Want to Retire Early? Try This Instead.

Key Points

• Retiring early can put a strain on your nest egg.

• There's also the issue of having to secure health coverage.

• A sabbatical is worth exploring before you commit to ending your career at a younger-than-average age.

• The $23,760 Social Security bonus most retirees completely overlook ›

Many people have the goal of retiring early. And it certainly has its benefits, like being able to travel and do the things you've always wanted at a time when your health and energy level may be stronger.

But there are a couple of pitfalls early retirees could face. For one thing, you don't want to run the risk of depleting your nest egg prematurely. And the longer your IRA or 401(k) plan needs to last, the greater your chances of spending it down in your lifetime.

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Also, if you retire early, you may end up needing to claim Social Security early. That could result in reduced monthly benefits for life.

Finally, if you retire early, you may need to cover the cost of healthcare until you're eligible for Medicare at 65. That could become prohibitively expensive and drain your nest egg even more.

That's why if you're thinking of retiring early, you may want to consider a sabbatical instead. It could provide a taste of retirement without having to take the full plunge.

The upside of taking a sabbatical

Before we go further, let's be clear that not every employer or career will support a sabbatical. But if yours does, it may be worth trying.

Perhaps the most valuable thing about a sabbatical, aside from the break it allows for, is that it gives you a sense of what retirement might be like without having to make a full commitment to it. That way, you can work out the kinks ahead of time.

Let's say you take a sabbatical and realize that your living costs while not working are more expensive than you anticipated. That might inspire you to go back to work for a little extra time to boost your savings so you don't run into financial issues later on.

Also, many retirees, including those who leave the workforce early, struggle with boredom. A sabbatical gives you an opportunity to see how fulfilled you feel in the absence of a job.

There's a true financial benefit

Some employers offer paid sabbaticals. But even if yours doesn't, you may be able to retain certain benefits while you're on unpaid leave, like access to your company health insurance plan. That could reduce one huge expense as you explore what it's like to not have a full-time job.

Also, in some cases, you may be able to work something out with your employer where you use some of your accrued vacation or sick time to get paid for a portion of your sabbatical. This will, of course, vary by employer. But it could make that trial run less expensive.

Don't rush into early retirement

Retiring early is a wonderful thing to do if you plan for it well. But even then, you risk hitting certain snags.

A sabbatical allows you to take a break from the grind and see what it's like to be retired without actually having to go all in. It's an option worth exploring if you can find a way to make it work.

The $23,760 Social Security bonus most retirees completely overlook

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