3 Things That Might Get in the Way of an Early Retirement

A lot of people dream of retiring early. For you, that could mean ending your career at 55, 59, or 62.

Since there's no official retirement age in the U.S., early retirement can mean different things to different people. But here are three universal things that could easily wreck your early retirement plans.

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1. High-interest debt

It's not unreasonable to take on some amount of debt during your working years. Most of us can't buy a home without a mortgage. And even a car can be tough to purchase without a loan.

But if you want to retire early, try to steer clear of high-interest debt, like credit cards with high APRs or high-interest personal loans. The more money you spend on interest, the less you'll have to put into your IRA or 401(k) and grow yourself the nest egg you need to make an early career exit.

Also, while high-interest debt may be easier to avoid than secured debt like a mortgage or car loan, be careful with the latter, too. Buying a home or car at the very top of your price range could leave you with large monthly payments that monopolize your income, making it harder to contribute generously to a retirement account.

2. Conservative investments

If you're someone who's naturally risk averse, you may not relish the idea of putting your retirement savings into the stock market. But if you invest too conservatively, you might prevent your nest egg from growing at a rapid-enough pace to allow for an easy retirement.

Imagine your conservative portfolio generates a 4% yearly return, whereas a stock-heavy one might give you an 8% yearly return, since that's a bit below the market's average.

If you contribute $800 a month toward retirement savings starting at age 22, by 57, you'll have about $707,000 with a conservative portfolio. With a stock-focused one, you could end up with over $1.65 million instead.

3. Unexpected life events

Life doesn't always go according to plan. You could get injured or sick and be forced to take a leave of absence from work. You could get divorced. Or, you could get unlucky with home repairs.

It's important to maintain a cash emergency fund so you're equipped to deal with unexpected life events. If you have money to cover events like these, you may be less likely to end up in debt or contemplate taking an early IRA or 401(k) plan withdrawal to deal with the hardship you're going through.

To pull off an early retirement, you need a solid plan from the start. That includes doing your best to avoid costly debt, taking on some portfolio risk, and equipping yourself to deal with curveballs as they arise.

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