Many people dream of the day they retire. For some, it’s the chance to finally travel, spend more time with family, or enjoy hobbies that were squeezed out by decades of work.
Research has found that the average person will spend around 90,000 hours working over a lifetime, and in the U.S., the average retirement age is 64, though it varies by state, ranging from 61 to 67. But while leaving the workforce early can sound like the ultimate goal, some people later find themselves wishing they had waited.
Asad Khan, a financial planning consultant based in Pinner, England, told Newsweek that early retirement regret often comes down to financial blind spots people don’t fully consider ahead of time.
Khan said: “While early retirement may seem appealing, many retirees later discover that certain financial realities were overlooked.”
He added that some issues only emerge after leaving the workforce, “leading to unexpected challenges.”
Six Things People Don’t Think About Before Retiring Early
Here are six of the biggest things people tend to underestimate before retiring early.
1. Longevity Risk
According to a 2024 report from the Bloomberg American Health Initiative at the Johns Hopkins Bloomberg School of Public Health, life expectancy in the United States is, on average, 78.6 years. Living longer is good news—but only if your finances can keep up.
“Retiring in one’s 50s or early 60s can mean funding a retirement that lasts 30 to 40 years,” he told Newsweek. “Many underestimate their life expectancy, which increases the risk of outliving their savings.”
2. Inflation and Rising Costs
Even when inflation slows, prices rarely go backward. According to the Bureau of Labor Statistics, costs are still about 2.4 percent higher than a year ago, with housing remaining the biggest pressure on household budgets as rents and shelter costs continue to rise. Food prices have also increased, particularly for groceries like cereals, meat, and drinks. Medical care, personal care, recreation, and communication services are all more expensive too.
“Inflation gradually erodes purchasing power,” Khan said. “Over decades, even modest annual increases in living costs can significantly impact fixed retirement incomes, particularly in later years.”
3. Pension Withdrawals and Spending Pace
“Accessing pension funds too early or withdrawing large sums without a structured plan can lead to premature depletion of retirement savings and unintended tax consequences,” he explained.
Without a clear strategy, money that needs to last decades can disappear much faster than expected.
4. Overspending in the Early Years
The first years of retirement often feel like freedom and that can come with extra spending. Travel, hobbies, and lifestyle upgrades can all take a toll.
“The initial phase of retirement often involves increased discretionary spending,” Khan told Newsweek. “Without a long-term financial strategy, this can result in financial strain during later stages of retirement.”
5. Tax Implications
Taxes don’t disappear in retirement, and misunderstanding how they work can be costly. The Internal Revenue Service explains that when you receive money from a pension or annuity, some or all of it is usually taxable. If the funds were built using pre‑tax income—which is common with workplace pensions—then payments are fully taxed.
If after‑tax money was contributed, only part of each payment is taxed, with the remainder treated as money already taxed. Withdrawing funds before age 59 and a half can also trigger an additional 10 percent penalty, unless an exception applies.
While taxes are typically withheld automatically, retirees may still owe more later or need to make estimated payments, particularly when taking large lump‑sum withdrawals that don’t qualify for a rollover.
“Misunderstanding the tax treatment of pension withdrawals and other income sources can lead to unexpected liabilities and reduced net income,” Khan said.
For retirees living on a fixed income, even small tax surprises can have a significant financial impact.
6. Emotional and Lifestyle Adjustments
Money isn’t the only challenge. Khan said many people underestimate the emotional shift that comes with leaving work behind.
“The psychological transition into retirement is frequently underestimated,” he said. “Loss of routine, identity, and social interaction can influence spending behavior and overall well-being, sometimes leading to unplanned financial decisions.”
For some, work provides structure and purpose that is hard to replace.
While early retirement can still be the right choice for many, Khan’s advice highlights why planning goes far beyond simply saving enough money. With living costs continuing to rise and retirements lasting longer than ever, thinking through these often-overlooked factors could make the difference between enjoying retirement—and regretting it.
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