save money all through your working life until you reach retirement age, then you should make your money work for you to retire.
The average 401(k), depending on the investments you make, returns between 3% and 10%. That adds up over decades.
Retirees can get stuck paying hundreds of thousands of dollars out-of-pocket on medical bills.
Early retirement means you will likely pay for more of your healthcare out of pocket.
The point is that the earlier you retire, the more money you will need, money that could have been saved for the future.
And the earlier that you retire the more money that you are likely to spend period.
Less than 17% of Americans actively save money for their future retirement. Even when they do, they usually don’t save enough money that would make a difference as retirement nears.
Less than 50% of people, for instance, have less than $15,000 saved for their entire retirement.
So, unless you are already wealthy or live in a very low cost-of-living city, and spend way less than you earn, you’re going to run low on funds just as you need them when you age.
Retire early if you can, but have a plan that actually works over the many years you will need money to get by.