A study by Empower has gathered the necessary information to consider if you are thinking about early retirement. There are financial and emotional implications that must be taken into account, as lifestyle and routines will be completely different, as explained by certified financial therapist and CEO of Your Financial Therapist, Erika Wassermen. One of the advantages of retirement is leaving behind work-related stress, which, according to data from the Headspace’s 2025 Workforce State of Mind Report, has a very negative impact on workers’ lives.
The financial freedom gained from early retirement allows retirees to spend their time on paid part-time work, voluntarily choosing tasks that are fulfilling, as explained by certified financial planner (CFP) and founder of Madi Manages Money, Madison Sharik. Another aspect to consider is that if you receive a lower income in retirement, you could also face tax advantages such as a reduction in taxes. You should also have an investment plan in place that allows you to make your savings last, as Social Security Medicare benefits would not come into play until age 65.
This also refers to retirement accounts such as 401(k)s, traditional IRAs, and Roth IRAs. Wassermen also highlights the importance of mental health at this stage of life, as retirement can sometimes become a lonelier period. The decision to retire before the expected age largely depends on the financial stability you have achieved throughout your youth and working years. However, according to Financial Independence, Retire Early (FIRE), it is recommended to calculate the savings percentage by multiplying annual expenses by 25 if you want your savings to last 30 years, applying a 4% withdrawal rate.
Early retirement
A study conducted by Empower has revealed that Americans are opting to retire at 58 instead of waiting until 65. And although this may seem like a very attractive idea, the truth is that there are several factors that must be considered when making such a decision, as both financial and emotional aspects come into play.
Trying New Things
Early retirement is a great opportunity to redefine your lifestyle, away from the obligations of daily life and work. Each person gives a different meaning to their retirement: while some prefer to travel the world, others prefer to focus on their health. However, it is important to remember that the routine, which until now was familiar, will disappear, meaning the person will have to learn to restructure their days and the way they spend their money.
According to certified financial therapist and CEO of Your Financial Therapist, Erika Wasserman, “Retirement is a major life change, not just because of your money, but because of your time, energy, relationships, and mindset. You go from having a social-routine structure—for breakfast, lunch, even breaks to go to the bathroom—to all of this disappearing, often overnight.”
Say goodbye to stress
According to Headspace’s 2025 Workforce State of Mind Report, this is a factor that dominates workers’ lives and affects their lifestyle.Stay activeAccording to certified financial planner (CFP) and founder of Madi Manages Money, Madison Sharick, “I see many retirees moving on to do more fulfilling work that is often paid. I believe achieving financial independence is what they needed to give themselves permission to continue with this work”.
Change in income and taxes
With little or no wage income, early retirees often fall into lower tax brackets, creating opportunities to access investment income at reduced or even zero tax rates. According to Sharcik, “One of the main financial advantages of early retirement is that it is taxed at the lowest rates and favorable long-term capital gains rates. If you are an early retiree living solely off your taxable brokerage investments, you are likely able to qualify for the 0% long-term capital gains tax. When it comes to tax strategy, this is the holy grail! This is only possible when your total taxable income is $48,350 or less.
Investment fund
It is important to have a fund that allows you to finance your retirement, especially when you retire earlier than the estimated age. Sharick recommends having a supplementary source of income such as retirement accounts, including 401(k)s, traditional IRAs, and Roth IRAs.
Mental Health
Life and habit changes can make retirement a lonely and boring period, so it is important to make or rekindle social connections.