Early Retirement Forced on Some

According to LIMRA Retirement Research, for nearly half (49%) of retirees surveyed, the date of their retirement was dictated by factors out of their control. Factors such as health issues (17%), job loss due to layoff or an employer buyout (14%) and negative work conditions (7%) were cited as the most common reasons behind retirees leaving the work force earlier than planned.

Just 45% of those polled said they retired when they had planned, and only 6% retired later than they had planned.

Retiring earlier than planned can have significant long-term consequences, LIMRA noted. When someone is forced to retire early it could seriously affect their standard of living in retirement. In addition to the loss of a regular paycheck, early retirement also affects employer-supplied benefits such as health care coverage and retirement contributions.

In many cases, retirement is forced on people who are actually preretirees, said LIMRA. Several years younger than a typical retiree, a preretiree may not be eligible for options such as Social Security benefits or a reverse mortgage. They need to make financial decisions immediately that they would have ideally made later.

Advisers who recommend to their clients steady systematic savings throughout one’s career can help them mitigate some of the risk, LIMRA suggests. Because no one can predict retirement dates with perfect accuracy, early planning and preparation makes it less painful when someone is forced to leave the work force earlier than planned.

Research from LIMRA was based on 5,296 consumers, which included 1,533 retirees, 1,391 preretirees (age 55 and older, and not retired), 955 Late Boomers (ages 45 to 54, and not retired) and 1,417 from Generation X and Generation Y (younger than age 45, and not retired).

A chart containing a breakdown of timing and reasons for retirement can be found here.