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4 Signs You Retired Too Early

Maurie Backman, The Motley Fool

Many workers dream of retiring early and getting to escape the daily grind ahead of schedule. But pulling off an early retirement is easier said than done. Here are a few telltale signs that you pulled the trigger on retirement sooner than you should have.

1. You're not yet eligible to collect Social Security -- and you're missing that income

Social Security eligibility begins at age 62, at which point filers get an eight-year window to claim their benefits. (Technically, there's no obligation to file for benefits by age 70, but there's also no financial incentive not to.) Now many people are able to get by in retirement without Social Security, especially since those benefits are only designed to replace a small portion of the average earner's pre-retirement income. But if you come to find that you're short on money, and you're not yet allowed to claim Social Security, it probably means you retired sooner than you should have.

Older man sitting at a table with a ponderous expression as his chin rests on his hand.


2. You can't keep up with your medical bills -- but can't get health coverage through Medicare

You might think you're prepared financially for retirement, only to have your healthcare costs come in and wreak havoc on your budget. But if you retire before you're eligible for Medicare, you might struggle to keep up even more. Though Medicare isn't totally free, it can be cheaper than paying for insurance yourself, even when you factor in things such as copays, deductibles, and services offered. Unfortunately, Medicare won't cover you until you turn 65, so if you're younger, it means you may have left the comfort of an employer-subsidized health plan too soon.

3. You're depleting your nest egg more rapidly than expected

For years, financial experts have been advising seniors to withdraw from their savings at a rate of roughly 4% per year. This rate has been tested and analyzed up the wazoo, and so far, it's proven to be a reasonable starting point for those looking to have their nest eggs last a solid 30 years. Now there are certain problems with the 4% rule that will lead some advisors to recommend withdrawing at a more conservative rate -- say, 3% per year. So if you find that you need to withdraw at a higher rate, it could mean that you retired before saving enough. And that, of course, puts you at risk of running out of money later on.

4. You're bored

The purpose of retiring early should be to enjoy different experiences while you're young enough to have the energy for them. So if you find that you're not doing much with your time, and that you're growing increasingly restless by the day, it could be that you retired too soon. Remember, there's no such thing as being too young to retire provided you go in with a plan for how you'll spend your newfound free time. But if you leave the workforce before mapping out that plan, you could end up miserable -- and what's the point of that?

What to do if you retired too early

If it turns out you did retire before you were ready, the good news is that you can take steps to start working again in some shape or form, whether you need to do so for the money, the health benefits, or the boredom factor. First, think about the reasons you left your career behind in the first place. Were you unhappy at work and perpetually stressed? Or was your job not the problem, but rather, you simply wanted to experience the freedom of retirement while reasonably young?

If you didn't hate your former role, you might consider resuming it on a part-time basis or even a full-time one, whether by asking your old employer to take you back or by applying elsewhere. Though it's true that you might face some challenges getting hired at an older age, it's by no means impossible.

Another option is to try consulting in your former field if you enjoyed the work itself but want more flexibility with your schedule. Doing so won't score you health coverage, as self-employed individuals typically aren't eligible for that, but it will give you a chance to earn money and occupy your time.

If the idea of resuming your former career doesn't sound particularly appealing, why not take the opportunity to try something new? You might pursue a business idea that's been floating around in your head for years or turn a favorite hobby into an income stream. Or, do both -- work on your business, but pursue those monetized pastimes on the side. There are so many options you can play around with, so unless you're truly desperate for money, you might as well take the time to figure out what will make you happiest.

The last thing you want is to regret your decision to retire when you did, so if you think you left the workforce too soon, take steps to make up for it. Otherwise, you might spend a significant portion of your golden years struggling needlessly.

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