Retirement is a huge decision; it can be financially catastrophic if taken hastily. Usually, most people think 60 is the right retirement age, but it depends on one’s financial obligations, financial readiness, and risk mitigation capacity. The longer the retirement period, the greater the risk mitigation capacity one needs to have to live a comfortable life. Early retirement exposes a person to live longer without work and income flow; thus, it may unfold several risks that they should be aware of. Let’s check out some of the risks you should know before retiring early in your career. Also Read:
Retirement Planning: 5 Financial Mistakes To Avoid For A Secure FutureWhat If You Want To Change Your Mind After A Few Years?
Suppose you decided to retire at the age of 35, and at the age of 50 you changed your mind, how will you return to work life? It can be a highly challenging task to return from retirement to your normal work life, especially after you lose touch. You may not be skilled enough to get a job and starting a business would be even more challenging. So, exiting the work completely should be avoided when you plan to retire early. Try to get yourselves skilled up from time to time even when you are not working.
You May Run Out Of Money
You may have accumulated a corpus that may seem to the enough for the rest of your life, but what if you want to upgrade your lifestyle in the future? For example, in the future, if you want to buy an expensive gadget, supercar or luxury home, which is not already planned, then your money may not be enough to buy you all these things. If the cost of living increases significantly in the future and beyond your expectations, you may run out of money sooner and it may lead to an end of your retirement life.
Your Financial Capacity May Get Restricted For The Rest Of Your Life
If you set aside a corpus for early retirement and leave your work life, you try to restrict your expenses in sync with the size of your retirement corpus. If you are earning a good income, it can help you consistently upscale your spending capacity and thus you can create a financial cushion that can absorb any size of financial shocks.
Finally
When planning an early retirement, you should be careful that you have to leave the work and not leave your skills. Try to stay updated about the market and domain related to your expertise. Always stay connected with the people with whom you have worked, they can be helpful if your
retirement goes wrong and you plan to return to work.
The author is an independent financial journalist.
