Facts on Retiring Early

Here are some facts (along with my comments) on retiring early from Money magazine's January issue:

13% of people expect to retire before age 60 and 20% expect to retire between 60 and 64.

So we have one-third of people who expect to retire early, huh? I'm not sure that this is a realistic expectation -- unless they expect that they simply won't be able to work. After all, it takes a lot of money to retire early and you need to take advantage of all the areas of saving to do so. I'm skeptical that most people (or even 1/3 of people) are taking the right steps to retire early.

73% took Social Security benefits early.

This is a bad idea. Or is it a good idea? I think the answer is, "it depends." For more thoughts on this issue, see Should You Start Collecting Social Security at 62 — or Wait?

38% of people retired earlier than they planned -- 7 in 10 of these say they were forced to retire due to health problems or layoffs.

This is why "working longer" may be a good retirement savings idea, but often isn't a practical way to fund retirement.

9% of people think they need $500,000 to retire early -- 35% think they need more than $3 million to retire early.

I'm clearly in the latter camp on this one. People at 65 years old have a good chance of living a few more decades. $500,000 simply won't go that far unless they have other sources of income or are very frugal.

Comments

[Julien]

Hi,

I'm french and i live in france so i don't intend to comment the numbers above. But i think that the nest egg to retire early can be just a way to invest in some bonds. So, you have a nest egg that you never touch and live just with the interest. With 1000000 $ and a bond with 4% interest, you can live with 40000 $ a year. I don't understand why people wants to have more than 3000000 $ (120000$ a year) ? And you can use a small portion of your nest egg to fight inflation. It's perhaps too simple but why do you need to eat your beautiful "retire-early-amount" while you can live with the interest ?

[Matt]

"Retire" doesn't necessarily mean "forego income". For a lot of people it just means giving up nonvoluntary full-time W2 employment.

I, for example, will be retiring by 35. Does this mean I won't work? No...it just means I'll be earning enough from my investments and my businesses that I won't have to have a day job anymore...and so I'll quit my day job and devote myself fully to the businesses and my family.

[Terry]

Yes, people who intend to spend a lot of money in retirement need to start with a large sum. I've lived on minimum wage my whole life. How much do you NEED to retire on? Looks to me like a lot of people are confusing wants with needs.