Life is unpredictable. You can plan for one thing, but all it takes is an unexpected event like a forced early retirement to derail your carefully laid intentions. You may hope to work right up until retirement age, but there is always the possibility that your work-life will end prematurely due to poor health, disability, job loss, or even to care for a spouse or other family member. An event like one of these can be detrimental to your retirement plan.
What Early Retirement Could Mean For You
Have you planned for what you would do if your employer suddenly closed their business a few years before you were hoping to retire? What if your skills are not needed by other employers in your area? You could potentially lose years of income that you were hoping to accumulate for retirement. On top of that, you would not yet be eligible for Medicare and would have to find suitable health coverage that is often quite expensive.
You might think that forced early retirement is uncommon, but surprisingly, that is not the case. The Employee Benefits Research Institute data shows that in 2015, 50% of retirees stopped working earlier than they had planned and 60% of those retirees were forced to retire early due to a hardship (1). Working fewer years than expected can also decrease your Social Security benefits during retirement.
To protect against this retirement concern, you must plan for the unexpected. Here are some ideas to get you started.
Come Up With a Plan
Given the statistics of how many retire earlier than expected, it is prudent to come up with a plan for unforeseen circumstances. One way to do this is to plan for retirement readiness at different stages of life, with the goal of building resources to provide for a reduced but adequate standard of living. Create models for what your retirement would look like if you were to retire ten years before, five years before, and at your planned retirement age.
Your standard of living will be different in each model, but by setting your savings program up to meet graded goals, you may be motivated to save earlier and to assess what the final years of work will mean to your retirement.
Be Aware of Severance Options
Some job losses are inevitable, and in that event, employees should pay attention to severance programs and the possibility of negotiating a better deal if there is a layoff. Do not take a severance offer until you speak with someone who can help you evaluate what you have been offered.
As you age, it is crucial for you to keep your resume and your skills sharp, as well as make an effort to learn new skills. This will ensure that you remain a valuable part of your company. Stay focused on networking throughout your career so that you have professional relationships to rely on if you need them. If you happen to be laid off, your up-to-date skills and extra efforts will help you find another job.
Take Control of What You Can
Since the majority of those who were forced to retire early did so because of health reasons, take steps early on in your life to make your health a priority. Some situations are unavoidable, but in general, maintaining a healthy weight, eating right, getting the appropriate amount of sleep, and exercising regularly can be part of your retirement security plan.
Don’t turn a blind eye to the threat of an early retirement. You can set yourself up for success by taking a few simple steps to plan for the unexpected. To learn more, download our free report, 12 Keys to a Successful Retirement Strategy today. If you need help, call my office at 770.249.7424 or email me today at firstname.lastname@example.org.
(1) Employee Benefit Research Institute, and Greenwald & Associates. “2015 RCS Fact Sheet #2: Expectations About Retirement.” Employee Benefits Research Institute. 2015. Accessed August 25, 2016. https://www.ebri.org/pdf/surveys/rcs/2015/RCS15.FS-2.Expects.pdf.