Early retirement - is it right for you?

Money and Life
(Financial Planning Association of Australia)

International research shows leaving work early may not be so good for your life expectancy. We bring you a checklist of things to consider before you leave work and ride off into the sunset for your happily ever after.

Retire early for a longer life?

If you've already squirreled away enough super for an early retirement, it's probably pretty high on your list of priorities. But money isn't the only thing that's going to help you enjoy retirement for longer. What if you knew that retiring early could actually mean dying sooner?

New research from Maria Fitzpatrick of Cornell University and Timothy Moore of the University of Melbourne shows an alarming leap in mortality rates for US citizens who retire and start claiming their social security payments as soon as they're eligible from the age of 62. The study concluded that retiring at this stage in their lives "may have an immediate, negative impact" on their health. This is particularly the case for men, who can expect a 20% increase in their mortality risk1. The flaw in these figures, as acknowledged by Fitzpatrick and Moore, is that existing health problems may be a trigger for many people to hurry up and retire. This could go some way to explaining why an earlier death is more likely for this retirement cohort.

Another study from the US classifies the health status of research subjects to make sure this doesn't skew their results. Of 2956 retirees taking part in the Healthy Retirement Study, about two thirds considered themselves healthy and their decision to retire wasn't motivated by poor health. During the 18-year period after retirement, 12% of the healthy group and 25.6% of the unhealthy group died. Compared with outcomes for a group who retired a year later after turning 65, mortality risk was 11% lower for healthy retirees and 9% lower for the unhealthy group2.

Embrace a lifestyle change

If you're determined to retire early but want to safeguard your health, what's the answer? According to Chenkai Wu, lead author of the Healthy Retirement Study, replacing the 9-5 with new commitments could be the answer. "Keeping active and getting involved in voluntary work definitely brings retirees a lot of benefits that would have been brought about by keeping on working," says Wu3.

Research from closer to home seems to confirm this tip for a longer life in retirement. A University of Sydney research study shows that, in many cases, retirement generally leads to healthier lifestyle habits. The data gathered by Dr. Ding, Senior Research Fellow at the University's School of Public Health, and her team shows that retirees were doing 93 more minutes of physical activity per week compared with their peers still in employment. They also sleep for 11 minutes longer. Perhaps the best outcome is that 50% of female smokers quit after retiring. "A major life change like retirement creates a great window of opportunity to make positive lifestyle changes," says Dr. Ding. "It's a chance to get rid of bad routines and engineer new, healthier behaviours."4

Early retirement checklist

So the trade-off between an early exit from work and shortening your life seems to be making a commitment to keeping active. Here are some other things to think about when you're planning for your best and healthiest life in retirement:

• Sharing retirement - if your partner continues to work when you retire will you be happy and keeping busy on your own? If friends are continuing to work too, it's important to have a plan for making some new ones. Aim to start your retirement with a strong social network so you can continue to have a sense of connection to the world around you.
   
• Volunteering/part-time work - volunteering in your local community or working in a part-time role are both good ways to give your new lifestyle some structure, help you meet new people and feel valued. Doing something you're passionate about like coaching, supporting a charity or turning a hobby into a business can be a very rewarding way to spend time in retirement.
   
• Making a move - when you're no longer tied to a location by work, the world is your oyster! Downsizing your home or relocating could be an important part of your retirement plan. Before making the move, do some research to check that a sea change will bring you into contact with the social groups and activities you're looking forward to enjoying in retirement.
   
• Looking after family - if you have family living locally who rely on you for care and support, you'll probably be staying put. Caring for grandchildren can be very rewarding of course, but be mindful of having time to look after your own needs and enjoy your own interests, particularly if you're in the sandwich generation and looking after elderly parents too.

Looking forward to an early retirement? Get tips from a financial planner on how to prepare yourself for the changes to your finances and lifestyle.

1 Bloomberg, Retiring Early Just Might Kill You, Says New Research, Christopher Condon, 19 December 2017 https://www.bloomberg.com/news/articles/2017-12-19/retiring-early-just-might-kill-you-says-new-research-eco-pulse

2 The Guardian, Does early retirement mean an early death?, Luisa Dillner, 2 May 2016 https://www.theguardian.com/lifeandstyle/2016/may/02/early-earlier-retirement-retire-death-risk-data-research-jobs

3 The Guardian, Does early retirement mean an early death?, Luisa Dillner, 2 May 2016 https://www.theguardian.com/lifeandstyle/2016/may/02/early-earlier-retirement-retire-death-risk-data-research-jobs

4 University of Sydney, Retirement is good for your health, 14 March 2016 https://sydney.edu.au/news-opinion/news/2016/03/14/retirement-is-good-for-your-health.html