Why You May Not Get to Choose Your Retirement Date

 There are many things in retirement you can’t control. You can’t control your health or even how long you’ll live. You can’t control economic conditions or market volatility. You can control your spending to a certain extent, but you can’t avoid unexpected emergencies like home repairs or long-term care needs.
 
One thing you may assume you can control, though, is when you get to retire. While your employer may have some input, you may feel that your retirement date is mostly your decision. For many retirees, that is true. It’s not true for all retirees, though.
 
Workers don’t always get to decide when they’ll leave the working world. In fact, a study from the Employee Benefit Research Institute found that nearly half of all retirees are forced to retire earlier than they had planned.1

That’s significant, because many workers say they plan on working past traditional retirement age. According to a study from Transamerica, two-thirds of baby boomers are planning to work past age 65. In fact, 15 percent of baby boomers say they will never retire. Why the strong desire to work past traditional retirement age? Most say they will work late into life because of financial reasons. They believe that working longer will help them overcome their retirement savings gap.2
 
As you might expect, a forced early retirement can have a sizable impact on your financial stability. When you are forced to retire early, you lose working years in which you would have contributed additional funds to your retirement accounts. Similarly, you create additional retirement years that you may have to fund with distributions from your savings. You may not even be able to file for Social Security benefits, depending on how early you stop working.
 
Do you have a contingency plan in place for forced early retirement? If not, now may be the time to develop a plan. In an ideal world, you would choose the age at which you retire. However, it may be wise to have a plan in place in case you don’t get that option. Below are two of the most common reasons workers are forced to retire early:

Disability
 
Most people become more vulnerable to injuries and illnesses as they advance in age. As you reach the final years of your career and approach retirement, you could become more susceptible to health problems that could force you to leave the working world.
 
Think the odds of suffering a disability are slim? Think again. The Council for Disability Awareness estimates that 1 in 4 adults in America will suffer a long-term disability at some point in their career. The group also found that, on average, workers assume they have only a 2 percent chance of suffering a disability. The reality is the average worker has a 25 percent chance of suffering a disability.3
 
The good news is there are steps you can take to protect yourself from the financial burden that comes with disability. You may want to consider an individual long-term disability insurance policy, which could provide you with supplemental income until you reach retirement age. Even if you have group disability coverage through your employer, an individual policy could help you replace your income should you become physically unable to work.

Job Loss
No matter what business or industry you’re in, the risk of job loss is always present. The economy changes very quickly. Even in strong economic cycles, businesses look for ways to streamline and become more efficient. What would you do if your position got eliminated and you were unable to find a new job?
 
Again, there are steps you can take to minimize this risk and the financial fallout. One is to keep investing in your skills and excelling in your career, even if your retirement is approaching. By making yourself more valuable to your employer, you may minimize the risk of being laid off. Also, an emergency reserve fund would be helpful in this scenario as well.
 
Ready to develop your backup plan? Let’s talk about it. Contact us at Carstens Financial Group. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.

 
1https://www.ebri.org/files/RCS_16.FS-2_Expects1.pdf
2http://www.transamericacenter.org/docs/default-source/retirement-survey-of-workers/tcrs2016_sr_retirement_survey_of_workers_compendium.pdf
3http://www.disabilitycanhappen.org/chances_disability/
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
 
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