Key Takeaways<\/p>\n
More than half of early retirees in Gen X are considering \u201cunretiring\u201d for a variety of financial, social, and emotional reasons. If you\u2019re thinking of retiring early, how much you have saved is important, but it\u2019s not the only thing you need to worry about.Many people who retire early discover that they weren\u2019t quite ready for such a major change.\n<\/p>\n As many as 54% of young or early retirees in Generation X report that they are considering \u201cunretiring.\u201d Their reasons for returning to work are both economic and emotional, such as wanting the intellectual challenge of work and needing more needing more financial options.\n<\/p>\n Before you retire early, consider whether you meet these financial milestones. If so, you may be ready to leave the workforce.\n<\/p>\n 1. You Are Debt-Free <\/p>\n Carrying a debt into retirement can be a significant drain on your finances, warns Jamie Kertis<\/a>, a certified plan fiduciary advisor (CPFA)and financial advisor at EverThrive Financial Group. If you are already debt-free, you might be ready to live on a fixed income. But if you aren\u2019t, focus on paying off your debt before you retire early.\n<\/p>\n \u201cMake a plan to pay down high-interest revolving debt<\/a>, like credit cards, first, and then focus on fixed-interest rate loans,\u201d Kertis said. \u201cIt can also be a good strategy to pay down unsecured loans<\/a> first.\u201d\n<\/p>\n 2. You Have Multiple Sources of Income <\/p>\n If you plan to retire early, you don\u2019t necessarily want to withdraw money from your 401(k) or individual retirement account (IRA)<\/a>s, as tapping these accounts before age 59\u00bd can result in hefty penalties and fees for early withdrawals.Additionally, retiring early means that you may not be able to rely on Social Security. The earliest that you can start collecting is age 62.\n<\/p>\n Therefore, it’s important to consider what income streams you do have. Having variety of income streams will protect you from losses during a long retirement. These are some income streams that can help you diversify:\n<\/p>\n 3. You Have Strong Retirement Savings <\/p>\n In addition to multiple income streams, you should only retire early if you already have robust retirement savings in tax-advantaged accounts<\/a>. Even if you aren\u2019t yet withdrawing that money, you should contribute as much as possible before you stop working so that it can continue to grow until you can withdraw it without penalty.\n<\/p>\n Kertis recommends maximizing your contributions<\/a> before you stop working. In 2025, you can contribute $7,000 to an IRA and $23,500 to a 401(k). If you\u2019re age 50 or older, you can contribute an additional $1,000 to your IRA and $7,500 to a 401(k) (or $11,250 for ages 60\u201363).\n<\/p>\n Tip<\/p>\n If you have kids and want to contribute to their college expenses, make sure you have put aside a sufficient amount before you stop working. You won\u2019t be able to contribute as much once you\u2019re on a fixed income.<\/p>\n 4. You Have a Plan and Savings for Healthcare <\/p>\n Unless you have a disabling chronic condition, you won\u2019t be able to start Medicare coverage until you are 65 years old. Before you retire early, you need a plan for how you will manage your medical care. \u201cHealthcare can be a significant drain on any fixed-income living situation,\u201d said Kertis.\n<\/p>\n If you have savings for healthcare expenses<\/a> and a plan for accessing affordable insurance coverage, you might be ready to retire early.\n<\/p>\n A 2025 study from Fidelity found that the average 65-year-old will spend about $172,500 on healthcare in retirement. If you are retiring early, you need the savings to cover even more than that.\n<\/p>\n If you\u2019ve been stashing money in a Health Savings Account (HSA)<\/a> while you work, you can use that money tax-free for qualified healthcare expenses in retirement.\n<\/p>\n Otherwise, you will need enough in savings to cover both out-of-pocket expenses and any health insurance premiums. For health insurance, you may consider purchasing a plan off the Health Insurance Marketplace<\/a>, getting coverage through a working spouse\u2019s health plan<\/a>, or enrolling in COBRA\u2014though coverage is typically only temporary with COBRA.\n<\/p>\n 5. You Have Strong Social Connections <\/p>\n \u201cIt is essential to consider not only the financial side of retirement, but also the emotional and practical aspects,\u201d said Kertis. Without the social interaction that comes with a job, many retirees find themselves feeling isolated, especially if they retire early and most of their peers are still working.\n<\/p>\n Having strong social connections outside of work is a sign that you might be ready to retire early. You can build these connections through a club, volunteer work, your neighborhood, or even religious communities.\n<\/p>\n 6. You Know How to Create Daily Structure <\/p>\n
\nBefore you retire early, meet financial milestones<\/a> that include being debt-free, having multiple income sources<\/a>, and having enough savings to cover healthcare expenses<\/a> before you can access Medicare.
\nRetirement can be socially isolating. Part of being ready for early retirement includes having strong social connections, a plan to structure your time, and activities that give you a sense of purpose<\/a>.<\/p>\n