Early Retirement Sounds Tempting—Here’s Why Many Public Employees End Up Second-Guessing It

Missy E
November 14, 2025

Key Takeaways

Leaving your public sector career early may seem exciting at first, but financial, health, and lifestyle consequences often surface later.
Thoughtful planning and professional advice are essential if you want to make an early exit work for the long term.

The First Appeal: Why Early Retirement Looks So Attractive

The idea of retiring early stirs excitement for many public employees. The thought of being free from rigid schedules, office politics, and exhausting commutes is undeniably appealing. Some of the most common reasons for considering early retirement include:

The opportunity to enjoy more personal time and hobbies
The chance to travel while still in good health

A desire to escape workplace stress and burnout
The temptation of reaching “Minimum Retirement Age” (MRA) under FERS

However, when you scratch beneath the surface, the reality often appears more complicated.

Financial Realities Set In

Early retirement often brings a series of financial realities that are easy to underestimate.

Smaller Pension Checks

Under the Federal Employees Retirement System (FERS), your pension is based on your “High-3” salary average and years of service. If you retire early, you cut short your years of service, leading to:

A permanently reduced pension
A lack of eligibility for the FERS annuity supplement in certain cases if you don’t meet the criteria

For example, retiring under the MRA+10 option allows you to leave early but at the cost of a 5% reduction in your annuity for every year you are under age 62.

Healthcare Costs Multiply

Healthcare can become significantly more expensive after you leave government employment early. While your Federal Employees Health Benefits (FEHB) can continue into retirement if you meet eligibility requirements, you still:

Must continue paying the full retiree premiums
Lose out on employer contributions if you fail to maintain FEHB eligibility
Potentially face Medicare Part B premiums starting at age 65

If you retire before 65, you may need to cover health insurance independently until Medicare eligibility kicks in, which can be costly.

TSP Considerations

The Thrift Savings Plan (TSP) is another vital pillar of your retirement security. However, withdrawing funds early may trigger penalties.

If you separate from service in the year you turn 55 or older, you can withdraw penalty-free.
If you retire before the year you turn 55, you’ll generally face a 10% early withdrawal penalty unless an exception applies.

Withdrawing too early can also impact how long your savings last over a 30+ year retirement period.

Emotional and Lifestyle Challenges

Adjusting to early retirement goes far beyond dollars and cents.

Identity and Purpose

Public employees often find strong meaning and identity in their roles. After retiring early, you might experience:

A loss of purpose
Boredom after the initial “honeymoon” phase
Challenges in structuring your day meaningfully

Without a clear post-retirement plan, many retirees find themselves questioning their decision within a few years.

Social Disconnection

Workplace relationships provide a daily social structure that is difficult to replace overnight.

Friends and colleagues are still working
Social opportunities may be fewer and harder to create
Feelings of isolation can creep in, especially if you retire earlier than your peers

Loneliness can have long-term effects on both emotional and physical health.

Healthcare and Medicare Timing

Healthcare deserves special attention if you are contemplating early retirement in 2025.

You can continue FEHB into retirement if you were enrolled for the five years immediately before retiring.
However, you must plan for the transition to Medicare at age 65.

If you do not enroll in Medicare Part B when first eligible, you could face lifetime penalties. Balancing FEHB and Medicare requires thoughtful planning to avoid unnecessary costs.

Retirement Is Longer Than You Think

One of the biggest miscalculations early retirees make is underestimating how long retirement can last.

If you retire at 55, it is not unusual to live another 30 to 40 years.
Inflation, healthcare needs, and long-term care costs compound over this extended period.

Even a well-funded retirement portfolio can feel tight after three or four decades without employment income.

Inflation’s Slow Burn

Inflation eats away at purchasing power over time, and early retirees are exposed to this risk for longer.

FERS pensions include cost-of-living adjustments (COLAs), but they may not keep pace during high-inflation periods.
Thrift Savings Plan investments may need to take on more risk to outpace inflation, which can cause portfolio volatility.

In 2025, inflation is a real concern after several volatile years. Building in safeguards is essential if you leave the workforce early.

Unexpected Family Responsibilities

Family obligations often arise when least expected.

Aging parents may require caregiving support
Adult children may need financial assistance
Grandchildren could add new responsibilities

Retiring early does not shield you from life’s surprises. In fact, it may make responding to them more financially complicated.

Part-Time Work Is Not a Guaranteed Solution

Some early retirees assume they will “just work part-time” if money becomes tight. However:

Part-time jobs can be harder to find than you anticipate
Skills can quickly become outdated
Health issues can make even part-time work difficult

Entering retirement with a part-time work plan is wise—but depending on it to “fix” financial shortfalls can backfire.

Psychological Effects of Financial Anxiety

Even if you have a sizeable nest egg, money stress does not always vanish.

Watching savings decrease year after year can trigger anxiety
Economic downturns (like the one seen in 2022-2023) can cause second-guessing
Fear of outliving assets is common, even among relatively wealthy retirees

In the public sector community, early retirees who thought they “had enough” often find themselves rethinking their original projections.

How to Think It Through Before You Leap

Retiring early isn’t automatically a mistake—but it demands serious preparation. Here are steps you should consider:

Model different retirement scenarios based on different ages, spending rates, inflation, and healthcare assumptions.
Work with a licensed professional to build a customized retirement plan that addresses your unique needs.
Evaluate your readiness beyond money, including your emotional, mental, and social preparation.
Create contingency plans for healthcare coverage, part-time work, family emergencies, and market downturns.
Stay flexible. You can always adjust your timeline if new information or feelings emerge.

A thoughtful, adaptable approach often makes the difference between joyful early retirement and painful regret.

Revisiting the Decision After a Few Years

In 2025, early retirement trends among public sector employees are rising, but so is the trend of “unretirement.”

Many retirees are returning to part-time work
Some are reentering the government workforce, depending on rehire rules
Others are starting businesses or consulting

If you do retire early and later realize it wasn’t the right fit, know that your story doesn’t have to end there. Flexibility remains one of your most important assets, both financially and emotionally.

Careful Planning Makes All the Difference

Early retirement can be a dream come true—or a hidden minefield. It all depends on the planning you put into it before taking that leap.

If you are considering an early exit from your public sector career, now is the time to schedule a conversation with a licensed professional listed on this website. Personalized advice can help you turn your early retirement vision into a lasting success story.