Advice matters
Is early retirement for you?

Retirement – it means different things to different people. For some, it’s a time to sit back and relax. Others look forward to getting out and doing the things they couldn’t do while working.

Whatever your ‘dream retirement’ looks like, you may like to accelerate your journey to that vision, and retire early. But before you quit your job for good, here are some key pros and cons to consider, according to our SHARE advisers.

Pro: More time to spend as you like

Living a comfortable retirement means one thing: freedom from the ‘need’ to work, and having a lot of time to spare. In fact, most of your day becomes free time.

This can feel liberating: after decades of hard work, you can finally do whatever you want. Walking on the beach, gardening, painting, travelling, fixing things around the house – you name it. If ‘more time for me’ is what you’re looking forward to, then early retirement may mean you could enjoy all that while you have good physical health.

Cons: Too much free time

Yes, there can be too much of a good thing. The reality is, some people get bored in retirement after a while. Without a job structuring your day, you may feel that you lack a sense of purpose and connection with others.

Of course, you might be too busy enjoying your new hobbies to experience any of that. But it can happen. In fact, stats show that money isn’t the main motivator for Kiwis to remain in the labour force after 65 – it’s other intangible benefits, like social interaction, having a place to go, and being part of something.

Pro: You can still work – if you want to

As we said, retiring (early or not) is not about no longer working, but rather not needing to work to sustain yourself. It may mean, for example, that you can choose another job or industry, even if it’s lower-paid, because it aligns better with your passions and your work/life balance. It may mean that you can switch to part-time, and then use your other hours to pursue a side hustle.

Con: You’ll be spending your nest egg

Depending on how early you retire, you may find yourself tapping into your retirement savings much earlier than you intended.

That’s why early retirement requires a fair share of planning in advance, as your savings will need to last you for a long time. The problem is, no one knows how long retirement will be, so erring on the side of caution is always preferrable. Being debt-free is crucial, but it’s not the only important thing to think about. Insurance can help you protect your future, but you need to be able to afford the premiums over the long term, while also having a good-sized rainy-day fund in place.

Plus, keep in mind that you won’t be able to access your NZ Superannuation or KiwiSaver until you turn 65. When it comes to KiwiSaver, in a way, this is a good thing as it removes the ‘temptation’ to tap into those savings. But to make the most of the scheme, you’ll need to keep up with your contributions – and you may still need a source of income to do that.

The bottom line?

Depending on your needs, goals and circumstances, retiring early can be possible. But make sure you factor in some careful planning, including working out how much money you’ll need, creating a budget, and finding ways to save and invest your money in the meantime.

Like to discuss your needs? Our SHARE financial advisers are here to help, always. Click here to find your local adviser.

Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure accuracy and reliability, the information provided is subject to continuous change and may not reflect current developments or address your situation. Before making any decisions based on the information provided in this article, please use your discretion and seek independent guidance.