Planning for retirement is a decades-long endeavor that requires a lot of discipline and constant reevaluation to stay on the right track. But what happens when you evaluate your retirement savings and the numbers come up short? The most logical answer is to just continue working for a bit longer. After all, you have already spent the last 40-plus years working, what harm could another couple of extra years do? Unfortunately, things don’t always work out that way.
According to the 2022 EBRI Retirement Confidence Survey, there is a considerable gap between when a person expects to retire and when they actually retire. While 14% of respondents stated that they would like to retire at age 70 or older, only 7% followed through. (1) Most end up retiring earlier and it’s often not by choice. There’s always the chance you could lose your job or fall ill. Even if you want to work longer and save more, there’s no guarantee you’ll be able to do that.
Let’s look specifically at a few reasons why retiring later is not a reliable strategy.
Unexpected Health Problems
Even if you are the picture of health today, you never know what will happen in 5, 10, or 20 years. As you age, your health can suffer. Working longer is not a guarantee, as 32% of retirees in 2022 were forced to retire early due to a health problem or disability. (2)
Your Company Downsizes
It is incredibly disheartening if you are in the last few years of your career and your company downsizes, leaving you in the dust when you were counting on the income to provide for you in retirement. In fact, 23% of retirees were forced into early retirement due to changes at their company. (3) At this stage of life, it’s challenging to find another job when interviewers know you will be retiring soon. While you can keep your skills sharp and take measures to prove your value to your current employer, you just never know what will happen to your company as the years go on.
Your Family Needs Your Help
Your loved ones are aging right along with you. Even if your health is excellent and your company still needs you, you may need to step back from the workforce earlier than planned to take care of a spouse or other family member. Your family comes first, so you don’t want to feel the pressure of working just to have enough in retirement if the unexpected occurs. It’s not fun to plan for contingencies like this one, but having a proactive mindset can provide you with comfort and confidence.
You Might Just Need a Change
When you’re in your 50s and still have years to go before you retire, it may seem simple enough to push out your retirement date from age 65 to 70. But what happens when, at 63 or 64, you can’t imagine working for another six or seven years? If you were banking on working until 70, you might not have enough saved.
The younger you are when you retire, the more energy and health you’ll have to enjoy retirement. Many retirees regret spending their best retirement years grinding away at work. Sure, they had more money when they finally did retire, but they had less time to enjoy it.
Since you can’t predict the future, how should you plan?
Start With a Plan
At the end of the day, you may be able to retire when you want to, but wouldn’t you rather know now that you’re doing everything you can to be successful and comfortable if you do need to retire earlier than planned? You’re never too young or old to start taking action and planning for your future, be it 5 or 20 years down the road.
At Premier Planning Group, our mission is to help you make smart decisions about your money. Working together, we can help you map out various retirement scenarios to see what your savings can handle and then review opportunities for maximizing your savings. To learn more, call our office at (443) 837-2520 or email my executive assistant, Talia Grover, at firstname.lastname@example.org to set up a complimentary consultation.
Brion Harris is the CEO, founder, and managing partner of Premier Planning Group, an independent financial firm specializing in working with pre-retirees and retirees, helping them create customized wealth preservation and retirement distribution strategies. With over 20 years of experience, Brion has developed deep knowledge and skill in helping his clients simplify their finances and find confidence in their financial future. Brion and the Premier Planning team are known for their unparalleled client service and their dedication building long-lasting relationships with their clients. As a result, Brion has been the recipient of the #1 Advisor Leadership Award* at Summit Brokerage Services for eight years running and has a reputation as one of the top retirement advisors in the business.
Brion is a proud 20-year resident of the Annapolis community, where he resides with his wife, Elizabeth, their three children, Addison, Jay, and Scarlett, and their two dogs, Pepper and Coco. When he’s not working, you can find him boating, skiing, traveling, and enjoying good food and music with his family. If you want to learn more about Brion, connect with him on LinkedIn.
*The #1 Advisor and Leadership award is based on production data and is awarded by the Summit Financial Networks region of Cetera Advisor Networks LLC. Brion Harris received the award in 2019, 2020, and 2021. This award is not a guarantee of future investment success. This recognition should not be construed as an endorsement of the advisor by any client.
The #1 Advisor and Leadership award was based on production data while at Summit Brokerage Services, Inc. Brion Harris received the award in 2015, 2016, 2017, and 2018. This award is not a guarantee of future investment success. This recognition should not be construed as an endorsement of the advisor by any client.