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Around Half of All Retirees Leave Work Earlier Than Expected. Here's What That Means for You.

By Christy Bieber – Jun 10, 2020 at 7:45AM

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It could damage your future financial security if you aren't prepared for the retirement you want.

For many Americans, working into their 60s and 70s is a part of their retirement plan, often because of financial concerns. Unfortunately, according to data from Employee Benefit Research Institute, around half of all retirees end up leaving work earlier than they planned. 

Forced early retirement can cause big problems, especially if you have to claim Social Security early and reduce your benefits. With less time to grow your balance and more time for your savings to support you, you could end up in dire financial straits. To head that off, there are a few steps you should consider in case you end up having to retire earlier than planned. 

Senior woman working stocking shelves.

Image source: Getty Images.

1. Consider relocating to a lower cost-of-living area

There's a huge difference in how much necessities cost from one state to another. In some places, such as Washington, D.C., or Massachusetts, a single senior renter would need more than $33,000 to cover the basics while in other parts of the country the bill for the essentials comes in under $22,000. 

If you're facing a potential financial shortfall due to forced early retirement, moving could make your savings last longer so you don't end up broke in the later part of your retirement. 

2. Delay claiming Social Security if you can wait

An early retirement could not only put a strain on your savings, but it could also reduce your Social Security income if you're forced to claim benefits sooner than you planned. That's because the earlier you start getting your retirement checks, the smaller each check will be. 

If you can claim unemployment or disability benefits, survive on a spouse's income, or live on a tight budget and make do on your savings with a safe withdrawal rate, delaying your Social Security claim could make a huge difference in boosting your income once you eventually start your benefits. 

3. Reduce your living expenses as soon as possible

Far too many people who are forced to retire early try anyway to have the retirement they planned for. This often means overspending on travel, pulling too much out of savings to stay in their houses, or otherwise making financial choices they'll regret later on.

The more you withdraw from your accounts early on to try to maintain a lifestyle you can't really afford, the worse your situation becomes, since you have less invested to produce the income you'll need later. Instead of living large now and setting yourself up for struggle later, react to your changed circumstances ASAP by cutting your budget so your money lasts as long as possible. 

4. Live on a detailed budget

When you have to make do on less income than you planned, a detailed budget can make all the difference in ensuring you aren't spending too much. To get started, figure out the money available to you and then allocate it toward the things you value most.

The process of making a budget will help you see if you can afford to stay in your home or need to move, while also enabling you to identify areas where you can cut spending so you can do the things that are important to you without going into debt or spending your savings too fast. 

Don't let forced early retirement ruin your financial security

When you can't stop working on your own time, your retirement plans may need to be adjusted to ensure you remain financially stable. While it may be disappointing to find you won't be able to spend your later years exactly as planned, taking smart steps early on can stave off financial disaster and help you salvage a bad situation.

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