Why are Americans retiring earlier than they expect?

When do you plan to stop working? 65?

We financial advisors sometimes make it seem that life is something that we can neatly plan for on a spreadsheet.

Buying a home, having kids, graduating college, or retirement.

The problem is life happens.

I was reading another advisor’s blog whose late-40s client wrote him and dropped this bombshell:

“Married, both 47, no kids. We both got our lives upended by two major, long-term, life-altering health diagnoses in the last two years. Unless science really pulls a rabbit out of a hat, it’s a matter of when, not if, we’ll both be forced to stop working.”

Life can be unexpectedly cruel.

When hit with news like this, the last thing you want to think about is money. You’re just trying to process how this will affect your family and lifestyle.

Luckily this couple gave themselves a lot of breathing room by being properly insured and saving tons during their working career.

Most of us don’t have that kind of foresight.

Our lack of foresight can best be explained by this chart from JP Morgan.

The average person thinks they are going to retire at age 65, but the average retirement age is 62.

Wow, good news!

People must be wealthier than they expected so they can move to the beach earlier… right?

For some yes.

But for most, early retirement was forced upon them because of health or layoffs.

Again, life happens.

This is why we recommend insulating yourself from these shocks with things like excess savings and disability insurance.
Not only do they protect and maintain your lifestyle when the worst happens, but they also give you confidence during your career that you’ll be okay no matter what life throws at you.

And yes, you still need to be able to have fun and pay for what you need today.

So it’s important to create a plan to balance all of these competing interests. Saving and insuring yourself more than you probably want to, but also having money left over to live and enjoy today.

If you’d like to review your own plan, don’t hesitate to reach out to schedule a meeting.