You will probably retire sooner than you think

retire sooner

Hi all.  Life got busy and Part 3 of my series on simplifying your life and executing on the things that are most important to you is taking a bit longer than expected.  I know.  Ironic isn’t it? Anyway, that post will be up soon.  Meanwhile I wanted to give you a few quick thoughts on some recent research related to when we expect to retire vs. when we actually retire.

Expectations

When do you plan to retire?  If you said mid to late 60s, you have a lot of company.  Most people plan on working until then.  Here are the specifics.  According to the latest iteration of the EBRI Retirement Confidence Survey, 75% of people said they expect to work until at least age 65.  A full 38% expect to work to age 70 and beyond.  When asked why, some gave lifestyle reasons and some gave financial reasons.  In other words, for some it’s a choice.  They don’t need the money, but they enjoy the challenge, engagement and structure that work provides.  For others it’s a necessity.  They need the money.  The paycheck (and in many cases the healthcare) they earn from working longer is an integral part of their retirement funding strategy.

Reality

Do those expectations match up with reality?  In a word, no.  In addition to tracking when people expect to retire, the EBRI study also tracks when they actually retire.  And as you may have guessed by now, most people retire much sooner than expected.  The study found that 76% of people retire before age 65 with the median retirement age at 62.  Almost 40% retire before age 60 (vs. 9% expected) and a scant 4% work to age 70 and beyond (vs. 38% expected).  When asked why, some said they decided they didn’t really want to work after all.  Others had a health issue or were the victim of downsizing and were forced to quit sooner than expected.

Regardless of the reasons, when expectations and reality are so far off, it causes problems.  It reminds me of something Mark Twain once said: “It ain’t what you don’t know that gets you into trouble.  It’s what you know that just ain’t so.”

What if you retire earlier than expected?  You’ll need to figure out how to bridge the healthcare gap until you’re eligible for Medicare.  You may need to claim Social Security early and take a permanent reduction in benefits.  You will need to fund your lifestyle for several years more than expected.  You’ll need to find other ways to fill your time, find purpose and get social interaction than heading to the office.  Those are some serious issues.  So as you plan for retirement, outline what you want and what you expect, but always be asking “What if it doesn’t work out that way?”  Have a contingency plan.  Be ready to pivot or call an audible if necessary.  Then if expectations and reality diverge, you’ll be able to adjust and keep your plans on track.

Have a great week!  As I mentioned earlier, Part 3 will be on the way soon.  Also, we’re heading to Iceland in a few weeks to do some exploring, so I’ll probably write a post on that that includes some stories as well as some of the tools, tricks and strategies I use for planning trips.  Until then, stay intentional and touch base if there’s ever anything I can do to help you.

2 Responses to “You will probably retire sooner than you think”

  1. Fritz @ TheRetirementManifesto May 22, 2017 at 2:38 pm #

    Joe, I worry about those who naively think they’ll work until 70, and use it for an excuse not to be prepared. I’ve written a similar post, and can’t encourage folks enough to have a contingency plan in place! You may WANT to work until 70, but the odds are against you. Be prepared!

    • Joe Hearn May 22, 2017 at 4:52 pm #

      Couldn’t agree more. Be prepared!

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