3 Reasons to Retire As Early As You Can -- and How to Do It

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Many, if not most, people are eager to retire -- yet a heck of a lot of us don't think we'll be able to do so anytime soon. Indeed, a 2016 Willis Towers Watson survey found that while about 30% of working Americans plan to retire before age 65, fully 46% expect to retire after 65.

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That does make some sense, as millions of Americans just haven't saved enough to support them through an early retirement. It doesn't mean that you are out of luck, though. It can be terrific to retire early, and it might be more attainable than you think.

Here are three reasons to retire early -- even if that means retiring at 67 instead of 70 or 72.

1. You don't know what the future holds

Very few of us have any idea how long we will live. Many people tend to assume that they have lots of years ahead of them, but some will be wrong. According to the Social Security Administration, "A man reaching age 65 today can expect to live, on average, until age 84.3," and, "A woman turning age 65 today can expect to live, on average, until age 86.6." Those are just averages, though. Many of us will live shorter lives than that. Retiring early will help you enjoy as many work-free years as possible. You'll also be more able to enjoy being active in retirement. If you want to restore a classic car or learn ballroom dancing, it will be easier to do that when you're 65 than when you're 75. The longer you work, the more you're rolling the dice on how good a retirement you'll have.

2. You can get a lot done in your retirement years

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Another reason to retire early is to get a lot done. Retirement doesn't have to be about passing time in pleasant ways. Instead, you can be productive. For instance, you can still work and make money in retirement. Forget working 40 or 60 hours a week and just work part-time -- at a job that's more enjoyable or at least less stressful. Generating some extra dollars that way can help your nest egg last longer. If you like your current job, you might be able to stay there, working fewer hours for a few years. It's actually good for many people to work some in retirement, as jobs offer the structure and socializing that many people find they miss in retirement.

If you're financially secure, you can volunteer as many hours as you'd like for causes or organizations you believe in. Or if you have an entrepreneurial bent, you might try starting a new business -- perhaps simply tutoring or doing freelance editing. If you work just 10 hours per week -- perhaps two five-hour shifts -- and earn $12 per hour, you're looking at about $500 per month in additional income, which might cover some big budget items, such as food and/or utilities.

You can also work on improving your health much more effectively if you retire early. The stress of your old job will be gone, and you may no longer have to wake up early to go to work, so your body may get the longer sleep sessions that it needs. You'll have time to prepare nutritious meals and to go for long walks or regular visits to the gym. If you can lose any excess weight you're carrying, you'll likely benefit in many ways, such as being at less risk of developing diabetes or high blood pressure. The healthier you are, the longer you'll likely live, too -- making your retirement even longer!

3. Retiring early might actually be financially possible

Finally, another reason why you might retire early (or earlier than you originally planned) is simple: because you can. Your retirement war chest might be big enough to permit you to retire right now, but if you get more aggressive about saving and you invest your money effectively, you can probably make your retirement happen sooner.

You're probably going to rely on Social Security for a significant chunk of your retirement income and you may be planning to delay starting to collect Social Security in order to end up with fatter checks. It's true that for every year beyond your full retirement age that you delay, your benefits will grow by about 8%. Delay from age 67 to 70, and your benefits will be about 24% bigger. That sure seems like a reason to work as long as you can. But hold on -- remember that while the delayed checks will be bigger, you'll receive far fewer of them. The Social Security program has actually been designed to be mostly a wash for those who live average life spans. If you expect to live a roughly average-length life, you can start collecting those checks at age 62 and either come out ahead or not too far behind. Checks that start at age 62 will be a lot smaller than those that start at age 67, but you'll collect 60 more of them!

You can also maximize your Social Security benefits by being strategic -- especially if you're married. For example, if you and your spouse have had rather different earnings histories, you might start collecting the benefits of the spouse with the lower lifetime earnings record on time or early, while delaying starting to collect the benefits of the higher-earning spouse. That way, you get some income earlier, and when the higher earner hits 70, they can collect extra-large checks based on their earnings. Also, should that higher-earning spouse die first, the surviving spouse can collect that bigger benefit.

How to retire early

If you've figured out how much money you'll need in retirement and your nest egg is not even close to that, you're not out of luck. Sure, the easiest way to amass really large sums of money is to start saving and investing early, thanks to the magic of compounded growth. Investing $8,000 each year for 30 years will grow to nearly $980,000 at 8% annually -- that's almost a million dollars!

But what if you're already around 50 years old, with not much more than a decade left before you'd like to retire? Well, make the most of that time. If you can sock away $12,000 that grows at 8% per year for 12 years, you'll end up with nearly $250,000. That kind of money could get a 62-year-old man a lifetime annuity that pays roughly $1,260 per year. Add Social Security, which might pay $1,300 to $1,500 or more per month, along with income from your main nest egg, and you're possibly looking at an early retirement.

Depending on how much time you have left until you'd like to retire, here's how much you can accumulate by socking away various sums that grow at an annual average of 8%:

Growing at 8% For:

$10,000 Invested Annually

$15,000 Invested Annually

$20,000 Invested Annually

3 years

$35,061

$52,592

$70,122

5 years

$63,359

$95,039

$126,719

10 years

$156,455

$234,682

$312,910

15 years

$293,243

$439,864

$586,486

20 years

$494,229

$741,344

$988,458

25 years

$789,544

$1.2 million

$1.6 million

Retiring earlier may be more possible than you thought. Being able to do so doesn't tend to happen by chance, though, so start planning, saving, and investing now.

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