Don’t Retire Early—Change Careers Instead


Why Do People Retire Early?

Sometimes, retiring early is not planned: a layoff, a long-term illness, or having to care for a loved one may mean that early retirement is unavoidable. In other cases, early retirement is a conscious move to pursue personal interests, such as traveling or pursuing a hobby. Early retirement (or the desire to do so) can also serve as a means of escape from an uninspiring career, a toxic work environment, or a frustrating job with no room for creativity or advancement. However, an alternative to retirement could be to try a mid-life career change.

Key Takeaways

  • Early retirement requires accumulating more assets to pay your bills over the longer haul.
  • Early retirement eliminates the social aspects of the workplace, which many people enjoy.
  • People who retire early may face the judgment of others who consider their choice unproductive and selfish.

Keep in mind that retiring early has its own challenges. A career change might allow you to continue working while doing something that you find more rewarding and improves your overall quality of life.

Don’t Retire Early, Change Careers Instead

The Challenges of Early Retirement

The most obvious challenge to retiring—early or not—is making sure you have enough assets to provide the level of income you will need. The earlier you retire, the more assets you will require to compensate for the potentially decades-long period that you will not be earning wages. If you retire at age 45, for example, will you have enough to live comfortably for the next 50 years? And what if some of those years require expensive medical care? Here are some items to consider:

You can’t begin taking Social Security benefits until you are 62 years old, and you won’t get your full benefit amount if you start taking them before your full retirement age (67 for people born in 1960 or later).

Social Security

Maybe you’re counting on Social Security? The age at which you start receiving Social Security retirement benefits has a significant impact on your monthly benefit amount.

  • The earliest you can start collecting Social Security retirement benefits is age 62, but your monthly amount will be permanently reduced.
  • Your full retirement age (67 if you were born in 1960 or later) is the age at which you can start collecting full or unreduced benefits.
  • If you wait until after your full retirement age to start receiving benefits, you may be eligible for delayed retirement credits that would permanently increase your monthly benefit (there is no further benefit increase after age 70, even if you continue to delay benefits).

You should also check that you have worked enough to qualify for Social Security benefits. Depending on earnings, you earn up to four credits for every year worked, and you need a total of 40 credits to collect.

Retirement Accounts

Many people rely on retirement accounts to help fund their senior years. However, early withdrawals from a retirement account, such as an individual retirement account (IRA) or a 401(k) or 403(b) plan, may be subject to a 10% penalty tax in addition to regular income taxes. The penalty can be even higher if you take an early withdrawal from a SIMPLE IRA. If you wait until age 59½ to start withdrawals, you can avoid the penalties.

Non-financial Challenges

Aside from the financial challenges, not working frees up a lot of time. Can your hobbies, adventures, and pursuits keep you occupied and engaged for the next 10, 20, 30, or 40 years? 

For many, the workplace is their primary social outlet. Some people may be perfectly happy staying home and talking to nobody but their pets, but most of us need some human interaction on a regular basis. If you leave the workforce, will you have enough opportunities to fulfill your social needs? Do you have a robust network of friends and family outside the workplace? 

Some people may also experience an unexpected side effect of retirement. For many people, their job is part of their identity, and they may be lost without it. Without a job title, some people can feel inadequate and may even feel guilty or become defensive about the time that they have to themselves.

Almost 50% of all the employment gains in 2018 were driven by workers 55 and older.

Changing Careers

According to a 2017 report from the U.S. Bureau of Labor Statistics, by 2024 almost one out of every four workers will be age 55 or older. Also, an analysis by The Liscio Report, a research publication for investors, of the bureau’s 2018 statistics show that nearly 49% of all employment gains in that year were due to workers 55 and older. These statistics imply a broad trend of delayed retirement.

Many of those who are working longer are choosing to start their own businesses. The second annual Inside Small Business Survey conducted by UPS and Small Business Week found that 65% of respondents dream of opening a business when they retire. Retirees also stand a good chance of succeeding because they have more financial wealth, experience, and personal networks to support their startup efforts.

Depending on your age, you might expect to spend anywhere from five to 30 years in a second career before actually retiring. You might be able to combine your existing skills set with your interests to create work that is rewarding.

Have you been an ER nurse in your local hospital for years but long for more travel? Consider becoming a travel nurse. Are you an experienced attorney, computer programmer, or human resource professional with a cause? Consider switching to the nonprofit sector to assist a greater purpose that you believe in. Does the idea of running a bed and breakfast or offering kayak tours appeal to you? Put your management, marketing, and customer service skills to work and start your own small business.

Rekindling Dreams

Remember when you were young and everyone asked, “What do you want to be when you grow up?” You may have answered anything from a paleontologist to a ballerina to a rock star. Somewhere along the way, if you are like most people, you let that dream slip away.

A second career is an opportunity to rekindle those earlier dreams, even if you adjust them slightly. If you dreamed of being a rock star, you could put your music skills to work and teach guitar. If you wanted to dig for dinosaur bones, you might look for work in your local natural history museum. Too late to become a ballerina? Open a dance studio in your community. 

You don’t have to recreate a childhood dream to have a fulfilling career change. After decades in the workforce, you might have the knowledge, energy, talent, and time to start a whole new career path that can provide both a paycheck and a purpose.

It is never too late to learn new skills. Professional programs, graduate schools, and community colleges cater to those with work and family obligations. These institutions offer evening, weekend, and online classes to provide students with the flexibility they need. If you plan it right, you can complete the necessary coursework while still in your current field, allowing you to “hit the ground running” when you do switch careers.

The Bottom Line

Not everyone has a choice when it comes to retirement. A job loss or health problem could bring unexpected early retirement, or your financial situation could keep you from retiring as soon as you would like.

If you do have a choice, it may be worth considering a second career rather than leaving the workforce altogether. A different job—whether it draws on your existing skills or enters totally new territory—could allow you to pursue your interests and keep you engaged, productive, and financially sound.

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