The Advantages And Disadvantages For Early Retirement For Society
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What are the Advantages and Disadvantages of Early Retirement for Society?
Four and a half billion people are currently employed either by the state, private sector companies or small businesses according to current macroeconomic forecasts. A large portion of this number will seek retirement come their retirement age, which varies from country to country. But since the Baby Boom decade of the early 1960s, early retirement has become popular where people tend to retire from their jobs earlier than the state or company designated retirement age.
Thus, early retirement as a popular concept represent an alternative where people choose to stop working early for whatever reasons and do other things other than being formally employed for the remaining part of their lives. Generally, if an employee elects to follow this path, he or she can expect to receive fewer benefits than if the employee had waited until the official retirement age.
This essay will discuss the benefits and disadvantages of early retirement. It concludes that early retirement has its benefits and setbacks but it depends on ones ability to prepare for the individual decisions and choices of the employee to plan as much as possible before taking the step to be able to lessen the negative impacts of this undertaking.
Early retirement occurs when an individual retires before the required or the generally accepted age, usually between 55 to 65 years of age. Early retirement is possible for those who have saved up enough financial assets or those who have come into large sums of money. For this reason, early retirement has some advantages for those who have decided on pursuing early retirement.
Benefits of early retirement includes receiving lump sums of money, having more time to pursue other interests, commencement of a new career, and that early retirement is also a mechanism for reducing unemployment.
Once an employee decides on retiring early, he or she is entitled on receiving a one-off large sum payment. The financial benefits of taking this step are numerous when the capital is put to good use.
Firstly, the lump sum one-off payment is to invest on other profitable ventures. By investing the money that the retiree has received, he or she will ensure that the money is used to generate much needed income during the retirees final years. Investments can be in the form of putting the money in other businesses where they will generate income or the retiree himself using the money he received to enter into self-employment ventures. Thus, the retiree can set up a business and make the transition from being a salary earner to a confident investor.
Secondly, the retiree can use this money to relax and enjoy a leisurely life. He or she might want to take a holiday or a trip around the world, as is common for many people in the developed countries. Leisurely activities can also take the form of doing other things that one may like to do but was not able to do so when he or she holds a full-time job. Such activities may include painting, stamp collecting or even babysitting. While working, many times people fail to participate in the important moments and events of their family life. But early retirement provides ample of time to spend with their family members.
Thirdly, early retirement also makes it possible for an employee to earn money without holding down a full-time job. On this instant, early retirement provides the opportunity to start a new career that employees might have been cherishing all their working lives that also earns some money on the side. Thus, more time for oneself to do the things you could not do when you are working especially in regards to earning extra income.
Fourthly, early retirement is a mechanism for reducing unemployment and bring benefits for all the society. Older people step down work for young generations, who have topmost unemployment rate in many countries around the world. The importance of early retirement can be seen with the case of Spain where since 1st January 2002, a flexible retirement scheme has been introduced as a result of a tri-partite agreement reached in 1997 (the Toledo Pact). The retirement package has often been subsided by Spanish government.
However, early retirement, as much as it has many advantages, has also has its fair share of disadvantages. Some of the disadvantages includes financial constraints, the likelihood of mismanaging the retirement monies, health implications, inflations toll on the retirement package, and the fact that those opting to early retire will only get their pension benefits when they reach the retirement age.
Firstly, many retirement schemes reduce the annual amount they pay if you take payments before the schemes normal retirement age. This is to take