For many early retirement in their 40s and 50s is the holy grail that will give them the freedom they imagine exists in being free from the work constraints that are not getting any lighter. The last decade of low inflation has led some to budget for the decades after retirement. Financial advisers generally recommend a €1 million retirement pot as the ideal financial basis for economic and work freedom.

Still, early retirement comes with many risks that they find difficult to manage once they no longer have a regular wage or salary landing in their bank account. Politicians, too, are getting worried about the adverse effects of early retirement on the economy. British Prime Minister Rishi Sunak plans to bring thousands of over-50s back to work by offering ‘midlife MOT’ to allow them to assess their financial health.

For too long European politicians ignored the looming demographic threat to their economies. While being strict on immigration control, they did little to tackle the increasing number of baby boomers and the generation after them looking for their workplace exit to pursue their dreams of financial independence and freedom from the drudgery of work. The onset of the pandemic in 2020 accelerated the number of early retirements. Now employees are complaining that they are finding it difficult to recruit. 

The number one reason people want to retire early is that they have not found a job that gives them enough fulfilment for the rest of their lives. Nobody quits a job they like. 

Corporate cultures poisoned with high doses of toxic internal and external politics often force some employees to retire early to have the freedom to surround themselves with yes men. Sadly, this is a reality that afflicts some public organisations with little regard for respecting the dignity of their employees.

Of course, many prosper when they retire early as they enjoy the free time to pursue their passions. Some see an improvement in their health and well-being as they find it easier to eat healthily and exercise. Shifting to early retirement allows you to focus on your quality of life and higher activity levels. Sleeping more, stressing less and getting out in the fresh air can significantly improve your outlook on life. 

However, the risks of early retirement are often ignored, especially in the high inflation era that may be with us for some years. Leaving the workforce early means you will have to support yourself for a long time which could last for decades. Your initial financial planning may be unreliable as with a more extended period come more negative variables like increasing costs to treat unforeseen medical conditions.

"Your initial financial planning may be unreliable as with a more extended period come more negative variables like increasing costs to treat unforeseen medical conditions"

But the most lethal risk is a loss of meaning that many experience soon after retiring. Many workers place a large portion of their identity in their work, and feelings of emptiness can set in when their careers have concluded. It is so easy to experience an identity crisis. Finding a place and contentment in the non-working years can be hard if you do not have a new chapter planned. 

The loneliness that some early retirees experience often leads to a deterioration in their mental and physical health as they slowly disengage from their community. It could be challenging for others to understand and support your lifestyle, especially if your peers are still deep in their careers.

For too long, the myth of early retirement has ignored the risk that comes with it. Policymakers have encouraged early retirement to induce workers to accept employment termination before retirement age following the employer’s diminished labour needs. Government supports for the practice has come from the belief that this should lead to a reduction in unemployment.

The unsustainability of this practice is now being recognised – the trend in most countries is now towards postponement of the retirement age. Since growth depends on having either more workers or greater productivity, society cannot really become more prosperous by paying an increasing number of its citizens unproductively.

With the median lifespan hovering around 80 years old, you only have 20 years of retirement to enjoy your life if you retire after 60. People rightly have a heightened awareness of time and want to do everything possible to ensure they are financially stable sooner rather than later. 

Early retirement planning needs to factor in the risks on the dark side of leaving the workplace earlier than the retirement age if it is to deliver the benefits of being free from workplace drudgery.