The Employee Benefits Research Institute survey on retirement confidence tells us something new every year, and the 2015 edition is no exception. The data show people are retiring earlier than expected, and not necessarily by choice:
8% want to retire before age 60…36% actually do
26% plan to wait until age 70 to retire…only 6% do
31% retired early by choice…60% had to because of hardship (health, disability, etc.)
These findings can have serious implications for retirement planning. Too many times people think they’ll work longer than they actually do, but then they’re “forced” into early retirement.
And while 67% of survey respondents think they’ll work in retirement, like having a part-time job or consulting, the reality is only 23% of people work after retiring from a full-time career.
When it comes to retirement, perception and reality clearly aren’t aligned. The fact is, you might be retiring early, whether by choice or not. So what can you do?
My advice is to build contingencies into your retirement plan. If your plan assumes you’ll work until 66 or 70, for example, consider having a “plan B” where you retire at 64. Run the numbers and tweak things as needed so it’s realistic to retire at 64, even if it’s not the desired path.
Planning for the unforeseen, like a sudden job loss late in your career, can ease the pain if unfortunate circumstances arise. It’s easier to handle downward financial adjustments when you plan for them in advance, especially when you’re calm and clear-headed.
Talk to your advisor about early retirement contingencies in your retirement plan. Because unfortunately, you could be retiring early, but not by choice.