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Retiring early is the dream of many, but in reality it frequently occurs for very different reasons than might be suspected. People may choose to retire early for a variety of reasons, including poor health, as an alternative to layoffs, to care for a sick family member, or due to savings plans that allow for an early retirement. In some cases, deciding to retire early may be less a function of choice and more a necessity brought by unexpected circumstances; in some cases, functional early retirement may occur when an older adult cannot find employment before retiree benefits kick in.
According to some experts, the most likely reason a person will retire early is poor health. Work-related disabilities and acquired illnesses force many people out of work years before the retirement age, particularly in risky or physically difficult jobs. Retiring because of illness or injury can be a risky proposition; people that do not qualify for disability insurance may find themselves both unable to work and unable to receive income assistance. Even with disability benefits, early retirees in poor health frequently make far less income than at their previous jobs, and may find it difficult to pay for medical bills until reaching the age of retirement.
In adverse economic times, some people may retire early as an alternative to being laid off. Companies may offer buyout packages to employees that have worked for the business for many years, in order to give them incentive to leave of their own accord. Buyout packages may include everything from severance pay to extended medical benefits, and may help older employees fill the gap in income between early retirement and the maturation of retirement accounts or pensions. While accepting a buyout package does not mean a person needs to retire fully, many people within a few years of the retirement age use a buyout as a way to start retirement early.
Another casualty of bad economic times is older workers that have difficulty finding employment after many years at one job. These people may lose a long-standing position due to layoffs or downsizing, and have difficulty finding a comparable position at any other business. Often, these early retirees search for work consistently, but cannot find a job that is sufficient to their skill level, or that will net them more income than unemployment benefits provide. Early retirees in this category may simply find themselves waiting out a bad market until their pensions or retirement funds kick in.
Generally, the ideal means of early retirement is by generating enough income to no longer need to work. This may be done through careful savings, a windfall or inheritance, profitable and stable investments, or early-maturing retirement accounts. It is important to crunch numbers carefully before deciding to retire early; while a person may have enough savings to live on for twenty years, this may not include unplanned for expenses such as surgeries, home care, and other costs associated with older age. Some people prefer to go into semi-retirement, which helps them keep busy and maintain a social life without the pressure and responsibility of a full-time job.
I've met a lot of people who retired at the standard age and they are almost always bored to tears after a few years. They'll either find a part-time job somewhere or get serious about a hobby and try to earn some money from it. I can only imagine what it must be like for someone who retires at age 40. I suppose professional athletes do it all the time for health reasons, but they usually get hired to do other things, like coaching or television work. An average person who is forced to retire early doesn't always have a lot of options.