Retiring Early Has an Unexpected Downside That Most People Forget to Plan For
Being able to retire early may sound like a fantastic scenario. But the experience of numerous retirees today may change this perception and lead you to rethink your own plans for the future. According to a NerdWallet survey, people tend to stop working at the age of 59 on average.
A bit surprising since the ‘traditional’ age for retirement is usually during a person’s 60s, specifically at 65 years old. After all, full retirement benefits from one’s Social Security doesn’t really kick in until 67 years old for some people.
So, what’s the downside of it all?
Apparently, statistics show that a significant portion of retirees didn’t actually retire voluntarily. About 36% of them say that they didn’t have a choice in the matter. Even more concerning is that 9% of these forced retirements were caused by job loss while 18% had to stop working because of various health concerns. As can be expected, these scenarios can cause major issues in one’s retirement and financial plans.
Thus, experts are recommending people to plan for the possibility of a forced early retirement when they get to planning their future. Doing so would better help one determine exactly how much to save each month for their retirement fund.
For example, take a hypothetical 25-year-old worker. Say he has an annual income of $40,000 while having about $10,000 in his savings. Expecting to retire at 67 and live until 95, he puts away $483 each month. However, suddenly being forced to retire at an earlier age would change all these.
If his retirement age suddenly changes down to 59, the same worker would’ve needed to set aside $883 per month, almost double of his initial monthly retirement savings.
So, what should be people’s take away from the above scenario?
Financial experts say that everyone should probably try to save like they’re retiring early even if they aren’t necessarily planning to. What more, NerdWallet retirement specialist Arielle O’Shea recommends people in their 20s to put away as much money towards their retirement now.
Meanwhile, she tells people, who are already in their 30s or 40s, not to despair. Instead, she advises them to take advantage of any positive changes in their finances. This may include putting the savings they’ll get from their kids’ transfer to a cheaper school towards their retirement fund.
Planning For Various Situations
For now, one of the best courses of action people can take for their retirement is to plan for a variety of outcomes. One can calculate how much to save considering different ages of retirement. This would help in determining changes in one’s financial targets and planning to meet them still.
More in Retirement
Experts’ Super-tricks to Save Six Times Your Income by 50
By the time you’re 50, you’re likely more financially stable than you were in your youthful years. But at this phase...December 9, 2020
The Iconic Hilton House is Up On the Market for $75 Million
In Los Angeles, the Jay Paley house, which has been the home to the Hilton family for more than 5 decades,...December 9, 2020
Tips That’ll Make You an Investment Master In No Time!
Investing is often considered to be complicated and risk-bearing because of unhappy stories we’ve heard from failed investors. But isn’t failing a part...December 8, 2020
Paul Simon Relists His Connecticut Estate For $11.9 Million
From sports to music to Hollywood, keeping entertainment aside, if there’s one thing that attracts us towards celebrities, it’s their lifestyle! Unlike...December 6, 2020
Why and How to Get Rid of Your Mortgage Faster!
Most people prefer to go with the flow; thus, they keep paying mortgages for years and years to come. It is...December 4, 2020
The Holiday Season is No Reason to Land Yourself in Debt
Everyone is eagerly anticipating Thanksgiving and Christmas’s auspicious occasions to shed off the misery of the past year. The coronavirus hit...December 2, 2020
These Private Companies Achieved Within 10 Years What Others Took Decades to Do
Similar to the fast pace technology evolves these days, modern companies also experience a quicker rise to financial success, especially when...November 30, 2020
Priscilla Presley Selling Her Home of 45 Years and it Comes with a Good Story
Priscilla Presley is primarily known for being the King’s wife. So, it’s safe to say that many Elvis Presley fans would...November 30, 2020
Wondering If You Can Build a House under $40,000 ? Here’s How It Is Possible
Due to the rising housing and real estate costs, a lot of people today are achieving their dreams of becoming a...November 30, 2020