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Home » Best Money Tips: The Downsides To Early Retirement – Goldstone Financial Group

Best Money Tips: The Downsides To Early Retirement – Goldstone Financial Group

Best Money Tips: The Downsides To Early Retirement - Goldstone Financial Group

Retirement is often seen as a time to rest and relax, a much-deserved break after years of hard work. While this may be true for many, early retirement comes with its own unique risks that you should consider before making any decisions. To broaden our understanding of the matter, let’s take a look at some of the common downsides associated with retiring earlier than expected. Not only does Goldstone Financial Group dive into how these issues can affect your finances and social life, but also how they could potentially impact your physical and mental health in the long run. So if you are thinking about taking an extended pause from work earlier than planned, read on to learn more about what that decision could mean for your future!

Goldstone Financial Group Lists The Downsides To Early Retirement

1. Financial Risk: The biggest downside to early retirement is the financial risk associated with it, says Goldstone Financial Group. By retiring ahead of schedule, you are sacrificing your reliable income stream and pension contributions. As a result, you may not have saved enough money to sustain yourself throughout your retirement years. To compound this problem, inflation can erode away at any savings that you do have. According to research from the Bureau of Labor Statistics, consumer prices in America rose by 2% every year from 2018-2019 and by 1.4% in 2020 alone. With inflation hitting retirees hard, even those who planned ahead for their golden years could find themselves struggling financially in retirement if they don’t prepare correctly or manage their funds properly.

2. Social Isolation: Another downside to early retirement is the risk of social isolation. Without colleagues and coworkers to interact with on a daily basis, retirees can find themselves feeling lonely and cut off from their professional peers. According to a study conducted by Robert Putnam in 2000, the average American adult loses approximately five close friends when they retire. This creates an environment where retirees are more likely to suffer from feelings of loneliness and depression due to a lack of meaningful connections.

3. Loss Of Self Identity: Early retirement can also lead to a loss of self-identity as retirees no longer have their job titles or career paths to define them. After decades in the workforce, this sudden void can be difficult for many retirees who may struggle with establishing new hobbies and interests to fill their day. According to the National Opinion Research Center, approximately one-third of retirees reported feeling a sense of “loss of identity” within the first year of retirement.

4. Health Risks: Finally, early retirement can also lead to a decrease in overall health and well-being. According to Goldstone Financial Group, studies have found that retirees are more likely to experience a cognitive decline due to a lack of mental stimulation as well as physical decline due to an increased risk of sedentary behavior and decreased exercise. Additionally, the American Psychological Association states that retirees are more likely to suffer from depression and anxiety due to their sudden loss of social connections, which can further exacerbate any existing health issues.

Goldstone Financial Group’s Concluding Thoughts

In conclusion, while early retirement can provide many benefits, such as greater freedom, flexibility, and time with loved ones, it is important, as per Goldstone Financial Group, for potential retirees to understand the risks associated with this transition before taking the plunge. By weighing all of the financial, social, and health risks, you can make an informed decision as to whether or not early retirement is right for you.