Early Retirement Might Not Be a Choice

February 6, 2017

I work with many clients who are retired.  Some of them retired when they sold their businesses.  Others retired from the corporate world after long and successful careers. Very few, however, retired at the “normal” retirement age of 65.

I recently saw a survey that showed that only 24% of American workers expect to retire by age 65, but, in fact, 65% of Americans are actually retired before age 65.  Therefore, 41% of workers retire before they thought they would.  Workers of all levels are taking early retirement, and often this is involuntary.  Many companies today are forcing early retirement packages on workers at all income levels.  The surprised 4 out of 10 workers in the survey cite health issues, disability, or a “corporate event” as the reasons which led them to retire early.

So, do you know your retirement date?  For our purposes let’s define your retirement date as the date you get your last pay check from your business or employer.  Remember this may well have nothing to do with your age.  It is simply the time when you no longer receive a W2, and your only income depends heavily on what you can generate from your life’s savings.  Many current workers are very uncertain about how much longer they plan to work.  This is often because they do not know how long their company will need them. I suffered receiving an “offer” of an early retirement package back in 2009.  With hindsight, it had a positive impact as it catalyzed me into starting a new and fulfilling career.  However, at the time I was faced with the possibility that my assets would have to sustain my family through the unknown and protracted period called retirement.

The latter part of our working career is usually when our pay is at its highest.  It is also, however, often a time when we are faced with large expenses such as paying down the debt on homes, college education for our children, or supporting aging parents.  This can be an anxious time as we seek to maximize our financial accumulation in preparation for retirement, while being aware of the risk that an illness, or a corporate action, that can take away our high paying jobs.

So what to do?  Unless you own your own business you are probably more at risk of an earlier retirement date than you think.  To mitigate this risk, my advice is that you must plan.  Are your assets working as hard as they need to be?  Are you aware of where you are spending your money?  Do you know what you might need to live the lifestyle to which you aspire?  Think of how you would react if next week a smiling person from HR walked up to you with a big envelope and said we have a wonderful offer for you – and by the way you have no choice but to take it.

Carl Gambrell