When are you going to retire?
“I’ve had it at work. I could not imagine going back after I took my stress leave.”
“The men in my family tend to die in their 60’s and I wanted time to enjoy life and stay healthy.”
“They offered me an attractive package and I jumped at it. I would have been crazy not to.”
“I was just tired all the time and miserable most of the time and so I worked with my spouse and we figured out how to make it work.”
“I call it retirement but I am working part time and so it is more like semi-retirement with a pension.”
These are the voices of some retirees who opted to take early retirement. Lowered stress levels, improved mental and physical health, other opportunities, possible incentives, and a retirement plan gave them the confidence to leave their former work lives behind.
Bucking retirement trends
When are you going to retire? Baby Boomers now say they are going to stay working longer than the average retirement age which is 62 for men and 61 for women. According to a Sun Life survey, 19 per cent claim they will never retire. A friend once told me this and it came true. She died suddenly in her early 60’s. The more common expectation in terms of age is 66 years old as the target retirement age. In that same Sun Life survey, 32 per cent of working Canadians said they intend to work full time until they are 66 years old. Older workers are a reality in Canadian workplaces and the age 55 and over group makes up 20 per cent or 3.6 million people (up from 1.2 million since 2006). Some companies welcome older workers while others are looking for legal ways to ease them out. As of 2012 the labour force participation rate of 65-69 year olds was 24 per cent. This includes part time work as well. Putting the age for receiving the OAS to 67 will increase the trend to a later retirement. Those who choose to retire early are then bucking a trend to later retirement.
Related article: Who says you need to stop working at 65?
Making it work
Certain conditions create the opportunity to retire early like choice of career, availability of a good pension, options for paid work in retirement, a modest lifestyle, a savings and investing plan, low or no debt, and a willingness to recreate your life. Workopolis has a list of the TOP TEN jobs that can lead to an early retirement: politician, public sector worker, investment banker, business consultant, teacher, business owner, firefighter, police officer, commissioned sales person, successful start-up participant. Others do so with disciplined debt control and steady savings. Some with defined benefit pensions are concerned that their plans are not sustainable in these uncertain times. But, generally speaking, these pensions do give options for earlier retirements.
I chose to take early retirement because I had a health condition, a pension, lived a modest lifestyle, and had opportunities to work part time if I wanted to do so. No more alarm clocks, bells dictating my time, less stress, more energy, shoulder season travel, and freedom of choice over how I would spend my time were part of my plan. No regrets.
What about risks?
Certainly some risks do come into the planning picture. These include longevity risk as Canadians are living and dying longer, market risk as markets do their roller coaster rides, and inflation risk as inflation rises and fixed income loses value. A 30-35 year retirement with market fluctuations and rising inflation is very challenging to imagine or plan.
The most difficult early retirement is not a conscious choice but a health issue or the job simply disappears through a pink slip, a downsizing, a shut down, or some unforeseen circumstance. The Sun Life survey found that 29 per cent of those who left work at an unplanned date did so because of health problems.
Related article: 10 ways to reduce the risk of health problems
Some enter early retirement as a surprise when the job disappears. This can be a bitter reality and well as an opportunity to recreate a life. Reentering the workforce can be a challenge. Like a Boy Scout, be prepared. Health issues or a pink slip can be an unpleasant surprise. Plan A for retirement timing may shift to Plan B very quickly and so be sure to have a contingency plan.
Look before you leap
Make sure that early retirement is indeed the right move. If it is a rest or a break that is needed, find a way to do that as reentering the workforce can be a challenge. But if you are ready financially and psychologically, have a wonderful and happy retirement!
Related article: 3 basics steps in your retirement plan
So when do you plan to retire? Any tips from those who did retire early?