There's a danger in having to retire earlier than expected. When you're forced out of the workforce at a younger age than you've initially planned for, you risk falling short on retirement savings and having to claim Social Security early. The latter could result in a lifelong reduction in your monthly benefits, and years of financial struggles.

Unfortunately, it's not uncommon for workers to end their careers sooner than anticipated. An estimated 48% of adults are forced to retire early, according to the Employee Benefit Research Institute. But that number may climb due to COVID-19.

Unemployment levels in the U.S. have reached a high because of the pandemic, and older workers are hurting for it. In April 2020, the unemployed rate among workers 55 and over reached 13.6%. In January 2020, it was 2.6%. Hopefully, a large number of older laid-off workers will become employed again once the economy is able to open back up. But unfortunately, many older workers risk never being able to collect a full-time paycheck again.

Older man at desk holding head while reading document


Don't wait to save for retirement

Sometimes, people are forced into early retirement due to personal health issues. Other times, it's due to unemployment -- and there doesn't need to be a global health crisis to trigger that. To avoid a scenario where a forced premature retirement hurts you, it's imperative that you make an effort to start socking money away for your senior years at an early age. If you wait until your 50s to start building your nest egg with the assumption that you'll catch up later in life, you may be in for a financial shock if early retirement is forced upon you and those extra years of savings never happen.

On the other hand, if you start saving small amounts of money consistently when you're younger, you'll manage to build wealth over time so that even if you're forced out of the workforce before you'd like to leave it, you'll still have a substantial amount of savings to take with you into retirement. Case in point: Socking away $300 a month starting at age 25 will leave you with $340,000 by age 55 if your IRA or 401(k) generates an average annual 7% return during that time (which is a reasonable assumption, since 7% is a few percentage points below the stock market's average). That $340,000, coupled with some Social Security income, could be enough to cover your bills and allow you to live comfortably as a senior.

Start small -- but start now

Of course, a lot of people can't save for retirement right now because they're out of work due to COVID-19 or their income has been cut. If that's the case, you may need to wait until the economy improves before you're able to meaningfully contribute to an IRA or 401(k). But once things open back up and you're collecting a more robust paycheck, make a point to automate your savings so you're allocating money to a retirement plan consistently.

If the idea of parting with a portion of your paycheck is overwhelming, start by saving $25 or $50 a month and work your way up from there. Maybe next year you'll be able to sock away $100 a month, and then $200 a month the year after that. You can also plan to ramp up your savings when you're older and have fewer expenses to contend with. But don't make the mistake of waiting until your 50s to start building retirement savings, because if you're forced to end your career early, you might really struggle for it as a senior.