Considerations for Early Retirement
July 25, 2025 Author: Tess Downing, MBA, CFP®, Complete View Financial
Early retirement often conjures images of freedom—no more commutes, meetings, or deadlines. However, this freedom can come with an unexpected cost, leaving many to question their decision.
As one of our clients recently shared, "I planned for 30 years of expenses—but zero years of purpose." This sentiment is not uncommon.
According to the National Bureau of Economic Research, over one-third of retirees express regret about retiring when they did, wishing they had waited longer. This suggests that the issue isn't always financial; it's often about finding meaning.
Studies indicate that the most fulfilled retirees aren't necessarily those with the largest portfolios. Instead, they are individuals who proactively built lives rich with purpose, structure, and intention well before their last day of work. They didn't postpone discovering this until retirement but instead took gradual, meaningful steps that prepared them for this significant life transition.
If you're reevaluating the value of working versus the benefits of exiting your career early, you're not alone. But early retirement isn't just about reaching a number—it's a full lifestyle shift. Here are five areas for consideration:
1. Making the Decision: Are You Ready?
Retirement changes everything. Beyond the finances, ask yourself:
- Will I miss work and the structure it brings?
- What will my social life look like without coworkers?
- How will I create purpose and meaning in my daily life?
- Will I launch a second act—consulting, part-time work, or entrepreneurship?
Psychological readiness is just as important as financial readiness. The psychological impact of retiring shouldn’t be overlooked, because it safeguards your mental health and puts you in a better position to budget effectively and make the right financial decisions.
2. Setting a Realistic Budget
Once you’re serious about early retirement, budgeting becomes your blueprint.
Start with:
- Your essential monthly expenses (housing, insurance, utilities, food, etc.)
- Add in occasional or unexpected costs from the past few years
- Reflect on your top five life goals in retirement—travel, hobbies, charitable giving—and estimate their annual cost
This budget informs everything from your investment allocation to your Social Security timing.
3. Understanding the Financial Impact of Early Retirement
Retiring early means fewer years to accumulate wealth—and fewer top-earning years. It also affects your Social Security:
Retirement Age
Monthly Benefit (2025 Max)
- Early (62) | $2,831
- Full (65–67) | $4,018
- Late (70) | $5,108
Every year you delay claiming past your full retirement age increases your benefit by ~8%. If you're retiring early but not claiming Social Security yet, ensure your 401(k), IRA, or other savings can bridge the income gap.
Also consider:
- Withdrawals before age 59½ may incur a 10% penalty—unless you retire after 55 and meet certain exceptions
- Required Minimum Distributions (RMDs) begin at age 73—so preserving balances now can help lower future taxable income
4. What About Health Insurance?
Medicare eligibility starts at 65—but if you retire early, you’ll need to bridge the gap with options like:
- Spousal health plans
- ACA Marketplace plans (consider tiers based on health needs)
- Part-time work with benefits
Your health—and the cost of healthcare—should be factored into your retirement readiness.
5. Tactics to Consider
If you're not quite ready but want to retire earlier than the norm, here are smart steps:
- Prioritize debt payoff to lower your required retirement income
- Maximize high-income years to boost your Social Security benefit
- Review your account types and tax planning strategies
- For married couples: explore spousal claiming strategies to optimize Social Security
The Bottom Line:
An effective retirement plan has a lot of moving parts to it, so it’s a good idea to think through the various decisions you need to make and be sure you are tracking everything before you stop working. This isn’t just about stopping work. It’s about starting something better.