Many Americans are obsessed with discussing and planning their retirement. They sketch out future career paths, make elaborate financial and tax calculations, and decide on the optimal time to start taking Social Security—often undertaking these measures decades in advance. But you know what they say about the best laid plans—life, and retirement, often goes awry.
The reality is that some 58% of Americans have their working years cut short and retire before they want to, whether due to personal health, employer discretion, or family-related reasons, according to a recent survey from the Transamerica Center for Retirement Studies. The actual median retirement age is 62, according to the survey, a few years before the so-called “traditional” age of 65. Just 21% of those who retire early report being financially stable.
Health is often the biggest factor: 46% of those who retired earlier than planned did so for personal health-related reasons. But a boss’s whims are a close second, with 43% reporting an employment-related issue was the cause, whether a layoff, buyout, or something else. Though you may want to keep clocking in for a few more years, your company’s plan often trumps your own.
While 20% of early retirees named caregiving as a reason, this is often a bigger factor for women, says Terri Fiedler, president of retirement services at Corebridge Financial, which recently released a report on women’s retirement regrets.
“Retiring before you’re ready can create financial challenges. It means you have less time to save and the money you do have saved now has to last longer,” Fiedler says.
After all, every plan needs a contingency. Here’s how to prepare.
By far the biggest regret most people have when it comes to retirement is not saving more—63% of respondent retirees to Corebridge’s survey said they wished they doubled down on their retirement contributions. Though this is easier said than done in the current economic environment, Fiedler says to start small—anything is better than nothing.
The new year is a great time to increase any automated savings—like into a 401(k) or similar workplace retirement plan—by a percentage or two; 31% of respondents to the Corebridge survey wish they did so. A traditional or Roth IRA is another great option. The change you feel now will be minimal, but it could mean tens of thousands more dollars saved down the line.
That’s critical, because moving up the timeline of when you start taking Social Security payments—which some 58% of Americans expect to be their primary source of income in retirement, according to Transamerica—can mean a significant drop in how much you get: Taking the benefits before full retirement age—which is 66 to 67, depending on your date of birth—means a smaller check, by 30% of more. Meanwhile, waiting until age 70 gets you the biggest payout.