Many plan to work well into their 60s or even 70s, thinking they can make up for years of undersaving. But according to recent surveys, retirement may come sooner than expected for many Americans — whether they’re ready for it or not.
The average retirement age in the U.S. is about 62, although most workers expect to retire around age 67. In fact, more than 56% of retirees left the workforce earlier than planned, according to a study by Transamerica. So, what’s causing this gap between expectations and reality?
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Health is a big factor. About 38% of early retirees say they had to stop working because of health issues or disabilities. This isn’t always part of the plan, but sudden medical conditions or ongoing health problems can quickly change things. This is a reality that many people don’t consider when they imagine working into their late 60s or 70s.
Then there’s the labor market itself. Fourteen percent of those who retired early did so after being laid off; for many, finding another job is neither attractive nor feasible.
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Businesses shrink, industries change, and job security diminishes as people age, making retirement less of a choice and more of a necessity.
In addition to these reasons, life events – such as family changes or unexpected financial shifts – can also force people to rethink their plans. Some may feel that they have saved enough to retire early, but for most, it is often a combination of circumstance and necessity that brings them to this point.
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Financially, retiring earlier than planned can be a challenge. Many people dip into their savings earlier than expected, causing their retirement funds to thin out over time. According to several reports, the average American retiree has saved about $269,078 for retirement, far below what is typically recommended. Financial planners suggest a goal of about $572,000, and that gap can mean tough choices later on.
Additionally, if people claim Social Security benefits before they reach their full retirement age — 67 for many — they will see a permanent reduction in monthly benefits. And if they retire before Medicare eligibility kicks in at 65, they may face higher health care costs or gaps in coverage.
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So, what does this all mean? Planning to work longer may not be the foolproof strategy some hope it will be. Between health issues, layoffs, and other unexpected life events, early retirement happens to more people than you might think. And without enough savings, the financial picture can quickly become complicated.
While everyone’s situation is different, having a backup plan and saving more now may be the safest option for those who want more control in retirement. It’s always wise to reassess your retirement plan, and consulting a financial advisor can give you a clearer picture of where you stand. They can help you adjust your savings strategy, assess your investment options, and ensure you’re prepared for surprises that could force you to retire early.
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This article Most People Expect to Retire at 67, But 56% Are Retiring Earlier – Can You Guess the Real Average Retirement Age? originally appeared on Benzinga.com
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