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A many people dream of retiring early, whether it is financially feasible for them or not. Although there is no precise definition of early retirement, most can agree that more free time for hobbies and family seems like a good deal.

But those who have made it can tell you that retiring in your late 50s or early 60s also presents challenges. Here are some of the pros and cons you need to weigh up if you’re thinking about it.

2 reasons to love early retirement

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1. More free time

When you retire, you will be able to spend the hours you used to spend in the office on hobbies, family time, or whatever you want. Early retirement gives you more years to devote to these activities.

But not everyone enjoys the change of pace that retirement brings. So if you’re thinking about retiring early, make sure you have plans to fill some of that time. If you’re struggling to figure out what you would do with all this new freedom, leaving the workforce right now might not be your best decision.

2. A more active retirement

The younger you are when you retire, the more likely it is that you will still be healthy and energetic enough to use your newfound freedom to engage in more active pursuits. People in their late 50s or early 60s have, on average, fewer medical problems than they will later in life. They may therefore find it easier to travel or perform physically demanding activities. Those who wait until they are older to retire may find that they have missed their window to enjoy some things they have been looking forward to.

3 potential problems with early retirement

1. Difficulty accessing your retirement savings

The federal government restricts your access to funds you hold in most types of retirement accounts while you are younger than 59 1/2. If you withdraw money from them before then, you could face a 10% early withdrawal penalty, as well as a tax bill if the money comes from a tax-deferred account like a traditional IRA. or 401(k).

There are, however, ways around this.

You can withdraw Roth IRA contributions from these accounts at any age without penalty, although this does not apply to your Roth IRA earnings. You can also access your 401(k) funds earlier with Rule of 55. This allows you to withdraw money from your 401(k) starting in the year you turn 55 (or the year you turn 50 if you are a qualified public safety officer) if you leave your job for any reason.

However, you can only make penalty-free withdrawals from your employer’s most recent 401(k), not other retirement accounts. And employers aren’t required to make Rule of 55 withdrawals an option from their 401(k) plans — some do, some don’t. So, if you plan to take advantage of this option in the future, make sure you have it first.

If you plan to retire before 59 1/2, it’s often best to put some money aside in a taxable brokerage account where you can access it without penalty at any age.

2. No Access to Medicare

You can’t apply for Medicare until you’re 65, so you’ll need to find health insurance coverage to cover the gap if you plan to retire before that age. It may be possible to stay on your former employer’s health insurance for a while, but it’s usually not the most affordable option.

Most people are better off getting their own health insurance. Compare a few different providers and find the one that offers the best coverage at the most affordable cost. And whatever you do, don’t skip health insurance. Just one medical emergency you have to deal with without coverage could completely derail your finances.

3. More unpredictability

Retirement is always difficult to plan because you can never be sure what your expenses will be. It’s likely that a few unexpected bills will crop up each year, and as you add years to your retirement, you increase the risk that these unexpected costs will deplete your savings prematurely.

There’s no way to completely avoid this risk, but you can minimize it by being realistic about your retirement budget and checking in with yourself approximately every year. If you notice that you’re spending your money faster than expected, you’ll either need to find a way to cut costs or consider getting a part-time job to supplement your income.

Only you can decide if early retirement is right for you, but if it’s something you’d like to try, you need to start planning for these challenges as soon as possible. And don’t be afraid to change your retirement schedule if necessary. Better to retire comfortably a few years later than to retire early without the money you need.

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