Is Early Retirement Bad for Your Brain?

Key Takeaways:

• A common solution to falling short on retirement savings is to keep working. 
• While early retirement is a common goal, it might not be financially feasible or, as it turns out, the best choice to preserve your mental health. 
• There’s a happy medium between the 70-year-old destitute Walmart greeter and the comfortable retiree bringing cash flow to supplement savings.

In the aforementioned retirement edition of The Juice, we focused on ways to lower your overhead to help offset a savings shortfall:

• Pay off your mortgage
• Get rid of your car payment
• Move to a less expensive place (apartment, house, neighborhood, or entire city)

Once you do this, the money you do have saved can take you further. 

Another way to ensure your savings don’t run out is to work past the traditional retirement age. So into and maybe beyond your 60s. 

This idea can conjure sad visions of elderly Walmart greeters who rely only on Social Security and barely make ends meet at the end of their month’s bare-bones budget. But it doesn’t have to be this way. 

If you think you might need to work in retirement, set yourself up for success sooner rather than later. 

For example, is there a side hustle (this can be anything from consulting to content creation to something in the gig economy or any flavor of small business) you can start to cultivate today so it generates ample cash flow tomorrow? Maybe you want to be a landlord in retirement (this is work). The process doesn’t happen overnight, so lay the groundwork as soon as possible. The possibilities for meaningful, even lucrative work that doesn’t break your back or fray your nerves in retirement are endless. 

Here’s the other thing…

Early or even on-time retirement isn’t always the dream it’s cracked up to be. A growing body of research shows early retirement, in particular, can speed up cognitive decline. 

The latest comes from a Binghamton University study of Chinese adults ages 45 and older. Early retirement negatively impacted activities that are supposed to enhance mental fitness and increase social interaction. Females felt the effects of this cognitive decline more than males did. 

In a paper SSM – Population Health published in 2021, researchers sampled more than 20,000 U.S. adults to determine the impact of delaying retirement to age 67. They concluded that delaying retirement protects against cognitive decline, even when controlling for lifestyle and other factors. The cognitive function of higher-educated individuals benefited the most from delaying retirement. 

The Bottom Line: Retirement – in terms of planning, how it looks, and the age you make one or more transitions into partial or full retirement – isn’t one size fits all. As a meaningful amount of research shows (there’s much more than we could fit into today’s Juice), even if you’re flush with retirement cash, your brain might benefit from remaining engaged with some type of work. 

Whether you plan to work into retirement or not, you need a financial plan. We’ll continue to cover the health and personal-finance angles to this concern, but in Thursday’s Juice we’ll use retirement stocks to begin to dissect the investment side of the equation. So look for that Juice to hit your inbox, as you most certainly do every day.

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