Why Retiring Later Is Not a Reliable Strategy
When it comes to retirement, you likely have all sorts of hopes about what you’ll do, where you’ll go, who you’ll spend your extra time with…and when you’ll retire.
But what happens if you calculate your retirement income needs and the numbers come up short for your ideal retirement age? Is the solution to just plan on retiring later so you can maximize your working years and minimize how long you’ll need to live off your savings? Although this may sound like a logical strategy, it isn’t always the most effective.
According to the 2021 EBRI Retirement Confidence Survey, there’s a considerable gap between when a person expects to retire and when they actually retire. While 26% of respondents stated they would like to retire at age 70 or older, only 6% followed through. Most end up retiring earlier and often it’s 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.
Here are 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 34% of retirees in 2021 were forced to retire early due to a health problem or disability.
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, 25% of retirees were forced into early retirement due to changes at their company. At this stage of life, it’s challenging to find another job when prospective employers 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 help you prepare for the worst-case scenarios leading up to retirement.
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 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
None of us has a crystal ball, so we have no way of knowing what the future holds. Yes, it’s possible you may be able to retire when you want to. But if you do need to retire earlier than planned, it’s better to know now you’re doing everything possible to be successful and comfortable. You’re never too young or old to begin taking action and planning for your future—be it 5 or 20 years down the road.
At The Rosamond Financial Group, our mission is to support, educate, and provide informed direction to help you make smart decisions about your money. Working with us, 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 my office at 830-798-9400 or email firstname.lastname@example.org. And check out what clients are saying about working with us here.
Preston Rosamond is a financial advisor and the founder of The Rosamond Financial Group Wealth Management, LLC with over two decades of industry experience. He provides comprehensive wealth management and financial services to successful business owners, corporate executives, and affluent retirees who enjoy simplicity and seek a professional to help them pursue their goals. Preston personally serves his clients with an individual touch, a sincere heart, and his servant’s attitude is evident from the moment you meet him. Learn more about Preston or start the conversation about your finances with him by emailing email@example.com or schedule a call on his online calendar.