What are the biggest cons of early retirement? I've been considering it but I want to make sure I'm not missing anything that could sc--w me over majorly.
27 replies (most recent on top)
You did not mention if you were confident about your finances. I suggest having in depth financial analysis done, perhaps a Monte Carlo Simulation.
I had an analysis done in '18 and again in '23 and then asked to be let go from T earlier this year (July Alumnus). Mine was done by a financial planner within the financial services company that I use. A couple of times I did speak to a CFP within Fidelity so you may want to start there if you do not currently have one.
It is the type of thing where garbage in will yield garbage out. For a proper analysis you really need to understand where all of your money (expenses) goes. This is a big of the input to the simulation, so being thorough is important. I have not spent any time on the ACA site. I used the non subsidized T retiree insurance rates as input to my plan (worst case scenario) and still had a very high score so I am not going to worry about it. Everything else is very manageable.
I have been retired since July, no cons yet.
Besides from SS and pension(if you qualify). If your financials are in order, I'd say retire as soon as you can. The longer you wait the harder it will be to let go of work. In retirement I found it's a new lifestyle and it's easier to adjust when your younger.
“ RTO has a side benefit of making employees more active“
It’s actually the complete opposite effect, not that the company gives one rip. When you’re commuting for hours every day you are far less likely to make time for exercise.
Nothing unless you don’t have your medical insurance taken care of and have diligently invested in your 401K since beginning with the company.
People don't like to talk about it, but a lot of enployees gained a significant amount of weight and became less active during the pandemic WFH.
the gym at my office closed permanently during covid and hasn't been replaced.
Other locations lost their gym before covid.
The long walk in from the parking lot might add a couple thousand steps to my day, but my overall fitness is much better if, instead of spending 45 minutes each way on a commute, I can actually do some meaningful exercise.
Social security is calculated based on your annual income for last X number of years before you qualify.
Social Security is calculated based on your annual income for the top 35 years of your working life, not just the last few years before you qualify.
It's important to note that your highest-paid years are most likely now, so you might have some years with 'zero' income or very low income (like that summer job at McDonald's when you were a kid).
Anyone planning to retire should model their Social Security benefit using the various tools available. Ideally, you should aim to retire on your savings and pension, with Social Security serving as a safety net for when things go sideways.
Social security is calculated based on your annual income for last X number of years before you qualify. If you don’t have an income for 10 years before age 65, your monthly social security benefit will be less than if you had worked
Health Care is the biggest issue, and it is keeping a lot of people here. When Stankey took it away 3 years ago he ended up costing the company a lot more money.
If you are married have your wife get a part time job at Costco if anything just for the health insurance. As a retiree subsidized I pay $175 per month for high deductible. To add wife and child add another $600. Costco wife and kid $180 per month as part time. Take the lump sum and invest mostly in the S&P 500. Don't take the AT&T annuity as the company they sold the pensions to aren't backed by the government PBGC. No cost of living adjustment either. If you want an annuity take the lump sum and get one on the open market that has a 2% yearly increase and can also leave some money to your kids if you kick the bucket. You can withdrawal from your AT&T 401k penalty free if you are at least 55 when you leave AT&T that's what i did. Living off the 401k and haven't touched the lump sum money. The money from the 401K and lump sum are generating more money per year than what I was making at AT$T. Just retire..Good Luck!
“Stay at least moderately active. Find something to do where you aren't sitting at home watching tv most of the time. I have known people who retired and became super lazy. Within a few years, serious health consequences follow along with degraded quality of life.”
People don't like to talk about it, but a lot of enployees gained a significant amount of weight and became less active during the pandemic WFH. RTO has a side benefit of making employees more active. This is especially important given the higher age demographic of T employees.
Probably not the angle you were thinking of. Stay at least moderately active. Find something to do where you aren't sitting at home watching tv most of the time. I have known people who retired and became super lazy. Within a few years, serious health consequences follow along with degraded quality of life.
I’m looking at retiring early next year but won’t be eligible for Medicare for several years so looking at ACA. For those of you who went from Aetna to ACA, what was the transition like? I understand ACA offers just HMO plans in most states versus Aetna’s PPO. Are the HMO doctors in your states any good?
I love it. Insurance can be very expensive.
Plain and simple, it's not impossible or expensive if you have a Superhero fund, that is a non-qualified account/taxable account outside your 401k/IRA. Draw down from that first. You're only paying on capital gains/ dividends, which keeps your income low and qualifies you for subsidies. Federal, and then depending upon the state you reside, a state subsidy as well. I also recommend a health insurance broker to help you navigate. Costs you nothing. We're not interested in draconian RTO rules with the 2024 twist of never having your own desk or even locker and have been working with our fiduciary. If you've prepared for an early retirement, don't let health care hold you back.
Biggest issue would be healthcare, IMO. Not being old enough to enroll in Medicare. Expensive to get coverage on your own, or even COBRA, and even more expensive should something happen if you choose to gamble.
Not having healthcare or a paycheck would be 2 cons.
Plain and simple. Money makes money if you dont have that you cannot retire.
You really need to speak to a fiduciary and plan your goals. They can advise if early retirement is in your cards or not by analyzing your portfolio.
Don't underestimate how good a deal the ACA insurance can be. If you are living off your savings it can be a pretty sweet deal if you are not morally opposed to subsidies. It is all about what your adjusted gross income will be.
Is your family supportive of early retirement? Are they going to want to spend a lot more time with you at home?
Biggest gotcha will be running out of money down the road; however, people never factor in SSI into the equation, it’s not nothing. Keep your spending in check, maybe get a part time something that you enjoy to stay busy and maybe give you some free perks (golf course, charter boat, guide, things like that) or start your own venture around your hobbies. Other than that, health insurance is the biggest concern until Medicare kicks in. I’m a veteran so I can get VA care if needed. If none of that is a concern, I’d say go for it. Get your life back.
Well, once you do retire, you will start recouping the 20 yrs of early death you accumulated for working here. Whatever your feeling now, expect an instant feeling of renewed youth and plan accordingly by staying away from the blue pills and gummies!! Everything else will fall into place with a little help from the creators of this game of life! Best wishes going forward
Don't ask here! Get a fiduciary and have them do an analysis. It is no fun running out of $ and having to work as a Sprawlmart greeter when you are 90.
The Stink give his warmest thanks to be rid of another so he can pocket your severance!
The cost of medical, even under medi-don't-care is astronomical.
Thanks Stink - the biggest POS in the universe!
Well thanks to Stanky et al, you lost your retirement subsidy (if you were eligible). So that’s a financial loss you have to account for. Those sc-mbags stole from people close to retirement, and I’ll never forgive them.
The question is how early? I think your biggest concern will be the cost of pre-medicare health insurance. There's the ACA but your APTC are based on your income and number of people in your household. If you can get healthcare through your spouse you're golden and next on the list is your income streams and expenses.
The biggest risk is finances. Did you sock away enough dough to last for X duration, etc.
Make sure if you are management you have insurance in place and make sure your finances are in order. Other than that it will be the best job you have ever had.