Voluntary Early Retirement

If you are considering a voluntary early retirement, you definitely need some early retirement planning!

You need to think twice --
before you jump...

Before you resign and retire, since we are talking a Voluntary early retirement -- hoping to lay in the sun, play golf, or read books, for days on end... think twice.

You could easily be retired for 30 yrs (or longer). Do you REALLY have enough to retire?

Just think – my early retirement started at 55. My mother is doing fine at age 84. That means I could live 30 years in retirement.. yikes! Thirty years with few raises (only Social Security increases, IF in fact, SS is still around, and IF they give raises). Thirty years of health care premiums, ever-increasing household bills and taxes.

Now YOU might think early retirement is at age 47, or age 60... whatever you have in mind, just take a few moments to consider where your life and retirement is headed before you take that early retirement!

Check out what retiree visitors to my website said about their own problems with early retirement. It only takes one persons words or idea to make a big difference...

If you are retiring early to go elsewhere -- then build up a fund through the new earnings (while the pension, from your previous employer, and/or Social Security, is going into savings)... that makes sense! If you are stressed, that's another matter to consider completely...

Are you ready to retire?

First, are You personally ready for an early retirement?

Unless you are laid off due to downsizing (which is quite common in today's world), the choice is yours to retire or not.

Either way, a voluntary early retirement or not, there could be, after retirement, anxiety and depression.

Another early retirement possibility is disability retirement, which has it's own issues.

Your Current Employment

Before you take an early retirement, consider your working  options.

If you are leaving work to seek employment elsewhere... Is the grass REALLY greener? Do you take your job for granted, been there/done that, and really don't appreciate the seniority you have, the benefits, the perks? Is it REALLY that bad? Just consider, for one moment, that the next supervisor could be worse, the hours horrible, layoffs happen just after you start work. Can you REALLY find work elsewhere?

Are you ready to work part time instead? Could you do contractor work and get hired on a project by project basis?

Keeping Busy in Early Retirement

Do you realize this could mean keeping busy for the next 20 years before you actually live a quieter retired life?

If you don't plan on working, what WILL you do all day? Eight hours a day with nothing to do sounds good, but... once you get there, retired, it's not all what you think. What will you do all day?

One of the biggest issues, early retirement or not, is what you will do suddenly 24/7, with no employment. It's totally liberating freedom, and yet... scary too.

You might look into some new Retirement Activities. For example, Retirement Hobbies, being a Senior Volunteer, or (gasp!) finding a Retirement Job!

Are your friends retired? If so, you can do lunch and hahg out with them to keep busy. If not, again, what will you do all day?

Your Retirement Income

OK, so you now know what you intend to do during early retirement... you have hobbies to enjoy, maybe friends or clubs to enjoy the hobby with, and you are all set to go!

Wait – looking for some Financial Advice on Retirement?

Pension Plan Help

Pension Plan Help here.

  • If the employer offers a lump sum (annuity) instead of a pension, think twice once again... will the lump sum cover you for 30-50 years? I bet not. Financial planners may say to take it... so they can control your finances, earn more for you (and earn their own commissions too), make your money grow -- but will it REALLY last 30 years? What if the market takes a hit?
  • If you take a lump sum, that may mean you irrevocably forfeit the right to any future benefits... including health care. That's a HUGE part of retirement, and something that most folks can't make up out of pocket for a lifetime. Ask questions!
  • If you retire early, you are likely getting a smaller pension (if any) and a smaller Social Security payment, for the rest of your life. In difficult times (2007-2010 was just that), inflation hits hard on the poorest of society.. and at a flat income (pension/Social Security) a retiree is hit hard.
  • On the flip side, if you need $10,000 for an emergency purposes... your monthly pension won't cover that, so are savings available to you?

As a former government employee, I can take withdrawals from my deferred compensation account (IRS Code 457), at any age, after I retire. That's my retirement savings during my early retirement years, prior to age 59 l/2.

  • If you do roll the pension lump sum to an IRA (to avoid taxes at the time you roll over), do you realize that you can't use those monies until age 59 l/2 or you'll face a 10% penalty on top of taxes (IRS regulations)?
  • There are ways around that -- disability, medical bills, 5 yr monthly payment plan, buy a home, etc.. but then, using the monies means there is less available down the road when you might really need it and are unable to work.


This is a huge factor for an early retirement. What is your investment worth in 10 years? 20 years? after inflation, that invisible cost of living increase, creeps in?

  • At 3% inflation, $50,000 in savings would be worth $48,500 next year (only one year inflation), and $36,870 in ten years and only $27,870 in 20 years. Of course, hopefully you have that money invested so that it's also earning for you. Still... scary scenario!
  • At 4% inflation - there is a 20% cost of living increase in just FIVE YEARS! Your Social Security increases, but will your pension (and if not, how much will that require from your savings to stay even)?

Social Security

  • Did you know Social Security is based on the highest 35 years of employment? Retire with 32 years of employment, and you have 3 years of ZERO earnings. This is pretty significant - the calculation below shows the differences in the average assuming you made $40,000 a year (you can easily recalculate using my formula below).... this isn't your social security payment but the 35 year average plays a major role in the SS calculation... so beware!

$40,000 earnings a year X 35 years = $1,400,000 divided by 35 years = $40,000 average

However, if you retire with 32 years:$40,000 earnings a year X 32 years = $1,280,000 divided by 35 years = $36,570 average

This is NOT your Social Security benefit, only part of the calculation -- but you can clearly see that you start the complex calculation with lesser earnings over your career.

How will your Early Retirement Social Security benefit affected?

The End... Just Think Before You Leap!

Lots to consider when you are thinking about Early Retirement Planning.. well worth your time to step back, emotionally, and think whether this is the right move, or not. You'll be in retirement many years, at least we all hope so, pay attention to the details and you'll be there, happily, sooner rather than later!

Happy Retirement to YOU

Reader Submissions on Early Retirement below

Early retirement in this economy.

Early retirement in Kentucky, teacher loving retirement.

Early retirement: Depressed and not enjoying life anymore...

Early retirement but Laid Off, not voluntary.

Early retirement - now what?

Early retirement but having second thoughts.

Working through early disability retirement.