THE DECISION TO RETIRE MAY NOT BE OURS TO MAKE
Planning to work until age 65 or even 70 is the riskiest retirement plan of all. As with most areas in life, there is often a discrepancy between expectations and reality. We may expect to work until 65, but the reality is the decision to work until age 65 and beyond may not be our decision to make. Our hand may be forced sooner.
We could be fired and unable to find a new job
Our physical health could prevent us from working our current job
Our mental health could prevent us from working our current job
A family member may need our full time care, requiring us to leave our job
Forced retirements can be extremely sudden. Early retirement can be great if it is planned for. The problem is many people expect to work until retirement age and plan around that. Being forced into an early retirement can have some dire financial consequences.
There are studies that show approximately half of people retire earlier than they had planned. That is a lot of planned cash left on the table, resulting in massive shortfalls.
Let’s imagine a 60 year old Ian had $300,000 and planned to have $450,000 by age 65. He plans to save about $30,000 per year for 5 years to hit his retirement target. But then his employer lays him off and he can’t find alternative employment. He will be well short of his required savings. Not only will he be $150,000 short of his target, but he will also have an extra 5 years of expenses to fund. Even if he can find a new job, chances are it won’t be at the same high rate of his old job. Running out of money in retirement is a huge fear of mine, and many people. Living on the poverty line in old age will not be fun.
This raises the importance of trying to hit your targets earlier. Start saving earlier. Even if you plan to work until old age, financial independence is a great goal for any age. Please don’t delay this. With retirement, the decision may not be yours.
If you need help with your personal retirement planning, then get in touch today.
The information contained on this site is the opinion of the individual author(s) based on their personal opinions, observation, research, and years of experience. The information offered by this website is general education only and is not meant to be taken as individualised financial advice, legal advice, tax advice, or any other kind of advice. You can read more of my disclaimer here.