5 Things That Worry Me About Early Retirement

5 Things That Worry Me About Early Retirement - picture of man looking nervous with piggy bank in his hand

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A few days ago, a friend asked me whether we were gearing up for early retirement. My answer was pretty boring and lengthy. Yes, we are preparing for early retirement. Unfortunately, we’re not there yet.

At this point, I think we are on schedule to reach financial independence in around 11 years – when we’re 46. Around that time, our retirement accounts should be fully stocked. Meanwhile, our primary residence and rental homes will all be paid off the same year.

I have to be honest – retiring completely at 46 sounds like a dream. On the other hand, I can think of a million things that could go wrong. Here are five issues that seriously concern me when it comes to our early retirement dreams:

I worry about the cost of college.

When I decided to have children, I felt like it was my duty to pay for at least part of their college education. To achieve that goal, I started saving in a 529 for each of them as soon as they got a social security number.

Here’s the problem: When we turn 46, our kids will only be 17 and 15. In other words, we may have no idea how much we’ll need to pay for their college – or even where they want to go. This is part of the reason I doubt we’ll retire until they are through college. As we all know, there is a huge price difference between the cost of community college and an Ivy-League school!

I am concerned about the cost of health care.

As I mentioned earlier this year, we opted out of Obamacare and joined a healthcare sharing ministry instead. This was mostly because of our high incomes; since subsidies drop off for families of four who make over $95,000, premiums in our state and county were crazy-high.

When we retire, however, I might be willing to get a regular health insurance policy. Provided that the new healthcare law still stands, we might be able to get a much cheaper policy when we are living off of our investments. Still, that isn’t all that concerns me. I’ve also thought a lot about the cost of nursing home care and whether we should get long-term care insurance. I’m still undecided on that front, but the potential costs do scare me.

I worry about our investment timeline.

Since I plan to live a really long time, I also worry about our investment timeline. Even if we retire at 50, we could feasibly need to live off of our money for another forty years. This begs the question, will it be enough?

This is also part of the reason I think it would be wise if we had some side hustles in retirement, or even just pursued partial retirement. It would be nice to make it through to 60 without spending any of our nest egg, if possible!

I don’t want to be a burden on my children.

I’m extremely conservative when it comes to money, but that doesn’t mean I’m perfect. One thing that always keeps me up at night is whether we’ll make some kind of mistake and wind up being a burden on our children in old age.

As we all know, there are no “do-overs” when it comes to retirement. And if we underestimate how much we’ll need, we could end up regretting it. While I believe in a variation of the “4 percent rule” and formulate our plans around it, I still worry that I will mess things up somehow – and that it will hurt my children.

I worry I won’t be able to live the life I want.

Although there are a ton of reasons I want to retire early, the main one is simply being able to live the life I want to live. Who knows what that will mean ten or fifteen years from now, but right now it means plenty of travel, plenty of relaxation, and work without deadlines or a sense of urgency.

If we don’t save enough or set enough aside, I worry that we’ll end up poor in retirement. And that’s honestly the last thing I want. If I quit working early, I want it to be so I can have more freedom, not less.

How I’m Overcoming My Worries About Early Retirement

Although all of those concerns are real and legitimate, there are some things I don’t worry about at all when it comes to our early retirement dreams. For example, our primary home and rental properties will be paid off within 11 years, meaning we will be 100% debt-free. That means that, even if our plan doesn’t go perfectly, we will at least have a cheap place to live (we’ll still have to pay property taxes and homeowner’s insurance) and at least $2,000 per month in somewhat-passive income.

Another thing I’m not worried about is our current savings rate. Even though we are paying a boatload in taxes right now, we’re saving around 50% of our incomes. That’s one good thing about self-employment – even though we don’t get a 401(k) match or benefits, we are able to save 25% of our incomes – up to $52,000 per year) in a Vanguard SEP IRA. And for the last few years, we have been maxing out our Vanguard Roth IRAs as well.

The rest stresses me out, but there is little I can do aside from planning the best I can. Our goals right now include a) saving as much as possible in retirement and investment accounts, b) paying off our home and rental properties, and c) keeping our spending as low as possible.

We’re also working on a few side hustles that would be easy to do on a part-time basis. My hope is, even if we can’t retire completely, we can scale down to location independent jobs that require less than 20 hours per week when we’re ready. Since we’re location independent already, I think that should be fairly easy to achieve.

