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How Americans Can Prepare Now to Retire Earlier Than Expected


Retirees aren’t all working into their 70s — in fact, many American retirees are leaving work earlier than they planned. 

Data from the Employee Benefit Research Institute’s annual Retirement Confidence Survey found that about 48% of Americans are leaving work well before they expected. According to the data, the average expected retirement age in 2021 is 65, but the average retiree left work at 62, about three years earlier than expected. 

The survey, conducted in January 2021, polled over 3,000 Americans over age 25 — including over 1,500 retirees — about their expectations and experiences with retirement planning. 

The institute suggests that the pandemic caused Americans to re-think their retirement planning, with about a quarter of workers adjusting their retirement planning in the last year.

While the pandemic has changed many expectations, the realities may be outside of most retirees’ control: two of the three main reasons for leaving work early were health issues or disabilities, and changes within a workplace.

Financial planner John Smallwood says that in his 31 years of working in the financial field, it’s not uncommon to retire earlier than planned. “It happens more often than you want it to,” he told Insider. 

That said, there are a few steps to take today to make the transition later easy. 

1. Don’t wait until it’s too late to save

Smallwood sees some of his clients try to wait to save for retirement until their children are grown and they’ve downsized their homes. But, he says, that’s largely too late. 

“Let’s say you’re 60 or late 50s…you’ve lost that power of compound interest,” he says. This type of interest grows over time, snowballing to make money grow, and is especially useful for long-term goals like retirement savings. “When you think about an exponential curve, the power of compounding takes place 20 to 30 years from now,” says Smallwood.

If you don’t leave time for money to grow, you won’t have as much when you’re ready to retire. Starting now, no matter your age, can help you take advantage of as much compounding interest as possible, and increase what you’ll have to live on. 

2. Get a clear picture of what you’re earning and spending

“The No. 1 thing is really getting a very clear picture of your current income and then everything that comes out of your paycheck,” Smallwood says. 

He suggests sitting down and taking a look at what you earn each month, and what you spend each month. “I’m a big fan of really getting clear on true income sources, true taxes, you know, what’s actually going into savings.” Then, you’ll have a clearer picture of what you’ll need to live on later, and how much you have to save to get there. 

3. Get disability insurance if your income depends on working

One of the big reasons people stop working, according to the survey data, is disabilities and illness. “For so many people, their most valuable asset is their ability to earn income. When you lose that ability, you’re forced into early retirement,” Smallwood says. Disability insurance could help cover this.

A disability insurance policy could help you cover your expenses until you reach retirement age when you can take money penalty-free from your retirement accounts and Social Security. It’s a good idea for anyone who needs employment income to make ends meet, and it’s something Smallwood says could be critical in your later working years. 

4. Check your employer’s benefits, and make sure you’re getting a full match

If you work for a company with a 401(k), you should be contributing to it. Oftentimes, these plans include a match, which could give a boost to your savings. 

“So many people miss their 401(k) matches, and that’s free money,” Smallwood says. “[Many people] are not being mindful of what their true packages are.”

Talk with your employer’s HR department to find out if your company offers a match, and if so, how much. Financial planners recommend at least getting the full match before turning to other retirement accounts — after all, employer matches are a free boost to your savings. 



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