Roughly 1 in 2 Americans retire between the ages of 61 and 65, and nearly 1 in 5 retire before that. Most Americans also now take Social Security before their full retirement age, which varies by year of birth. Not only are people retiring earlier, but they're also living longer — much longer — and there's mounting evidence to suggest that early retirement often doesn't translate into just a few extra years of golf, fishing, and margaritas on the beach. From your health and happiness to, of course, financial realities, consider the risks of calling it quits too soon.
RETIREMENT WILL LIKELY LAST LONGER THAN YOU THINK
YOU PROBABLY DON'T HAVE ENOUGH MONEY SAVED
Even if you knew for sure that the average retirement length will apply to you, it's still likely that you don't have enough money to make it through. CNBC reports that common rules of thumb — such as retiring with 10 times your final salary in savings — often omit important factors like existing debt, stagnant wages, and rising costs of living.
MARKET DOWNTURNS ARE INEVITABLE — AND UNFORGIVING TO SENIORS
According to a report from the University of Michigan, the 2008 recession revealed just how vulnerable older Americans are to market downturns, which are cyclical and inevitable. Even if the next downturn isn't as seismic as the Great Recession, a crash that coincides with your retirement could erase a huge chunk of your nest egg with almost no notice, as it did for millions starting in 2008. The young have time to ride out the storm and wait for the rebound, which took years the last time around — but older workers don't. Retirees can find themselves struggling to age well on a tight budget.
YOU'LL BE DEPLETING YOUR RETIREMENT FUND INSTEAD OF ADDING TO IT
Retiring early is a double-edged sword. First, you stop growing your stack of cash just when it's starting to enjoy the peak effects of compound interest. According to the financial website Seeking Alpha, someone who stops saving at 60 instead of 65 could sacrifice tens of thousands of dollars of portfolio growth, even if monthly contributions remain the same. Also, not only does the pile stops growing upon retirement, but it immediately begins shrinking by whatever it costs to maintain your lifestyle.
YOU'LL MISS OUT ON CRUCIAL CATCH-UP YEARS
THE LONGER YOU WAIT, THE BIGGER YOUR SOCIAL SECURITY CHECKS WILL BE
YOU'LL BE IN THE HEALTH CARE WILDERNESS UNTIL MEDICARE KICKS IN
Medicare is one of the most popular government programs in history — and for good reason. Most seniors rely on it to provide for most of their healthcare needs. With a few exceptions, you don't become Medicare eligible until you're 65. If you have employer-based insurance, that disappears when you hand in your two weeks notice. Health care costs — especially for older Americans — are expected to skyrocket. If you retire early, that's your cross to bear until Medicare kicks in, and even then, you should expect to spend a nice chunk of change on supplementary "gap" coverage.
IT'S BAD FOR YOUR HEALTH
Financial considerations aren't the only reason to keep working while you can — your health and well-being could be on the line. According to the BBC, those who retire early are more likely to be both physically and mentally unwell than those who extend their earning years. Instances of depression among retirees are 40 percent higher. Diagnosed physical ailments increase by a full 60 percent.
YOU'LL LOSE A KEY SOCIAL OUTLET
IT'S LIKELY YOU'LL WANT TO GO BACK — BUT FIND THAT YOU CAN'T
According to the Harvard Business Review, it's often much harder for older Americans — particularly older women — to re-enter the workforce after a hiatus than it would be for their younger colleagues. That's a difficult pill to swallow for early retirees who didn't realize that the door might close behind them should they reconsider retirement, which many do. According to a Reuters/Ipsos poll, a full 30 percent of retirees — nearly 1 in 3 — would go back into the workforce if they could.
YOU COULD ROB YOURSELF OF AN AMAZING SECOND CAREER
IT COULD KILL YOU
If you've recently retired early, don't panic. In fact, congratulations — you've accomplished something many people dream of but never actually do. The reality, however, is that people who work past 65 live the longest. Studies show that working just a single year beyond 65 dramatically reduces the risk of all causes of death, even when lifestyle, health and demographic issues are considered. To be fair, a wide variety of variables are at play, including the fact that the data pool contains some people who retired early involuntarily because they were already too unhealthy to work. But even still, Bloomberg, citing another study, summed up the clear correlation between early retirement and early death as "striking."