How does it affect early retirees?

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Early retirees can face unique challenges and opportunities when it comes to managing their finances and lifestyle choices. From the data, we see a variety of aspects that affect early retirees:

  1. Impact of Bereavement: In one case, an individual became financially independent due to a tragic event — receiving life insurance from the demise of a spouse. Though this led to early retirement, it was highlighted as an undesirable and emotionally difficult path to financial independence. Adjusting to this sudden change involved taking family medical leave due to grief and inability to concentrate at work. Over time, the individual's interest in work returned, but they chose early retirement to spend more quality time with their children, highlighting a shift in priorities where personal and family time became more important than professional engagements 1.

  2. Changing Costs and Social Security Considerations: Another discussion revolved around the financial dynamics post-retirement, where certain expenses, like mortgages and costs associated with dependents, diminish. This reduction in expenses is part of a broader financial strategy often referred to as a "smile" expense curve — low in the middle years of retirement. Furthermore, the role of Social Security was discussed as a future income backstop that starts typically from age 62, providing additional support after several years of managing living expenses through savings like the 4% Rule 2.

  3. Flexible Financial Planning: The flexibility in financial planning for early retirees was also emphasized. The concept that small additional incomes during retirement can significantly lower the amount of necessary savings illustrates a less rigid approach to financial independence (FI). This flexibility allows early retirees to potentially retire earlier than initially planned or adjust their lifestyle and career choices in retirement to suit personal preferences and circumstances 3.

    Early Retirement Decision

    William shares how he achieved financial independence after the death of his wife and how it led him to reevaluate his work-life balance. Despite enjoying his job, he decided to retire early to spend more time with his kids while they were still young.

    ChooseFI

    108 | Setting up a Special Needs Trust
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Overall, these discussions show that early retirement involves careful planning, a consideration of how expenses change over time, and the need for psychological readiness for such a significant lifestyle change.

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