Pros and Cons of Early Retirement

The Pros

More time to enjoy life while you're healthy enough to do it. Freedom from work stress. Ability to travel, pursue hobbies, or spend time with grandkids. If you've saved enough and have guaranteed income, early retirement can be wonderful.

The Cons Nobody Mentions

Healthcare is the biggest challenge. If you retire before 65, you don't have Medicare. COBRA lasts 18 months, and ACA marketplace plans can cost $800-$1,500/month for a couple. This alone can be $10,000-$18,000/year that you didn't have when your employer covered it.

Social Security is reduced permanently if you claim before full retirement age (67 for most). Claiming at 62 means a 30% permanent reduction. And you may have a longer retirement to fund — 30-35 years instead of 20-25.

The Income Gap Problem

Early retirees face an income gap between when they stop working and when Social Security and Medicare begin. You need to fund this gap from savings, pensions, or annuities. A 5-year gap at $5,000/month requires $300,000 in bridge income.

This is where annuities shine. A fixed index annuity with an income rider can provide guaranteed income during the gap years, allowing you to delay Social Security to its maximum benefit at 70.

How to Know If You're Ready

At ACM, we help clients model early retirement scenarios. We look at your monthly expenses, healthcare costs, Social Security projections, and savings — and tell you honestly whether you can afford to retire early. Sometimes the answer is 'yes, but wait 18 months' — and that small delay can make a huge difference.