Retiring at 50 sounds great in theory, but it can present obstacles, the biggest of which may be nonfinancial: boredom.

You might enjoy doing nothing but drinking margaritas on the beach for a year or so, but once the initial 'honeymoon' period passes, I would bet you will want more out of life. In addition, if you do not plan carefully, early retirement can come with many extra expenses you would not face if you waited.

Before permanently joining the Great Resignation, carefully evaluate your finances with a financial planner. You may find that an arrangement in the gray area between LOTS of work and NO work—preretirement, a sabbatical, a “workcation,” whatever you call it—is closer to what you are looking for.

Here Are Some Reasons You May Want to Reconsider Retiring at 50:

• You Will Most Likely Get Bored. You might enjoy doing nothing but drinking margaritas on the beach for a year or so, but once the initial 'honeymoon' period passes, I would bet you will want more out of life.
  
  Perhaps that means reducing your working hours starting at 55, changing careers at 50 to pursue something you are more passionate about, or volunteering more at a local charity. But the idea that you will stop working abruptly and remain happy for the next 30 years should give you pause.
• Medicare. Once we leave the workforce, most of us lose employer-provided health insurance. And most people are not eligible for Medicare until age 65 unless they have a long-term disability. Retiring at 50 leaves a large gap in health coverage—one you will have to cover.
  
  Although the Affordable Care Act (ACA) allows people under 65 to find health insurance even with a preexisting condition through their state marketplace, the available policies are often high-deductible plans. They might get you through a few years before Medicare eligibility, but with a gap of 10 years or more, health insurance and related out-of-pocket expenses can add up quickly. The good news is that the ACA recently changed under the Biden administration to limit health insurance costs to 8.5% of your income.
  
  You may also qualify for subsidies, or premium tax credits, that make self-purchased coverage more affordable than many people expect. If you retire early, your income may fall enough to qualify you for substantial subsidies.
  
  Another option is COBRA , which lets you keep your previous employer's health insurance but requires you to pay the entire premium yourself and expires after 18 months.
  
  

Have You Saved Enough?

• Savings. Your savings must last longer if you retire at 55 rather than 70. You may not have saved enough to support yourself through the extended retirement that follows an early exit from work. According to a study by the Employee Benefit Research Institute, only 42% of workers over 55 are confident they will have enough money to live comfortably in retirement.
  
  If you are uncertain about your retirement savings, postponing your retirement date by at least a few years is worthwhile. Working longer delays the need to draw down savings and gives you more time to contribute and grow your savings, which can provide greater financial security during retirement.
• Retirement Accounts. You will have difficulty withdrawing money from retirement accounts if you retire before age 59½.
  Early withdrawals from IRAs and 401(k)s result in a 10% tax penalty unless you qualify for one of the few exceptions. Recent IRS rule changes make it easier for people younger than 59½ to withdraw money from some retirement savings accounts without penalty through a substantially equal periodic payments plan. But being able to withdraw money does not mean you should.

Run the Numbers on IRA Withdrawals

• Using what is known as SEPP or the “72(t) exception” lets you take money from qualified accounts before age 59½. The amount you can withdraw is determined using one of three methods based on age, life expectancy, and interest rates. These transactions are complicated, risky, and may lead you to take out too much money too soon. You are also still responsible for ordinary income tax on the withdrawals.
  
  For example, if you had $1 million in a 401(k) at age 50 and applied a SEPP rule, you could withdraw up to $60,300 annually. You would also be required to continue those withdrawals for 10 years. But by age 60, you would have depleted your account by more than half its total, leaving you with $500,000 and more than 20 years of retirement.
  
  
• Social Security. Because benefits are based on the average of up to 35 years of earnings, retiring early will likely prevent your highest-earning years from being used to calculate your monthly benefit. At the same time, Social Security reduces your benefit if you claim before what it considers your “normal retirement age,” which is based on your birth year.
  
  If you claim benefits three years before your normal retirement age, your monthly check will be reduced by 6.67%; if you claim four or more years early, your benefit will be reduced by an additional 5% for each year.
  
• Shorter Lifespan, Earlier Cognitive Decline. Some research suggests that people who stop working before age 65 have shorter lifespans and earlier cognitive decline.
  Continuing to work into your 60s, 70s, and even 80s keeps you active and engaged with society, preventing cognitive decline.

Benefits of Staying Busy

• Shorter Lifespan, Earlier Cognitive Decline. Some research suggests that people who stop working before age 65 have shorter lifespans and earlier cognitive decline.

Before considering retirement at 50, carefully weigh all the financial and emotional issues.