Expert's View

Should you take an early retirement? This may seem like a dumb question, but it isn’t. While the vision of retiring early is a sugarplum that continues to dance in many employees’ heads, there are some questions you ought to answer before taking the plunge.

Let’s start with the most obvious one. Can you afford to retire early? Will your annuity, TSP account, Social Security (if any), investments and savings be enough to let you do the things you want to do in retirement, not just now but over the next few decades? Or will you have to go back to work to make ends meet?


Consider this. Life expectancies have lengthened to the point where many people are spending as many years in retirement as they did working. Therefore, you need to consider the long-term financial implications of retiring. Costs do go up as we’ve seen all too clearly when gas pieces shot through the roof. The good news is that your annuity will be increased by annual cost-of-living adjustments when you become eligible for them, something that’s very rare in the private sector. And, if you’re entitled to a Social Security benefit, it will be increased annually by the same percentage. However, these adjustments are made after costs have gone up. Therefore, you’re always playing catch up.

Here’s another question to consider. Are you ready to retire? I don’t mean are you excited about the prospect of getting out, as if you were kid looking forward to summer vacation. It’s not enough to be happy about leaving your current job. You should be energized by what you’re going to do next. Remember, most of us are defined by what we do. We feel proud when we say, “I’m a (you fill in the blank).” See how proud you feel saying, “I’m a retiree.”

Your job has not only given you an identity but it has provided some structure to your life. When you retire, those two props will be gone. And they will need to be replaced – by another job, a hobby, volunteer work, etc.

One last question. Will you be able to carry your health insurance into retirement? Scared you, didn’t I? Relax. You absolutely will if you are currently enrolled in the Federal Employees Health Benefits (FEHB) program (and have been for the five years immediately preceding your retirement)., you can continue that coverage when you retire. The good news for early retirees is that the five year rule will be waived.

Is early retirement for you? That’s a decision you’ll have to make if the opportunity arises. If an offer comes your way, look before you leap. It may be just what the doctor ordered. Or it may not.