So I guess I’ll just keep planning. When it comes down to it, I suppose that’s all anyone can do to prepare for early retirement. I just hope I’m able to pull the trigger when I finally get there.

What worries you most about your retirement plans? What steps are you taking now to make your transition into retirement as seamless as possible?

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  1. I share so many of your concerns. After what we have been through with student loan debt, I really want to be able to pay for my children’s college. But I don’t know where they will go, I don’t know how much college will cost by that point. There are a lot of unknowns. I have already decided that, though we will be saving for their future, we will not tell them. They will be left to think that they have to get scholarships and grants and that we will help if we can. I’m hoping that motivates them to ensure that we can MORE than cover tuition…

    Second, I honestly enjoy blogging at this point and it doesn’t have to take a ton of time. Things like blogging a freelancing are not terribly inconvenient and I’d probably welcome doing something for 10-20 hours a week. Something to fill the time. Otherwise, I am afraid I will end up in front of the TV eating some sort of vegan equivalent to Cheetos. I think I will always be earning money, right up until I get wheeled into a nursing home.

  2. Holy smokes Holly! You want to live till 90?? :-). These are very valid concerns, and enough to stress one out, but you are definitely on the right oath, and just need to keep on marching towards. We just switched to a new health insurance yesterday that is costing us $120 per month for both of us, zero copay, all hospital and oncology and dental..everything, and l am so thankful for being able to live here as that would be a biggie with early retirement in the U.S. We live entirely on passive income from real estate and reinvest all stock dividends. Still l want to side hustle with the blog, not make money per say, but reviews of hotels etc. we enjoy travel so it’s a good fit as long as it’s fun. I think it’s healthy to worry, but l also believe everything will work out just fine.

  3. We worry about college costs too. It’s hard not to, since it’s such a big unknown. At this point we don’t yet have an estimated retirement date, but that’s mainly because we want to move, so we know we are not in our forever home yet. I think it sounds like you guys have a really solid plan!! I think even if you get to age 46 and feel like you have the option of retiring, you will feel like you’ve “made it.” Even if you don’t quit working at that point, it’s the feeling of knowing you potentially could that will be awesome 🙂

  4. I worry about retirement, too, but honestly my biggest worry right now is just saving enough for a huge down payment on a house. We also want to have our (future) house paid off within 15 years of purchasing it, which would put me around 45-46. I hope we can contribute more to retirement down the line, too. Right now, we’re not contributing much and that scares me.

    Our “plan,” however, is a bit non-traditional. Yes, I do want fully-funded retirement accounts, but I also want to have multiple rental properties for a passive income stream. Since my husband is a handyman, he could do all of the repairs and updates as-needed (assuming he was in good health). I also don’t really see me ever not working. I really enjoy writing. As I age, I’m sure I’ll do it less and less and on a more flexible basis, but hopefully by that point I’ll have a few sites that generate passive income, as well.

    Sounds like you guys are doing a great job. I have a feeling you guys will have MORE than enough in retirement and you’ll be leaving your kids with a nice chunk of change when you pass rather than ever being a burden.

    Hope you all have a wonderful weekend!! 🙂

  5. All legitimate concerns. I think the key to retirement is scaling back what your are doing already, the fact that you are a freelancer makes it easy over a regular 9-5er. What about passive or residual income streams you could build over the next 11 years? Things that can be set on auto-pilot. I can’t think of retirement were there isn’t some type of work involved, just to stay sharp or active.

  6. My main worry is that our broke government decides to tax withdrawals on ROTH retirement vehicles. I feel pretty certain that won’t happen, but at this point nothing shocks me. I guess that is why I do my best to tax diversify as much as possible.

    Right now I am pretty satisfied with my passive dividend income, but that is something that could always dry up or again, congress could change the rules and they could lose favorable tax treatment.

    So I guess to sum it all up, I am most worried about our broke country deciding to really tax those who did what they were told and saved.

  7. Like others, I share some of the same concerns. I’m concerned that we may lose the tax free withdrawals on Roth’s, not to mention the cost of college for the kids – assuming they do end up going. I’m also concerned about the cost of health care and not knowing where that’s going to be. That being said, we’re just working to focus on what we can control and save as much as we can and work to get 100% tax free as soon as possible in order to have more options. As an aside, have you & Greg looked into Solo 401(k)s by chance? We’re moving away from our SEPs to Solos for several reasons, but mainly because we’ll have the ability to contribute more than we can in a SEP.

