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Pros and cons of extremely early retirement

couple in yacht holding hands pros and cons of extremely early retirement

Early retirement is not always the wondrous dream many people make it up to be. Here’s a look at the good and bad side of early retirement.

Many people dream of an early retirement, but only a handful achieve financial independence and retire a decade or two before reaching the actual age of retirement (currently at 65 years old).

There are a few who not only can exit the rat-race early but retire extremely early—before hitting their 40s—and are living the dream.

There are different opinions about extremely early retirement, even from those who actually achieved it.


Nest Egg discusses the sentiments to extremely early retirement and some considerations to think about for those who want to tread the same path.

“Early retirement is a nightmare.”

Let’s get the negative emotions out of the way first.

Some young retirees worked hard, invested smart, and did everything they could to kiss dependence on monthly paychecks goodbye as early as they could. When their strategies paid off and early retirement became possible, they grabbed the opportunity to retire early certain that it will make them happy.

Only, it didn’t—their 'dream retirement' becoming instead a nightmare.

One would think that these instances are rare—perhaps more so in Australia, where extremely early retirement remains an unaffordable dream. But it actually happens more often than expected to those who retire early.

Their dissatisfaction usually stems from the difference between the retiree’s expectations and reality.

For example, one of the main reasons why people want to retire early is to gain freedom from a stifling work environment and the stress from bosses, clients, and competitive co-workers.

Once they retire though, retirees find themselves having too much freedom until they become bored and unsatisfied with their situation. Their newfound freedom becomes akin to their work stress—turning early retirement into a regrettable decision that persists until they come out of retirement or change their stance after a deep introspection.

“It’s a dream come true.”

On the other hand, some young retirees consider their early retirement as a dream come true—a dream they tirelessly worked on to turn into reality.

These retirees may or may not have harboured negative sentiments during the early portion of their retirement, but their view of it tends to be more positive overall.

They take advantage of all the freedom, travel, non-work, and mundane activities they experience and find enjoyment in them—the same experiences that those who have come to regret their retirement dislike. They have also come to understand that all the anxiety that built up since their final day of work is part of the retirement process and they managed to get past it.

This is the type of early retirement everyone wants to experience, but it’s not an automatic result. It would depend largely on the retiree’s personal circumstance or, more accurately, the non-financial aspects of their retirement plan.

Reality check: why extremely early retirement could go both ways

As mentioned earlier, individuals already have a set of expectations with regard to how very early retirement would play out. These visions involve the absence of daily commute, deadlines, a stressful environment and alarm clocks.

In most cases, the ideas either stop there or only consider moving on from a tiring and stressful employed life to a more relaxed one. However, this stage is only the first stage of retirement.

How a retiree will respond to early retirement once the initial rush wears off depends on several factors, including but are not limited to:

  • Reason for retiring
  • How prepared the retiree is
  • Financial security and control
  • Openness to new experiences
  • Core values

Reason for retiring
Happy retirees believe that individuals should retire with something else to do instead of just focusing on terminating their employment.

This is because retirees will have a lot of time in their hands and, without any goal to aim for, they may find themselves questioning the value of their activities.

In general, those who entered retirement simply to wave goodbye to their daily grind find their newfound freedom just as stifling and can get bored of it easily—a major reason why it turns into a nightmare.

How prepared the retiree is
Despite many accounts of what extremely early retirees experience in their new circumstance, some still enter retirement unprepared. Excess freedom still takes them by surprise, followed by a sense of boredom and discontent.

Retirees who were prepared, however, actually find various activities and endeavors to fill their time with. In fact, some even say that they are just as busy as when they were still employed.

Financial security and control
Retirees who actively managed their finances to reach their retirement savings goals usually don’t have a problem with financial security and control because they have developed smart financial habits.

Those who retired after receiving a windfall, however, usually end up needing to work again because of thinning financial reserves. Some windfall retirees regret their decision, especially those who did not bother to stay long enough in the workforce to appreciate the efforts put into earning money.

Openness to new experiences
With too much freedom in their hands, retirees need to be open to new experiences because they will not be able to enjoy things the same way they did when they were employed.

For instance, a long vacation overseas may be the activity they looked forward to each year, but actually having the freedom to take vacations anytime and anywhere can take away the excitement.

Core values
A retiree’s core values also play a big role when it comes to contentment. Accomplishments achieved before and after retirement tend to be different and if they evaluate accomplishments according to their work values, retirees may find less value in their activities.

It’s important for retirees to adjust their expectations and values—smaller and lesser accomplishments can still provide satisfaction. Sure, you churned out around 100 emails, held meetings, and paved the way for million dollar contracts in a single work week. But successfully teaching your dog to use and flush the toilet in that same time frame is also a valuable accomplishment.

Key takeaway: Retirement is a comma, not a period.

Retiring extremely early is very much like a Disney style fairy tale: the dreaming audience gets reeled into thinking the protagonists lived 'happily ever after'.

In reality, however, retirees took active steps to ensure that they would not regret their decision to retire by pursuing their interests after retirement.

It’s important to understand that retirement does not mean that one no longer has to do anything. Retirement is a life stage allowing a financially secure individual to pursue other things without being dependent on monthly paychecks.

This information has been sourced from the Nest Egg, The Money habit and Early retirement Australia. 

Pros and cons of extremely early retirement
couple in yacht holding hands pros and cons of extremely early retirement
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