Business

Early Retirement Is Big In Tech – But Is It A Good Idea?

Plenty of tech workers dream about retiring early in life—or ridiculously early, if they’re proponents of the “financial independence, retire early.” In fact, early retirement and technology seem to go hand-in-hand. However, hanging up your professional hat before you hit your 50s or 60s isn’t always the right choice.

True, you might be tempted by thoughts of warm, sunny days filled with leisurely pursuits instead of nagging bosses and back-to-back meetings. Yet early retirement isn’t all it’s cracked up to be a lot of the time. In fact, retiring without a plan can lead to disastrous results if you’re not careful.

How do you know whether your future should include a pathway to early retirement? Consider the following pros and cons of getting out of the “rat race” in or around your middle-age years. Knowing the bigger picture will help you figure out whether you really want to pursue this dream, or if you should consider a less extreme alternative.

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Pro – Early Retirement Can Be Good For Your Health

Are you in a stressful tech occupation? Do you worry that you’re shortening your life by burning the midnight oil constantly? Many tech workers log incredibly high weekly hours in exchange for attractive salaries and perks.

While it can be exhilarating to pull occasional all-nighters to finish projects, it can rapidly deplete you mentally and physically. After a few decades, you may find that taking retirement allows you to relax finally, which can be much-needed for your body and mind.

Con – You May Not Have Enough Funds To Cover You Into Later Life

Talk with a financial planner before jumping into any early retirement decision, because what seems like a lot of money now might not stretch far enough if you live into your 80s, 90s, or beyond. Examine your portfolio, including the money you’ve amassed in vehicles like your employer’s generous small business 401k or your Roth IRA.

Then, map out whether you’re going to be covered if you say “I resign” now. You might realize that waiting another five or 10 years to retire could make a huge difference just in your 401k, especially if you max out your company’s match. Spending a few extra years in the office could translate serious money—and buoyed financial security.

Pro – You Could Leverage Early Retirement To Spawn A Second Career

Do you feel the itch to try a different career path? Is it one that won’t earn you nearly as much as the salary you currently enjoy? Lots of people have “dream careers” that look nothing like their day jobs.

Maybe you want to tinker on vintage automobiles in your garage. Perhaps you’ve always thought seasonal tour guide work would be up your alley. As long as you have enough wealth built up to retire from your tech job, you may be able to transition into your “next-generation” career. Who knows? Retiring while you’re still young might give you enough runway to launch a secondary professional path.

Con – Early Retirement Might Not Be The Paradise It Seems

Before you say goodbye to everything you know, understand that about one-third of all retirees reverse their retirement. Why? For some, their financial situations have changed unexpectedly. Others simply get bored of not going to work on a part-time or full-time basis.

If you’re accustomed to producing great work on behalf of a company, you may not like retirement for long. At first, it can seem like a vacation. But over time, retirement can feel like a jail sentence. Unless you have something waiting for you in the wings, think long and hard about retiring from a career you (mostly) enjoy.

Pro – You May Be In A Position To Give Back

Is part of your early retirement plan to become a super volunteer in your community? Great! After working in a fast-paced tech world, you could potentially put your skills to the test to help nonprofits.

For example, you might want to spend lots of time helping up-and-coming charities build websites or apps. Or, you could offer to mentor young entrepreneurs who want to become more tech-savvy. The choices are endless if you’re driven to move from professional business person to professional volunteer.

Con – Getting Back Into The Workforce Could Be Challenging

Life circumstances can change abruptly, leaving you in difficult financial circumstances. Can you get another job at that point? Yes—but maybe no.

Jumping back into the workforce where you left off could be impractical. Technology evolves quickly. By the time you’ve been absent from tech for a few years, you could find yourself scrambling to earn a decent wage. Just make sure that if you jump into retirement, you’re aware that getting back into it down the road might not be easy or feasible.

Should you retire early or stay the course? Only you can decide. Quite honestly, your answer could end up being a happy medium.

Case in point: If you’re not 100% sure that retiring very young makes sense, why not wait? Taking an earlier retirement in your late 50s or early 60s still gives you extra years. And if you’ve prepared financially, you shouldn’t feel any cash pinches.

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