    1. We can contribute 25% (up to $52,000 per year) with our SEP IRA. Right now, that’s fine. If we needed to stash away more, I suppose I would consider it.

  8. Health insurance costs are also what scare me. It’s basically the reason my mom continues to work even though she has enough money to retire at this point.

  9. One of the reasons I’m on a path to FI is to reduce the things I worry about, not increase. I don’t worry about much, but also my timeline puts me as FI in about 11 years as well. So it’s still very far away and many things can change.

    1) State schools are great. I went to a cheaper state school and it hasn’t held me back yet. Also you won’t be earning an income so there’s grants, scholarships, etc.
    2) In FI you must likely won’t be earning a large income and therefore health care costs will be subsidized.
    3) If sh!t hits the fan, I’m sure you guys can easily find some side income to get you through the rough patches.

    FI is supposed to relieve worry, not create it! 🙂

    1. 1. It would be nice if my kids went to a state school…..but they’re only 4 and 6 so no way to tell now! Also, we may be earning an income at that point. I seriously doubt my kids will ever qualify for any type of help aside from merit scholarships, which is why I’m saving so much to begin with.
      2. Yes, I know how it works. Part of the reason healthcare is unaffordable now is because our income. Still, its crazy expensive in my state, even for those who are unsubsidized. I think anyone who doesn’t worry about health care in this country is crazy. The costs are spinning out of control and those who can pay anything are being asked to pay far more than their share.
      3. We have rental properties and online real estate, so yes, that’s part of the plan.

  10. One of the benefits of early retirement is that you’ll still be young and if needed still capable of working if expenses get to high. I think most people still plan on doing some type of work during early retirement, just not the typical 9-5 job. I think it’s the people who wait till there in their late 60’s+ that are so burnt out from a lifetime of hard labor or mental exhaustion who don’t plan on doing anything during retirement. This often comes with increased costs especially medical due to all the harm they put on their body during their working years (I’m a physical therapist I see it everyday).

  11. That’s great that you’re able to predict when you’ll reach financial independence. I worry about a lot of these factors as well. Right now I have no idea when I’ll be able to retire but all I can do is prepare and work on diversifying my income and establishing some passive income. I want to be able to help my son out with college, along with any other kids I might have, but I also want to push him to work hard as well and apply for scholarships.

    I wish someone would have put the fire under my butt to pursue more scholarships when I was in school. This morning I was listening to the radio and heard about a senior class from a school in Chicago generated $18 million in scholarship money as a whole, and one girl got offered $3 million alone. It’s not wise to bet on opportunities like these for your kids, but with scholarships and my help hopefully my kid(s) can graduate debt free.

  12. With all the blogs about early retirement (even in the 30s) I’ve been a little obsessed about it. I have a dream of retiring around 45/46 like you too but I don’t know if it’ll happen.
    As for College (my son is just about 2 so college is a long way off though my wife and I both went to state university so that is an option)
    Having your house paid off is a biggie, that’s something which will be tough to do here in NYC. The cost of living is pretty high so it would be tough (but possible) to retire early unless we move to a lower cost area. Another things is that I have a pension at work and if I retire early, there is a stiff penalty. If I wait another 10 years, I can get an extra $25k or so.
    I definitely need to work on some side hustles so that I have passive income coming in!

  13. These are some great concerns you’ve brought up about retiring early. I think that keeping your options open is always a good idea, even if it’s doing something part-time like you mentioned and just keeping yourself and your skills sharp should you ever need to dive back into working full-time.

  14. The thing I worry about most as far as retirement is concerned is the multitude of people who failed to plan for retirement and surviving their impact on an already fragile support net.

    Given our age and baby, I hope to be working to \”retirement\” age simply because of all the child expenses up to college. Whether someone will be willing to hire me for a decent salary, or I\’ll be self-employed / side hustling at that point remains to be seen. However, I think many younger people assume that they\’ll be able to do the same job for the same high pay until the day they retire. That strategy works fine right up until that layoff when you\’re in your 50s and can\’t get hired anywhere. Many will be forced into an early retirement whether they\’re ready or not.

