Why You Should Plan for an Early Retirement
There’s a number in your mind. It’s the age that you’re thinking that you’ll retire. Is it 55? 62? 65? 70? Are you among those who believe they’ll never retire, or never be able to retire? The truth is you should plan for an Early Retirement.
My wife and I met with a financial planner when we were in our mid-50’s. In my mind, I was thinking I’d probably retire at 63. But in our discussions, we analyzed our ability to retire as early as 60. Just in case.
Two weeks after my 60th birthday, I left work for the last time.
The Retirement Surprise
The University of Michigan’s Health and Retirement Study found that more than a third – 37% – of workers retired earlier than planned. Does that shock you? It might be on the low end. Another study by the Transamerica Center for Retirement Studies found that number was 56%!
Think on that. Perhaps HALF of America’s workers are retiring earlier than they intended. How many were ready for it? Are you?
Time and again I’ve watched family, friends and co-workers retiring early. For some, it’s health reasons. Others were downsized. I have one friend who may shut down his company permanently because of a sea change in his industry due to the Coronavirus. Most of these people are very smart, but few saw it coming.
“Several studies have found that a deterioration in health precipitates early retirement. Other influences include changes in marital status and employer buyout offers.“
Center for Retirement Research – Boston College
Give Purpose to Your Dream
The most popular story on this website is Four Steps to Saving for Early Retirement. Most readers are probably looking at early retirement as a dream, and well they should. It is a blessing to be able to step away from work when you want to. But I’d also like to challenge your mind set. Make early retirement not just a dream, but a need. A purpose if you will.
“Only 11 percent of retirees retired sooner than planned because of financial ability.”
Transamerica Center for Retirement Studies
Your Early Retirement Number
This story is not meant to be doom and gloom. Even with so many unexpected early retirements, an overwhelming majority of retirees say they are happy. But four in ten retirees are also concerned about outliving their savings and investments.
See this as a call to action. That number in your mind? Take five years off of it and make a real plan to retire early.
There’s a good chance you’ll need it.
For more stories like this, visit our Retirement Planning section.
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As stated elsewhere, I am not a financial planner, and I am not making specific recommendations for your personal financial decisions. That’s why I recommend that you meet with a “fee only” CFP or similarly qualified investment professional to create your own retirement plan.
