WSJ Your Money Briefing - Want to Retire Before 65? Here’s What You Should Know

Episode Date: April 10, 2025

An early exit from the workforce comes with significant psychological and financial consequences. Wall Street Journal reporter Anne Tergesen joins host Jacob Passy to discuss how some Americans are spending their time and money. Sign up for the WSJ's free Markets A.M. newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

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That's ymb at wsj.com. Now on to the show. Here's your Money Briefing for Thursday, April 10th. I'm Jacob Pasey for The Wall Street Journal. Do you dream of an early retirement? Sure, the idea of limitless free time may sound appealing, but exiting the workforce before the age of 65 can come with some serious drawbacks. If you're taking money from your savings, from your 401k or IRA or any form of savings, you're increasing the number of years that your nest egg has to support you. We'll talk to WSJ reporter Anne Turkisen about the realities of retiring early after the

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Most people picture retiring at age 65, but the reality for some Americans is that their retirement years start a lot earlier. And an early retirement comes with pretty significant consequences. Wall Street Journal reporter Ann Turgeson joins me to talk about it. Ann, how common is it for workers to retire early? Ann Turgeson, Journalist, Wall Street Journal It turns out it's pretty common. There's this annual survey that's been done for over three decades, and in almost every installment of that survey, people say they had wanted to retire at 65, but that the actual median age at which people do retire is more like 62.

I know you interviewed some people who had early retirements. Were there certain factors that led the people you interviewed to pursue that? So, my colleague and I have been writing a series about what retirement looks like in America. And each one of these, we interview four people, or sometimes it's four couples, about what retirement looks like to them. And usually there's some kind of theme. In one case, we did, what does retirement in America look like when you have a million

dollars in savings or two million in savings? For this one, we wanted to look at what does retirement look like if you retire at age 55 or younger? On the theory that a lot of people dream that early retirement is their goal and on the flip side of that sort of dream or aspirational side of early retirement, there's a lot of people who write to me a lot because I cover retirement that they were forced of early retirement. There's a lot of people who write to me a lot because I cover retirement, that they were forced into early retirement. So that's a less kind of happy,

optimistic picture of retirement. So we got a bit of a reality check from these people in both positive and negative ways. For one person, it really was burnout. Well, it was actually a combination of factors. One was ageism. There was a management change and he felt like he was increasingly being pushed

to the side of important decision making. He also just rapidly got burnt out. Another guy I spoke to just said he loved his job and absolutely felt on the top of his game, but he also just felt like the stresses were growing, that he was either having to lay people off or he had all this pressure to bring in revenue. felt like the stresses were growing, that he was either having to lay people off or he had all this pressure to bring in revenue. So it was just the parts of the job that he

loved were getting overshadowed by the parts he didn't love. So in both of these cases, these guys left, but other people also they leave because maybe what made them fall in love with their career, it's getting a little old and they want to try something new. Maybe there's some burning passion that people have to segue into something else. Did these folks have working spouses or other sources of financial support besides their savings? Two out of four of them did have working spouses that they could rely on. In one case, that working spouse was about to retire as well, so it was a very temporary situation. But

I think that's very common, especially among people who retire early, is that the spouses aren't always on the same timetable. And three out of four of them actually did have pensions. So while these people were generally too young to qualify to take any social security yet, some of them were receiving some form of pension. One of them, it was a fairly small, modest pension. So, in general, what did their savings look like before they retired? The two people I spoke to in depth, they both consulted with a financial advisor

because they both were sort of do-it-yourself investors. They'd been fairly diligent savers. Before making such a big decision, they wanted to make sure that they were in good shape. And that made them feel more confident. Both of them had saved significant sums in 401Ks and IRAs. One of them had an HSA, which is a health savings account as well. They both had saved well over a million dollars by the time they decided to retire. And were there financial drawbacks to entering retirement at a younger age that they identified?

These are things that financial advisors will tell you and the people we interviewed would not dispute any of this. So first of all, if you're taking money from your savings from your 401k or IRA or any form of savings, you're increasing the number of years that your nest egg has to support you. This is the reason why people often get part-time jobs, because they want to reduce the strain on their savings. There's also health insurance, which is huge.

Once you're 65, you can go on Medicare. But before that, you can't. So for each of them, they had to solve this problem. And for those with working spouses who have insurance, the problem was very easily solved, where they went on their spouse's insurance. The other guy I spoke to who's single went on Obamacare. And then there was another couple who were former military.

And they were eligible for the military's health plan, which made it a lot easier probably for them to make that decision to retire, because this is a problem for people who retire early, and it can be quite expensive. And were there any other consequences, such as feelings of loneliness or isolation? One guy said one of the big challenges of retirement

in his view is that you just, you have to really work to replace the automatic social life that you get in an office. And he had been a lifelong employee of this one company and really just loved his job and clearly had a substantial kind of social life at his job. He discovered that he really has to work at it. And he said, sometimes he's the one who's always reaching out. And he began to feel a little funny about it. And then he consulted with his girlfriend.

And she said, look, if you enjoy seeing these people, don't worry that you're the one who always is reaching out, as long as you're getting a lot out of the relationship. So he said he tries very hard to get together with friends a couple of times a week. He also volunteers extensively. And so he has built new social contacts, new social life through his volunteer work. And I also think that what is kind of disconcerting to a lot of

people who retire period at any age, but certainly who retire early is just that there's like all of a sudden a lack of structure. You know, you're used to racing through your day and having to be somewhere all the time. And then all of a sudden you've got this blank slate. And one guy told me he woke up a couple days after retiring and he just had this sort of momentary feeling of almost like panic because it was just the opposite of the way his work life had gone. But, you know, he said gradually you fall into a new routine and you just have to kind

of embrace the uncomfortableness of having to reinvent. That's WSJ reporter Anne Turgison. And that's it for your money briefing. This episode was produced by Ariana Osborne with supervising producer Melanie Roy. I'm Jacob Passe for the Wall Street Journal. Thanks for listening.