    Best plan accordingly.

  15. I have a lot of the same concerns, Holly. My main bugaboo is making sure I properly fill the void left by a career. I feel that those of us planning for early retirements underestimate the role that a vocation serves in terms of providing a day to day & higher purpose, standing among peers, social interaction, etc.

    It can be addressed, of course. But I get the feeling that some retirees (traditional or not) assume the extra time will be the catalyst for finding new passions and activities.

  16. My biggest concern is health care. I do worry about the cost of college, but that’s something we can have some control over (state school, kiddo taking jobs to pay some costs, etc). I have little control over whether I get some awful disease or have a terrible accident that takes tons of money. The other concern I have is for my in-laws. While we are constantly thinking about how to sock away more money and create income streams, they have nothing saved and apparently no desire to start at this point. They do OK on social security and Medicare now, but if one of them starts to go downhill, we’ll be taking care of them and probably footing the bills. You’re right that all we can do is make the best plan possible and try to work around the curve balls that will no doubt be coming our way.

  17. Your concerns are very much in line with what I hear from my clients, whether they are planning to retire early or at a more traditional age. Because Chris and I didn’t start our family until I was in my late 30’s, we pretty much took an early retirement off the table because we also wanted to help pay for college and as long we both enjoyed our work, we would continue working until Taylor at least graduated from high school. The healthcare issue is a major one because most people don’t plan for their long-term care needs, whether or not they choose to get long-term care insurance. But the reality is most people who live those long lives we all want, will need some assistance at some point.

  18. All great concerns and ones that keep many shackled to the cubical longer than planned or even in some cases necessary. In your case you are lucky that your plan timeline is still 11 years out and a lot will change (not can, WILL change) between now and then. I had a 10 year plan but started at age 40 and at age 51 pulled the trigger. During those 10 years a lot happened. Some good, some bad-very bad. Some planned and others unplanned. It just requires plan adjustments. Even our retirement vision changed over that time and since as funny how grand-kids can change your mindset.
    College- We paid for our kids but with strings and limitations. Also kids change when they grow up and you never know the direction they will want to take. Our son decided to go Trades, went to Trade/Technical school to become an automotive collision repair/painter. I agreed to pay for 2 year community college for my daughters and then we would determine if they wanted to extend to a 4 year school what we would carry but they had to have decent grades. I didn’t want them to go down in debt but I believe that our kids should have reasonable skin in the game. One left after a single semester deciding that school wasn’t for her and went to live life. She is now a successful pediatric dental office manager. The other went 2 years community college and another 18 months in a specialized field and is a happy stay at home mom/wife now. We also agreed to pay $12K towards each daughter’s wedding that had to be budgeted for, the last of which was just months before my first retirement.
    Healthcare- To early to worry about it now but you have 11 years to make sure you are the healthiest you that you can be. That will always reduce costs. My Health Insurance is 20% of my early retirement budget which sucks but not enough to make me wish I wasn’t retired. Plan in your budget for high costs. If its lower then great.
    Investment timeline, burden on the kids, and living the life you envision will all workout as time goes. You guys are so ahead of anyone else I know with your self employment mindset. I can’t see any better way to live early retirement than being open to opportunities and taking paid work when it aligns with my passions and interests for as long as I am healthy enough to do it. You can already see some of your endeavors fitting into your retirement vision. People who can pull off FI are an ambitious, motivated, and goal driven lot. All the energy and enthusiasm that gets us to FI and early retirement doesn’t just disappear when the “number” or goal-deadline is met. You will find that you will enjoy keeping your paid activities that fit into your lifestyle vision. Stop Worrying and stay to your plan and in 11 years you can enjoy the prize if that is what you want when you are then your 11 year older self. FI is the freedom to have options, not worry.

  19. The only thing that worries me about retirement for myself and my clients is healthcare costs. At least I know that I am only paying for 4 years of my son’s college education, so the pain is fixed for a period of time. None of us know how long we are going to live and we are all at risk for living a long life but it could potentially be filled with a number of health issues. And these unknowns combined with the ever growing cost of healthcare freak me out to no end.

