There’s a Good Chance You May Be Forced to Retire Sooner Than You Expect

Perhaps you’ve heard that the best way to make God laugh is to tell him your plans. … Particularly your plans for retirement!

And you’ve probably heard that with the unpredictability of the markets – stocks, bonds, real estate, whatever – you’re going to need to work longer than you had planned, in order to have enough to live on in retirement.

But that doesn’t mean the universe will cooperate.

Research from the Center for Retirement Research reveals that on average 21 percent of workers intend to work to age 66 or later. But more than half of them fail to reach this target.

The share of workers who say they expect to work past age 65 rose from 16% in 1991 to 48% in 2018. But the study shows that 37 percent of all workers end up retiring earlier than they had planned.

How can this be?

Why Are Hard-Working Americans Retiring Earlier Than Planned?

Three main reasons for forced retirement have been identified by the Center for Retirement Research at Boston College:

  • Poor health
  • Employment changes
  • Family needs

Health Shocks Force Early Retirement

Health shocks seem to be the most important in driving workers to an earlier retirement. And health shocks come in two flavors …

  1. You have an existing health condition that won’t let you keep working. For example, maybe you’ve got arthritis, but you figure you can hang in there until age 66. … But you can’t. Your arthritis limits your ability to work.
  2. You’re in good health at age 55, so you decide to work until 66, just to provide a little cushion. But something happens. Your good health is replaced by something you didn’t even anticipate. Could be cancer. Or heart trouble. Or something else. Whatever it is, you’ve got to quit work.

Health shocks don’t play favorites. They ambush you. And your best-laid plans go astray.

Employment Shocks Cause Workers to Call It Quits

Employment shocks are the #2 reason folks don’t work as long as they want or need to. And there are three varieties of employment shocks:

  1. You move to a new job, and it just doesn’t work out.
  2. You lose your job due to a layoff or the business closing. You rebound and find a new job, but it’s not a good fit.
  3. The obvious one: You lose your job, and you don’t find a new one.

No matter the reason, unsatisfactory work or the lack of work altogether too often spells early retirement – just when you were counting on working longer.

Family Shocks Put Workers in a Cruel Bind

All kinds of family issues can trip you up …

  1. Your spouse changes employers, requiring you to move, and you don’t find work. Or your spouse retires, and you feel the pressure to spend more time together. After all, “we ain’t getting any younger.”
  2. Your spouse’s poor health means you’ve got to choose between working and caring for your sweetheart. And your sweetheart is always your highest priority.
  3. Your marital status changes. You get married. Or unmarried. Either way, upheavals in your personal life make it unrealistic to keep on working.
  4. Your kids move back home – or they won’t move out in the first place. This still happens, and it can sap your strength, your energy, your vitality. Work just won’t work.
  5. Your first grandchild comes along, and you’ve got a strong urge – and lots of pleading from your son or daughter – to become a full-time grandparent or babysitter. Who can work in the face of a cooing two-month-old who loves you?
  6. You have a parent – or parents – who needs your care. You can’t ignore Mom or Dad. And when their needs are unpredictable and urgent – as they almost always are – work simply gets in the way.
  7. Your parent can no longer live alone, and you know in your heart that the best solution is for them to move in with you. This situation is not as common as the others, but if it happens in your family, no one will fault you for taking your mom or dad in. In fact, you’ll be seen as a hero.

But it’s awful hard to go off to work in the morning, leaving your elderly mother or father alone in the house all day, every day. … And reliable care is so expensive, you decide you’ll be money ahead if you become the full-time caretaker.

The Center for Retirement Research concludes that health issues are the biggest factor forcing early retirement…

“This analysis suggests that health likely plays the largest role in early retirement, both because people in bad initial health overestimate how long they can work and because health often worsens before the age at which they planned to retire.

“Job loss is also important, although the effect is mitigated by the fact that some people are able to find a new job and those people are more likely to make it to their planned age. Still, for those who fail to find a new job, the effect seems to be discouragement and ultimately an early retirement.

“With respect to family transitions, having a parent move in seems to be a large burden on people who experience it, but it is not a frequent enough occurrence to drive early retirement in the population.”

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How to Prepare So that Retirement Shocks Aren’t So Shocking

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Nobody thinks a forced early retirement will happen to them, but more than half of the people who think that are wrong. It does happen to them.

May we suggest three steps you can take starting today if you’re planning to work a little longer. That way you’ll be better prepared if you find yourself among the majority who’s plans God laughs at.

  1. Prepare for the worse. Assume you will have to retire earlier than you planned. The fact is the chances are better than 50-50 that retirement will come sooner than you want.
  2. Save more each year, beginning now. According to a new study by the Stanford Center on Longevity, you need to be saving between 10% and 17% of your income just for retirement. If you aren’t saving that much already, you’ll be smart to aim for 17%, rather than 10%.
  3. Realize that you shouldn’t risk what you can’t afford to lose. You wouldn’t gamble your retirement savings on the ponies. The risk is too great, obviously. Perhaps less obvious, but just as true, is that the risk is also too great in the stock market.

Past performance is no guarantee of future results. You’ve heard that. Now it’s time to believe it.

Save a big chunk of your retirement money where it’s guaranteed safe against market risk and where you’ll receive competitive growth of your money. And, since you really can have it all, don’t forget to demand favorable tax treatment, too!

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