FIRE is less about retiring early and more about having the freedom to pursue your dreams and ambitions,” says Deacon Hayes, the author of book ‘You Can Retire Early!’

Early retirement is a new craze these days. In my opinion, the whole meaning of early retiring is misguided and misunderstood. Millennials today are joining  FIRE movement without knowing the entire concept of ‘Financial Independence and Retiring Early’. FIRE sounds more like becoming rich as early as possible, taking retirement and going on a life long vacation. It may not sound well  financially for most of the millennials, who even don’t know ‘How much money they need to accumulate for their retirement?

It will make sense only  when one wants to shape their life as per their dreams and ambitions, without money coming in the way. But there are many challenges which one need to deal with, after early retirement.

Yes, early retirement has its own merits like freedom from work and stress related to office etc. Early retirement also gives advantage to spend more time with family/friends, for hobbies, to travel etc. 

Though early retirement demands a lot of control over spending in order to save more money.  It takes considerable effort in the very beginning of a career, in order to get a comfortable life in the later half of your life. This  possibly could also means rushing through the education, to the first job that you can get, frequent job switches for salary hikes etc. which  could cause losing out on travel, love, family and your hobbies.

If preparing for early retirement leads anyone towards more stressful life or depression, it means that person is struggling to spend, save and adjust with the income. Understand, that’s a lot of investment – money, time, health, emotions etc. make sure your early retirement plan is worth it all.

Following are some of the major drawbacks or disadvantages of early retirement –

–Money accumulated for retirement goal and to fund expenses after retirement would not be enough:

Nobody knows how long they are going to live after retirement and hardly anyone thinks about it. Most of the people under estimate the number of years they will live. As a result the funds they have accumulated as retirement corpus, generally spent  long before they actually die. Additionally, increasing cost of living, health care cost, inflation and situations like current pandemic (Covid19), can deplete their retirement investments.

-Early retirement could make you miss the work or office life

If you love your job or love to take on new challenges, you may miss your office, interaction with colleagues/friends and work. Life could be a little boring without work and socializing. Also, ‘Time’ plays an entirely different role during retirement. For the first few days, loss of a typical work schedule, not tied to the clock seems wonderful, but later it becomes hard to spend the time. 

Therefore, do not retire from work, retirement merely marks the end of a particular job or a stage in a life. Better find yourself an easy part-time job or shift to the work you like or to your hobbies/interest which not only helps to spend time, make new friends, interact with new people but also helps to get little extra bucks. 

-Lack of purpose

During retirement years, you will need interactions/conversations with people and most importantly ‘Purpose’. For early retirees- there’s potentially a long runway ahead and it can be jarring when there is no clarity about the purpose of life. Many people do not realize this or do not plan for ‘life during retirement’. This planning is not the ‘Bucket-list’ where you’ve checked ‘yes’ to the items in the list  and after a year or two, you have to figure what to do next?“

“Life is never made unbearable by circumstances, but only by lack of meaning and purpose”.― Victor Frankl

-Rising Healthcare cost and inflation may impact the retirement fund.

Income during retirement will be limited but rising inflation, cost of living and few sudden expenses can ruin the entire early retirement plan. A good watch on money is important as it is easy to slip into the old spending habits of when you were working full-time. Savings, investments made during working years could not be enough to live looonngg life after early retirement.

–Not everyone gets passive income or follow their interests during retirement

Saving more and retiring early, very much possible for people who have high income or more income sources or have strong investments/assets which could provide  good passive income during their retirement. Not everyone has a passive income source during retirement on which they can survive comfortably OR not everyone wants to pursue any dream or hobby in their retirement after working hard for money.

-Ignoring expenses during retirement

There are many small and hidden expenses which most of us overlook while planning for retirement. To mention few:

1. Sudden expenses on upgrades, maintenance, repairs or fixing things. For example, things in the home like appliances may need repairs or replacements. And such sudden expenses can cost more than expected.
2. Underestimating medical bills, health issues, regular/irregular check ups etc.
3. Taxation

This does not mean one can/should not opt for early retirement, rather truth is, if well planned and prepared, retirement will indeed be your golden years.

Think wisely before opting for early retirement and plan well.