  20. The one thing that I’ve definitely considered regarding early retirement is medical tourism. I mean you still have to buy healthcare because if you get brain cancer, you’re going to have to get treated where you live (I mean, you probably want that), but for the slightly more optional treatments, going elsewhere is probably a good option.

    College costs aren’t as concerning to me, but that’s because I honestly believe that a high proportion of kids who are trained to be free thinkers won’t go to college unless it’s pushed onto them. I wouldn’t have gone if my parents didn’t encourage me to go.

    1. The “free thinkers” comment made me laugh.

      I have read so many comments/blog posts where parents hope their children are “free thinkers” and stay out of college. What about what your child wants when they reach adulthood? The last time I checked, you need a degree to be a school teacher, police officer, doctor, nurse, etc.

      Do you always need a college degree? Absolutely not. Do I have one…no. Do I want my sons to go to college? It depends. I want them to follow their passion, not what I think their passion should be.

  21. Aside from the obvious (finances) I would worry about the day to day stuff – being active and healthy still while not getting too bored. For finances – everything costs money so I\’d be worried I would spend too much every day which isn\’t an issue now since I am usually at work during the days

  22. You are in great financial shape, and believe me when I say that your future looks very bright to most of us. I think that your idea of semi-retirement sounds just about right. You are Type -A+ (Am I right?) so I don’t see a retirement of leisure for you. There will always be meaningful work available to you. Until 60? No! Until 90 : ) I’m sure you’ll learn to let go of your present fears and take advantage of the freedom that will be available to you – including the freedom to work at what you love.

  23. Education is what scares me a lot because of those reasons you mentioned above and I and my wife would like to support them whatever course and universities they’d like. Not only those tuition fees but also those expenses such as school supplies, budget, dormitory (in case) and a lot more. This is what we’re mostly preparing for.

  24. I think it’s human nature to worry about stuff… we’ll create worries out of thin air if we have to! The thing to remember is that you’re taking the steps needed to put yourself in the best possible position at retirement. You can’t bank on what the government will do… half the time they don’t have a clue anyway. So, focus on the things you can control. Everything else will happen as it happens.

    And, worst case scenario: you can start a retirement travel blog! 🙂

  25. After spending the first two years in early retirement, you really DON’T need as much as you think, and I didn’t even have Social Security.

    Part of the reason simply is that you don’t have to save for retirement anymore because you’re retired! I was saving 50%+ of my income, so that means I can make 50% less.

    Lots of cheaper stuff or freebies in retirement! Don’t worry!


  26. I guess this blog about these 5 Things That Worry Me About Early Retirement would be really helpful and inspiring too. Great share!

  27. Hi Holly, I’ve been through the college thing with 4 kids now. Don’t know about Indiana, but here in sunny Calif., community college is the way to go. Even at $46 unit, it’s only @ $1500 year. As for what the kids “wanted”, they didn’t really have a choice. LOL! We told them if they went to a c.c. to complete their g.e. reqs and lower div. major reqs, we would pay for that as well as their final two years at a state university. If they wanted to go to a 4 year state university right out of the gate, they were going to have to pay for 1/2. I like to think we raised smart kids re money: they all “chose” the first option. Ironically, they all loved the c.c. and wished it were a 4 yr. school. As for their education, it was top notch: we have an electrician, doctor of physical therapy, a medical doctor (anestesiology), and a theater major (ha, ha–he’s working in insurance and doing community theater).
    My point is that you can control your kids’ college options. It’s when you give them free rein that the costs can get out of control.
    Stop worrying and start planting the seeds re c.c. first and then on to a state university. Of course this only works if you have a good c.c. transfer curriculum.

  28. All legit concerns I have as well. To be honest, we’re not tracking towards a very early retirement just yet, but I’m shooting for 50 🙂

    Even once we’ve got enough saved and a strategy in place, I have a feeling it’s going to be VERY difficult to pull the trigger.

    I like the rental income to offset your investment income. Would you want to add any more properties?

  29. Holly,
    I share many of the same concerns even though I am nearly 20 years ahead of you!

    One more to add: The need to help support your children financially once they are out of college and the home. My oldest daughter is just finished college and is getting married this fall. My youngest will start college next year. I often wonder if there may be some savings put aside to pull them out of a financial bind? They have been both raised to be frugal and to not depend on their parents, but you never know.

    Also, the biggest question for me, how much is enough to feel comfortable to actual stop working?

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