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Strategies to Preserve Your Retirement Savings from Inflation
Inflation can erode purchasing power in retirement, but the right strategies may help protect your savings. Learn about investment, income, and tax...
Retiring before 50 sounds ideal, but is it practical? Learn about financial challenges, career impact, and lifestyle changes before making the leap into early retirement.
Should You Retire Before 50?
Retiring before 50 is often seen as the ultimate financial goal—more time for travel, hobbies, and personal pursuits. But early retirement isn’t always as ideal as it seems. It requires a much larger savings cushion upfront, and stepping away from the workforce too soon can create financial and lifestyle challenges:
- Social Security benefits are reduced when you retire early, and without employer-sponsored healthcare, medical costs can become a major expense.
- If financial markets take a downturn, a shorter earning window leaves less time to recover.
- Re-entering the workforce later can also be difficult, as industries evolve, and job opportunities may be limited.
- Beyond financial concerns, some retirees simply find themselves bored or lacking purpose without the structure and engagement of work.
Before deciding to retire early, it’s important to weigh both the financial and personal considerations. This guide explores the different factors to think about before stepping away from work at an early age.
Financial Considerations
If early retirement is the goal, the first step is calculating how much savings will be needed to maintain a comfortable lifestyle. This “retirement number” depends on factors such as income, expenses, and long-term financial goals.
A longer retirement means more savings are required for several reasons:
- Lower Social Security Benefits – Fewer working years reduce total contributions, resulting in a smaller monthly payout.
- Higher Healthcare Costs – Medicare eligibility doesn’t begin until age 65, leaving a gap that must be covered with private insurance or savings.
- Missed Peak Earning Years – Many professionals reach their highest salary levels in their 50s and 60s, providing valuable opportunities for wealth accumulation.
- Market Volatility Risks – Withdrawing funds earlier leaves less time for investments to recover from downturns.
- Limited Compound Growth – Retiring early means missing out on additional years of investment growth, potentially reducing overall wealth, and potentially lowering your ability to afford significant expenses. Additionally, retiring early means you may have to stick with a fixed income/or a more restricted budget.
While these challenges don’t make early retirement impossible, they do highlight the importance of careful financial planning. Additionally, a huge portfolio withdrawal could potentially limit some of the decisions you make during retirement.
For example, if you're planning to buy a new home and use the equity from your current home—along with a significant portfolio withdrawal to avoid taking on a mortgage—how would this impact your long-term financial security? Would reducing your portfolio balance limit your ability to maintain your current standard of living in the future?
This is just one of many important factors to consider when deciding whether to retire early or not.
Professional Impact
Retiring before 50 can also have lasting effects on career growth and future job prospects. Many professionals reach their peak earning potential in their late 40s and 50s. Leaving the workforce at this stage can mean missing out on:
- Career Advancement – Higher-level roles, leadership opportunities, and increased earnings.
- Networking and Industry Connections – A strong professional network can open doors for consulting, mentorship, or part-time work.
- Skill Development – Industries evolve, and stepping away for years can make it difficult to stay competitive.
For those who later decide to return to work, gaps in employment history and shifts in required skills may make it difficult to regain previous earning power.
Lifestyle Considerations
Work is more than just a paycheck—it also provides structure, purpose, and social interaction. Retiring early may seem appealing, but some retirees find themselves struggling with:
- Loss of Routine – Without a structured schedule, it can be challenging to maintain productivity and motivation.
- Social Isolation – Many friendships are built through work, and stepping away can lead to fewer social interactions.
- Boredom or Lack of Purpose – Some retirees miss the sense of accomplishment that comes with work.
To counter these effects, early retirees should consider ways to stay engaged—whether through volunteering, hobbies, travel, or part-time work.
WHEN IS RETIREMENT A GOOD IDEA?
While early retirement isn’t for everyone, it can be a great option for those who are well-prepared. Some signs that early retirement may be a viable choice include:
Sufficient Assets to Sustain Your Lifestyle with Flexibility
A well-funded portfolio can provide the necessary income for decades. A financial advisor can help estimate sustainable withdrawal rates and evaluate how different retirement timelines impact long-term financial health.
Healthcare Costs are Accounted For
With private insurance costs rising, healthcare expenses can consume a significant portion of a retirement budget. Early retirees should plan for insurance premiums, deductibles, and long-term care needs, which often exceed the normal rate of inflation.
A Buffer for Unexpected Expenses
Market downturns, inflation, and family emergencies can all impact retirement savings. A strong emergency fund can help manage financial stability when unexpected costs arise.
Retirement Plan Stress Testing
A solid financial plan includes projections for different economic conditions. By running various scenarios—such as inflation spikes, increase in taxes, or lower-than-expected returns—financial advisors can help determine whether an early retirement strategy is realistic.
Planning for a Strong Retirement with EP Wealth
Whether retiring before 50 or working into later years, a clear financial plan can help bring confidence and flexibility to the process.
EP Wealth provides a structured approach to retirement planning:
- Understanding Your Retirement Vision – Defining lifestyle goals and financial needs.
- Building a Personalized Financial Plan – Developing strategies for savings, investments, and risk management.
- Implementing Actionable Steps – Aligning income sources, tax strategies, and withdrawal plans with your goals and your lifestyle.
- Ongoing Monitoring and Adjustments – Regularly reviewing progress and adapting as needed.
To explore retirement planning strategies and build a financial future that aligns with your goals, connect with an EP Wealth advisor today.
DISCLOSURES:
- EP Wealth Advisors, LLC. is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability.
- Request an appointment with an EP Wealth Advisor when you have a minimum of $500,000 in investable assets – which includes qualified retirement plans (IRA, Roth IRA, 401(k), taxable brokerage, cash (savings / checking) and CDs. Investable assets do not include your home, vehicles, or collectibles.
- Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions. Content does not involve the rendering of personalized investment advice nor is it intended to supplement professional individualized advice.
- EP Wealth Advisors (“EPWA”) makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information presented. All expressions of option are subject to change without notice.
