Can I Retire Early?

Can I Retire Early?

Most people have a hard enough time imagining what their retirement will be like, let alone retiring early. When I say early I mean before the current, average U.S. retirement age of 63. Sure it sounds great to throw out the alarm clock and play golf all day. The reality is leaving the workforce early has some important tradeoffs.

Cognitive Decline

Recent studies seem to indicate a profound link between cognitive decline and retirement. [i] This notion of “mental retirement” seems to have a more dramatic impact on younger retirees. A New York Times article, citing a recent study, reported, “Researchers find a straight-line relationship between the percentage of people in a country who are working at age 60 to 64 and their performance on memory tests. The longer people in a country keep working, the better, as a group, they do on the tests when they are in their early 60s.” [ii]

Use It or Lose It

As much as everyone seems to complain about their jobs, there appears to be a real benefit to working when it comes to maintaining cognitive ability. The issue may not just be working as long as we live. The benefit may be as simple as finding consistent mental stimulation as we age. Work can often take us out of our comfort zones and help us keep active socially. One problem is that it isn’t always easy to keep working or find another job in your 60’s. One option, that is often suggested, is to find something to volunteer for.

The Trends

Research shows we are working longer. A research paper from the National Institutes of Health say “There is evidence that older Americans have reversed a century-long trend toward early retirement and, during the past decade, have been increasing their labor force participation rates, especially beyond age 65. This is good news for the standard of living of elderly Americans, as well as for the fiscal balance of the Social Security and Medicare systems. Our paper suggests that it may also be good news for the cognitive capacities of our aging nation.”[iii]

[i] http://hrsonline.isr.umich.edu/sitedocs/userg/dr-006.pdf

[ii] https://www.aeaweb.org/articles?id=10.1257/jep.24.1.119

[iii] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2958696/

*Investment advisory services offered through Horter Investment Management, LLC, an SEC-Registered Investment Adviser. Insurance and annuity products are sold separately through Eric Scott Financial.