Plan for an Early Retirement — Even if You Don’t Want One

I know a lot of people who have a goal of retiring early, be it in their late 50s or sometime during the first half of their 60s. Personally, the idea of early retirement doesn’t interest me. (Technically, if I have my way, I’ll never really retire, but that’s a different story.)

When you retire early, you face a number of challenges that can be mitigated by, well, not retiring early. Take healthcare, for example. If you retire before the age of 65, you’ll need to figure out coverage, since you won’t yet be eligible for Medicare. That could be a huge expense.

Then there’s your savings to think about. You might manage to amass a nice-sized nest egg. But if you need that money to last for 30 or 35 years instead of 20 to 25 years, it won’t give you as much buying power.

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That’s why I happen to think early retirement is a bad idea — at least for me. But I know plenty of people who agree. Still, you may want to plan for an early retirement even if your goal is to work until your late 60s or beyond for one big reason.

Life doesn’t always go as planned

You may have every intention of working well into your late 60s or 70s. But you may end up having to retire early if health issues prevent you from working.

That’s precisely what happened to 53% of early retirees in a recent survey by Clever Real Estate — they left the workforce ahead of schedule due to health issues. And while you can take steps to prevent that scenario by taking good care of your health when you’re younger, the reality is that even people in good shape with solid habits can see things take a turn for the worse later in life.

Take a family member of mine who’s always maintained a good diet and healthy weight. During her 40s and 50s, she had no reason to believe she’d have health issues in her 60s. But over the past couple of years, she’s developed a number of problems with joint paint and fatigue, to the point where she’s already had to scale back from 40 hours of work per week to 20. And she’s only 62.

Her goal is to keep working part-time as long as she can to avoid having to claim Social Security too early. And thankfully, she has savings to fall back on. But her original plan was to retire in her late 60s, and now, here she is, looking at having to move up retirement by a good five years or so.

The point, therefore, is to make sure to save steadily throughout your career so that if you’re forced into early retirement, you can manage it financially. Along these lines, don’t wait until your 50s to ramp up your 401(k) or IRA contributions. Rather, boost your savings rate earlier in life in case you don’t end up with as many working years as expected.

Health problems can be sudden, and they can also be sneaky. But if you plan and save accordingly, you won’t have to worry as much about managing financially if you’re forced into early retirement.

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