Imagine this: You’re 62, and you’re almost there! You’ve been diligently saving for retirement for years, and at 65, you’re planning to bid farewell to your full-time career. You’ve teamed up with your financial planner to estimate your retirement spending, shift to a safe investment strategy, and craft a tax-efficient income withdrawal plan. You’re even exploring the best options for long-term care healthcare, factoring in Medicare and supplemental insurance, and revisiting your estate plan. Everything seems to be falling into place, and you’re feeling great about your future. But then…
An industry downturn hits, and your employer makes cuts. To your dismay, that multiyear project you’ve been working on is eliminated, and so is your job – just three years shy of your planned retirement and two years before your youngest is off the family payroll and benefits plan. Yikes!
So, if this were you, what would you be thinking and feeling? What would you do?
Believe it or not, this scenario is more common than you might think. According to the “2024 Retirement Confidence Survey” by the Employee Benefit Research Institute and Greenwald Research, there’s a significant gap between pre-retirees’ expectations and retirees’ actual experiences.
- Over half of pre-retirees expect to retire at age 65 or older, while 63% of retirees retired earlier than 65, with a median retirement age of 62.
- Of those who retired earlier than expected, 70% did so due to reasons beyond their control, such as changes at work, declining health, or disability.
- More than 50% of pre-retirees want to transition into retirement gradually, but over 70% of retirees experienced a “full stop” retirement.
- And while 75% of pre-retirees expect to work in retirement, only 30% of retirees actually do.
I, like you, know folks who retired earlier than planned, some due to job loss and others due to health issues or the need to become caregivers. Most sought advice from their financial planner to understand the impact of early retirement. This led some to search for a new job, start a business, or retire early with adjusted financial plans. That all sounds reasonable, right? But here’s the rub – retirement re-calibration isn’t just about adjusting finances.
When someone retires, planned or not, they might not anticipate the sense of loss because their identity was closely tied to their career. Those who start a job search may face the challenges of finding a new job at a certain age. Many people’s social connections come from their workplace, and their absence may be felt deeply and swiftly. Volatile emotions, loss of identity and social connections, isolation, and the challenge of ageism can take their toll on our mental and physical wellbeing.
Preparing for retirement is a holistic journey. It’s about the person you are and the person you will become in your next chapter. It’s about finding the optimal mix of structured and unstructured activities that you find meaningful. It’s about your social network built around those things you want to do and those you care for most. And it’s developing new routines and habits that promote continuous learning and a healthy lifestyle.
If an unplanned early retirement happened to you, how can you get out in front of it? One way is to start planning for retirement early, 5 to 10 years out, and expand your thinking to include the lifestyle design for your next chapter. An initial design will help you land softly no matter the circumstances, deal with the wide range of emotions, reimagine your identity and purpose, put a healthy lifestyle into practice, renew enriching relationships and start anew, and discover activities that are engaging and meaningful to you.
Would love to hear how you are going about designing your next chapter.
Carol Bergeron guides people through major life transitions with a focus on self-reflection, visualization, and collaboration. She helps clients adapt to personal and professional changes, especially when shaping modern retirement lifestyles, which involve emotional, social, lifestyle, and health-related shifts converging all at once.
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