earlyretirement

Early retirement is the act of leaving full-time paid employment before reaching the standard retirement age. Definitions vary by country and program rules, but it commonly refers to stopping work in one’s 40s, 50s, or early 60s to rely on savings, investments, pensions, or other passive income instead of earnings from a job.

People pursue early retirement through financial independence. The goal is to accumulate enough wealth and passive income to cover living expenses without regular employment. Common strategies include maintaining a high savings rate, investing in diversified assets, reducing expenses, and creating streams of passive income such as dividends, rental income, or business ventures. Some individuals also use phased retirement, working part-time, or running a small business as a bridge to full withdrawal.

Key considerations include health care coverage, especially in systems without universal coverage; the risk that funds may not last during longer-than-expected lifespans; and the impact of inflation and market returns on withdrawn capital. Withdrawal rules, taxes, and the potential loss of employer-provided benefits must be planned. Longevity and sequence-of-returns risk are central concerns for those who retire early.

Early retirement is a topic in personal finance and is associated with movements such as financial independence and retire early (FIRE). Critics argue that early retirement may not be feasible for many people and can entail significant planning, risk, and lifestyle trade-offs.