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3 reasons to retire as early as you can

The Motley Fool logo The Motley Fool 12/12/2018 Maurie Backman

Many folks dream of early retirement, whether that means leaving the workforce in their late 40s, mid-50s, or early 60s. But taking that leap is far easier said than done.

For one thing, there's the financial risk to consider. The more time you spend in retirement, the more income you'll need your nest egg to provide. Then there's the mental risk. If you retire too early, you'll risk growing bored and regretting that decision down the line.

But difficult as it might be to separate from the workforce ahead of your peers, in some cases, it pays to make a clean break sooner rather than later. Here are three reasons you might consider retiring as early as you possibly can.

1. You've earned it

A large number of Americans are painfully behind on retirement savings, with one-third having less than $5,000 socked away for the future. But if you've saved responsibly throughout your life and were smart with the way you invested your savings, you deserve to use that money to buy yourself an early escape from the daily grind.

As a general rule, you can withdraw about 4% of your savings' value each year in retirement and expect your nest egg to last for 30 years. (It's not a perfect rule, but a reasonable starting point). This means that if you're looking at retiring in your 50s, you'll need to adjust that rate downward -- say, to 3% or even 2%.

If you only have a $400,000 nest egg, 2% a year will give you $8,000 of annual income -- hardly enough to live comfortably, especially if you retire before you're eligible to collect Social Security. But if you have a $4 million nest egg, suddenly you're looking at $80,000 in annual income instead. And that's not a bad amount to work with at all.

The point, therefore, is that if you're in a strong place financially to retire, there's no reason not to use your savings for their intended purpose. Sure, you could always keep working and save even more, but if you want to retire early and have the money, you deserve to reap that reward.

Related video: How to retire in your 30s (provided by CNBC)

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2. You don't like working in a traditional capacity

An estimated 52% of Americans consider themselves unhappy at work. If you're dissatisfied with your traditional job setup, retiring early might open the door to another one.

Many people associate retirement with not working at all. In reality, working can be a fulfilling component of retirement, provided you get to do it on your own terms and not somebody else's. If you have an idea for a great venture, you could retire but start a business that you work on as needed or when you please to generate income or just plain give yourself something to do. You could also turn a hobby you enjoy into a money-making opportunity. The key is to work in a manner you find meaningful and on a schedule that gives you the lifestyle you want.

Now to do this, you'll probably need a healthy level of savings. After all, you can't just decide to go from a full-time job to a 10-hour-a-week musician gig without having a means of making up for that lost income. But if you are in a strong enough place financially, there's plenty of opportunity to keep working in retirement, as well.

3. Your family health history isn't great

Without a crystal ball, it's impossible to predict how long you'll live or what the future holds for you. But if you have a family history of folks dying young and your own health isn't particularly stellar, then you may not want to run the risk that you'll work too long and deprive yourself of the opportunity to do the things you've always wanted to do in life.

Though you still can travel, pursue hobbies, and spend time with loved ones while holding down a full-time job, you'll be able to do so more freely when you don't have a boss to answer to. So if you have the money to retire and aren't counting on living a particularly long life, consider escaping the workforce earlier than most.

As you can see, retiring early often hinges on having the savings to do so. But if you can afford to leave the workforce sooner rather than later, why not go for it? Remember, there's no rule stating that once you retire, you can't undo that choice, but this way, you'll have a chance to fulfill a goal that so many people only get to dream about.

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