By Adam K. Wright, CFA®, CFP®
Many people dream of retiring at a certain age, but will your growing needs always align with your numbers? Retiring later to have more working years in order to minimize the need to live off savings is not always the most effective strategy since there is no guarantee you will be able to do so. Some factors that could affect your ability to work longer include health issues, the availability of suitable jobs for your age and skills, and changes in the job market.
Research pulled from the 2021 EBRI Retirement Confidence Survey suggests there is a considerable gap between when a person hopes to retire and when they actually retire. While 26% of respondents stated that they would like to retire at age 70 or older, only 6% followed through. Most people end up retiring earlier, and quite often it’s not by choice. Because life is unpredictable, there is always the chance you could lose your job or fall ill. Even if you want to work longer and save more, there’s no promise you’ll be able to do that if an unforeseen situation comes up.
Below are four reasons that reveal why retiring later is not always a dependable strategy. Keep these risks in mind as you build your retirement plan.
1. Unexpected Health Problems
Even if you are the picture of health today, you never know what will happen in 5, 10, or 20 years. As you age, your health can suffer and Medicare may not be enough. Working longer is not a guarantee, as 34% of retirees in 2021 were forced to retire early due to a health problem or disability.
2. Your Company Downsizes
It is incredibly disheartening if you are in the last few years of your career and your company downsizes, leaving you in the dust when you were counting on the income to provide for you in retirement. In fact, 25% of retirees were forced into early retirement due to changes at their company. At this stage of life, it’s challenging to find another job when prospective employers know you will be retiring soon. While you can keep your skills sharp and take measures to prove your value to your current employer, you just never know what will happen to your company as the years go on.
3. Your Family Needs Your Help
Your loved ones are aging right along with you. Even if your health is excellent and your company still needs you, you may need to step back from the workforce earlier than planned to take care of a spouse or other family member. Your family comes first, so you don’t want to feel the pressure of working just to have enough in retirement if the unexpected occurs. It’s not fun to plan for contingencies like this one, but having a proactive mindset can help you prepare for the worst-case scenarios leading up to retirement.
4. You Might Just Need a Change
When you’re in your 50s and still have years to go before you retire, it may seem simple enough to push out your retirement date from 65 to 70. But what happens when, at 63 or 64, you can’t imagine working for another six or seven years? If you were banking on working until 70, you might not have enough saved.
The younger you are when you retire, the more energy and health you’ll have to enjoy retirement. Many retirees regret spending their best retirement years grinding away at work. Sure, they had more money when they finally did retire, but they had less time to enjoy it.
Since you can’t predict the future, how should you plan?
Take Action Today
Taking action now is one of the best ways to ensure you reach your goals in the time frame that will allow you to make the most of your retirement. It’s never too early or too late to start planning for your retirement, no matter how many years you have left before you plan to retire.
At Wright Associates Investment Advisors, we understand how having the right strategy in place can make all the difference in the success of your retirement. Our mission is to support our clients by mapping out different retirement scenarios and opportunities to make smart decisions while maximizing savings. Schedule a complimentary phone call to get started and learn more about our services.
Adam Wright is a CERTIFIED FINANCIAL PLANNER™ professional at Wright Associates, helping clients plan and prepare their investments to retire on their terms. If you’re serious about planning for your retirement and investing for your future, his annual process will help you make the right money choices today. Therefore, Adam and his team will proactively manage your accounts while communicating the progress of your financial plans. He believes the retirement advice you receive should be intentional and actionable.
Adam has a Bachelor of Science in Supply Chain and Information Systems from The Pennsylvania State University and a Master of Business Administration from University of Pittsburgh, Katz Graduate School of Business. He lives in Upper St. Clair with his wife and two children. When he’s not working, Adam enjoys the outdoors (fly fishing), reading, and taking long runs while listening to a favorite podcast. He’s also currently encouraging himself to take up golf. To learn more about Adam, connect with him on LinkedIn.