Early retirement is often seen as a luxury for the rich, but it's more common than you think. A recent Nationwide survey found that 64% of seniors retired earlier than they expected, with an average retirement age of 60. That's about seven years earlier than the age at which today's average worker plans to retire.
Undoubtedly, some of these workers saved diligently throughout their careers and chose to retire sooner after growing a sizable nest egg. But for others, the picture's not as rosy. Below is a look at why you may have to retire earlier than planned and what to do about it.
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Retirement isn't always a choice
We'd all like to be able to exit our careers on our own terms, but many don't get this option. People are sometimes forced to quit their jobs early for reasons including:
- Job loss
- Illness or injury
- Caretaking requirements
For some, it's a temporary speed bump. They may get laid off from their job and need to find a new one. Some people may need a while to recuperate from an illness but later return to the workforce. It only becomes problematic when you can't do this.
Many workers struggle to save enough for a comfortable future, even if they're able to work as long as they'd like. Early retirement means you have to stretch your existing dollars even further, possibly for years or even decades more than you initially planned. It means less financial security, a lot more penny-pinching, and possibly more sleepless nights.
How to prepare for the unexpected
Having a retirement plan in place and saving regularly are some of the best things you can do to ensure your future financial security, but it's not always enough. Job loss or health issues can arise unexpectedly, so it's worth taking steps to minimize these risks.
Keep up to date on changes in your field and continue to hone your skills over time. This will make you a more desirable employee and could lead to pay raises that help you set aside even more money for retirement.
Prioritizing your health can make your senior years more active and enjoyable in addition to reducing the risk of an early retirement due to illness. Staying healthy can also reduce your out-of-pocket healthcare costs. Then, you can use this money for your living expenses, travel, or anything else that interests you.
It still helps to have a backup plan
Even if you take the steps above, it still helps to have a contingency plan in case you're forced to retire before you're ready. Think about what you might do if you're unable to work at your current job. You might plan to seek out other full- or part-time work or look into remote opportunities.
If you're truly unable to work at all, you may have to reduce expenses or seek out government assistance to help you meet your basic needs. Downsizing your home or moving to a more affordable area could also be on the table for some.
It's best to have some idea of how you'd handle an unplanned early retirement, but be prepared to adapt your approach as you go. Check in with yourself at least annually to see if you're still on track for your target retirement date, and prioritize savings every year so you can set yourself up for the most comfortable future possible.
