Want to Retire Before 65? Here’s What You Should Know
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Hey, your money briefing listeners. This is Jacob Passy. Here at YMB, we're all about bringing you important personal finance and career news. We're working on making some changes to our personal finance content, and we want to hear from you. Our question today is, what would be the ideal length of the show? 5 to 8 minutes, 10 to 15 minutes, 20 to 30 minutes, or more than 30 minutes?

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Do you dream of an early retirement? Sure, the idea of limitless free time may sound appealing, but exiting the workforce before the age of 65 can come with some serious drawbacks. If you're taking money from your savings, from your 401k or IRA or any form of savings, you're increasing the number of years that your nest egg has to support you.

We'll talk to WSJ reporter Anne Tergesen about the realities of retiring early after the break. Um, I think I just won my taxes. Yeah? I just switched to H&R Block in about one minute. All I had to do was drag and drop last year's return into H&R Block and bam, my information is automatically there. So I don't have to go digging around for all my old papers to switch? Nope. Sounds like we just leveled up our tax game.

Most people picture retiring at age 65. But the reality for some Americans is that their retirement years start a lot earlier. And an early retirement comes with pretty significant consequences. Wall Street Journal reporter Anne Turgason joins me to talk about it. Anne, how common is it for workers to retire early?

It turns out it's pretty common. There's this annual survey that's been done for over three decades, and in almost every installment of that survey, people say they had wanted to retire at 65, but that the actual median age at which people do retire is more like 62. I know you interviewed some people who...

So my colleague and I have been writing a series about what retirement looks like in America. And each one of these, we interview four people, or sometimes it's four couples, about what retirement looks like to them. And usually there's some kind of theme.

In one case we did, what does retirement in America look like when you have a million dollars in savings or two million in savings? For this one, we wanted to look at what does retirement look like if you retire at 80%.

age 55 or younger, on the theory that a lot of people dream that early retirement is their goal. And on the flip side of that sort of dream or aspirational side of early retirement, there's a lot of people who write to me a lot because I cover retirement that they were forced into early retirement. So that's a less kind of happy, optimistic picture of retirement. So we got a bit of a reality check from these people in both positive and negative ways.

For one person, it really was burnout. Well, it was actually a combination of factors. One was ageism. There was a management change, and he felt like he was increasingly being pushed to the side of important decision-making. He also just rapidly got burnt out. Another guy I spoke to just said he loved his job and absolutely felt on the top of his game, but he also just felt like the stresses were growing, that he was either having to lay people off or

or he had all this pressure to bring in revenue. So it was just the parts of the job that he loved were getting overshadowed by the parts he didn't love. So in both of these cases, these guys left. But other people also, they leave because maybe what made them fall in love with their career

it's getting a little old and they want to try something new. Maybe there's some burning passion that people have to segue into something else. Did these folks have working spouses or other sources of financial support besides their savings? Two out of four of them did have working spouses that they could rely on. Uh,

In one case, that working spouse was about to retire as well. So it was a very temporary situation. But I think that's very common, especially among people who retire early, is that the spouses aren't always on the same timetable. And three out of four of them actually did have pensions. So while these people were generally too young to qualify to take any Social Security yet...

some of them were receiving some form of pension. One of them, it was a fairly small, modest pension. So in general, what did their savings look like before they retired? The

The two people I spoke to in depth, they both consulted with a financial advisor because they both were sort of do-it-yourself investors. They'd been fairly diligent savers. Before making such a big decision, they wanted to make sure that they were in good shape, and that made them feel more confident. Both of them had saved significant sums in 401ks and IRAs. One of them had an HSA, which is a health savings account as well.

They both had saved well over a million dollars by the time they decided to retire. And were there financial drawbacks to entering retirement at a younger age that they identified? These are things that financial advisors will tell you, and the people we interviewed would not dispute any of this. So first of all, if you're taking money from your savings, from your 401k or IRA or any form of savings, you're

You're increasing the number of years that your nest egg has to support you. You know, this is the reason why people often get part-time jobs, because they want to reduce the strain on their savings. There's also...

health insurance, which is huge. Once you're 65, you can go on Medicare. But before that, you can't. So for each of them, they had to solve this problem. And for those with working spouses who have insurance, the problem was very easily solved where they went on their spouse's insurance. The other guy I spoke to who's single went on Obamacare and

And then there was another couple who were former military, and they were eligible for the military's health plan, which made it a lot easier probably for them to make that decision to retire because this is a problem for people who retire early, and it can be quite expensive.

And were there any other consequences such as feelings of loneliness or isolation? One guy said one of the big challenges of retirement, in his view, is that you just you have to really work to replace the automatic social life that you get in an office. And he had been a lifelong employee of this one company and really just loved his job and loved.

clearly had a substantial kind of social life at his job. He discovered that he really has to work at it. And he said sometimes he's the one who's always reaching out. And he began to feel a little funny about it. And then he consulted with his girlfriend and she said, look, if you enjoy seeing these people, don't worry that you're the one who always is reaching out as long as you're getting a lot out of the relationship. So he said he tries very hard to

get together with friends a couple times a week. He also volunteers extensively, and so he has built new social contacts, new social life through his volunteer work. And I also think that what is kind of disconcerting to a lot of people who retire period at any age, but certainly who retire early, is just that there's like all of a sudden a lack of structure. You know, you're used to racing through your day

and having to be somewhere all the time. And then all of a sudden you've got this blank slate. And one guy told me he woke up a couple days after retiring and he just had this sort of momentary feeling of almost like panic because it was just the opposite of the way his work life had gone. But, you know, he said gradually you fall into a new routine and you just have to kind of embrace the uncomfortableness of having to reinvent everything.

That's WSJ reporter Anne Tergesen. And that's it for your Money Briefing. This episode was produced by Ariana Osborough with supervising producer Melanie Roy. I'm Jacob Passi for The Wall Street Journal. Thanks for listening. ♪