Beyond the Traditional Path: Exploring the Limitations of Delaying Retirement
By John Benedict
As you imagine your future retirement, you probably have a specific age in mind for when you’d like to retire. But what if you crunch the numbers and come to realize that your retirement income falls short of your needs? Should you simply plan on retiring later to extend your working years and minimize the time you rely on your savings? Although this approach may seem logical, it isn’t always the most effective strategy.
Based on findings from the 2021 EBRI Retirement Confidence Survey, a large disparity exists between people’s expected retirement age and their actual retirement age. While 26% of respondents expressed a desire to retire at age 70 or older, only 6% followed through with it. Many people end up retiring earlier, often due to unforeseen circumstances. For example, job loss or health issues can disrupt your plans to work longer and save more, making retiring later an unreliable strategy.
Let’s explore a few reasons why relying on retiring later may not be a dependable approach.
Unexpected Health Problems
Even if you are the picture of health today, you never know what will happen in 5, 10, or 20 years. As you age, your health can suffer. Working longer is not a guarantee, as 34% of retirees in 2021 were forced to retire early due to a health problem or disability.
Your Company Downsizes
It is incredibly disheartening if you are in the last few years of your career and your company downsizes, leaving you in the dust when you were counting on the income to provide for you in retirement. In fact, 25% of retirees were forced into early retirement due to changes at their company. At this stage of life, it’s challenging to find another job when prospective employers know you will be retiring soon. While you can keep your skills sharp and take measures to prove your value to your current employer, you just never know what will happen to your company as the years go on.
Your Family Needs Your Help
Your loved ones are aging right along with you. Even if your health is excellent and your company still needs you, you may need to step back from the workforce earlier than planned to take care of a spouse or other family member. Your family comes first, so you don’t want to feel the pressure of working just to have enough in retirement if the unexpected occurs. It’s not fun to plan for contingencies like this one, but having a proactive mindset can help you prepare for the worst-case scenarios leading up to retirement.
You Might Just Need a Change
When you’re in your 50s and still have years to go before you retire, it may seem simple enough to push out your retirement date from 65 to 70. But what happens when, at 63 or 64, you can’t imagine working for another six or seven years? If you were banking on working until 70, you might not have enough saved.
The younger you are when you retire, the more energy and health you’ll have to enjoy retirement. Many retirees regret spending their best retirement years grinding away at work. Sure, they had more money when they finally did retire, but they had less time to enjoy it.
Since you can’t predict the future, what are the steps you could take to plan?
Prepare for Your Future Today
Ultimately, it may be possible for you to retire when you want at a later age, but wouldn’t it be nice to have the comfort of knowing that you have taken every possible step to reach a successful and comfortable retirement, even if circumstances allow you to retire earlier than planned? Age is not a barrier when it comes to taking action and planning for your future, whether it’s five or 20 years from now.
At J2 Capital Management, our main goal is to guide you in making informed decisions about your finances. By working together, we can help you map out different retirement scenarios, evaluate how your savings align with those scenarios, and identify opportunities to increase your savings. To learn more about how we can support you, please contact us to schedule a meeting online or reach out to us at info@j2cmonline.com or 248-641-4444.
About John Benedict
John Benedict is CEO, investment advisor representative, and portfolio manager at J2 Capital Management, a boutique financial advisory firm specializing in in-house custom financial planning, tax, estate, and investment management. With over 20 years of experience, John is passionate about helping clients navigate uncertain markets, reduce risk, and plan for a sound future. John combined his talents and passion in statistics and technical analysis to create J2’s tactical strategies, managing them since the beginning of the organization. He is known for being a visionary and continually looking for ways to improve J2’s services and strategies to better serve his clients. John graduated from Central Michigan University with a degree in business administration and finance, and his thoughts on markets and technical analysis have appeared in The Wall Street Journal, Investment News, and on Moneyshow.com. He was also a contributor to the book The StockTwits Edge: 40 Actionable Trade Set-Ups from Real Market Pros.
When he’s not working, you can find John boating or participating in water sports and spending time with his wife, Janine, and his three children, Jack, Alexis, and Saraphina. To learn more about John, connect with him on LinkedIn. You can also register for his latest webinar on What Makes J2 Capital Management Different From Other Financial Advisors.