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4 Reasons You're Not Ready for Early Retirement

David Ning

I'm supposed to write an article today, but all I can think about is getting a bike. You see, I want to start biking around town, and I've narrowed the vast array of choices to just a couple possibilities. I made a deal with myself that I'll go test each bike out and pick one today after I finish this piece, but the more I try to focus my attention on the task at hand, the less I'm able to stop fantasizing about the eventual purchase.

It is usually at these times that my mind wanders to the thought of early retirement. After all, I wouldn't have to wait until I finish work to get that bike if I never had work again. But do I have enough money to last the rest of my life? Will I regret the decision and end up going back to work anyway? How do I know when I'm ready to retire? Here are a few of the questions that need to be answered before someone can be deemed ready to retire:

Do the financial calculations work out in your favor? You'll never be able to eliminate every risk out there, but you need to have the confidence of being able to manage them for decades to come. How much are your anticipated retirement expenses going to be, and will your nest egg support that lifestyle? How much slack is in the budget? Can you cut back in order to quit? Are you willing to? Is it even in your best interest?

Retiring on a small budget is a wonderful option for many people, but not everyone will appreciate the freedom if they see the whole exercise as sacrificing their materialistic habits. Our family doesn't subscribe to cable TV anymore, and we actually think it's wonderful that we aren't paying for the useless expense, but will you feel the same way? If you quit and then promptly see an amazing Verizon FiOS promotion code, will you be tempted to subscribe all over again? This is a big decision for you and your family. Think it through and make sure everybody is on board.

Do you know how to spend your time meaningfully in retirement? There's no point in quitting a job so you can sit at home all day watching TV, even if the financials work out. I'm excited about biking around town right now, but it doesn't make much sense for me to quit just because of this newfound hobby. After all, who's to say this isn't a fad that I'll outgrow in a few months?

Many people have aspirations, like painting or writing a book, they believe they'll finally have time to do during retirement. The reality is that if you aren't already doing those things while you are working, chances are low that you'll start after you retire. How realistic are your dreams of spending your retirement time? Have you even tried doing what it is you think you'll love?

Are there people to hang out with when you start being free on most weekdays? It's much easier to develop a relationship with someone you can relate to, so most working people end up having friends who spend most of their days working. When you decide to quit, how will your social circles change? Are there close friends you can still openly share the new challenges and joys of early retirement with? If not, will your new hobbies allow you to expand your social circle and find people who will understand what you are going through?

Do you actually look forward to retirement? Notice I didn't say whether you hated your work, which is a common reason for people to contemplate retirement. But if you just want to quit because you don't like the employment situation, then the right solution for you is to find another job.

Those who are ready to retire can't wait to spend their days outside the 9-to-5 grind. They have many activities lined up and get-togethers with friends and family to attend. There's no doubt in their minds whether retirement or working is better. I suggest you get to this state if you want a fulfilling and exciting retirement.

I'm not ready to retire either, but hey, I can go pick out my bike now. Working isn't always so bad, right?

David Ning runs MoneyNing, a personal finance site that shares money moves you can make to significantly increase your chances of having a comfortable retirement. He likes to share simple changes that anyone can make, such as picking the best online savings account and figuring out whether a 0 percent balance transfer credit card makes sense.

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