Dealing with a Surprise Retirement
For years, you have imagined the way your second act will unfold: when it will start, what you will do, and where you will be. Then life hands you a wild card. You are forced to retire years earlier than you planned and with little notice. How do you adjust?
This turn of events is not uncommon. The respected Center for Retirement Research at Boston College finds that 37% of Americans retire earlier than they anticipate. The big dilemma is that you find yourself potentially having to fund a few more years of retirement with a few years less of accumulated retirement savings.
There are ways to respond to that challenge. Many new retirees work a little, and you might be able to find part-time or lower-paying employment, possibly with health care benefits. While not the work you once did, it can help you refrain from tapping your savings too soon.
You may want to reconsider when to claim Social Security benefits. You might not want to make big consumer purchases or embark on major vacations until you are confident you can justify them financially.
You may need to run the numbers again, as variables affecting your potential retirement income have changed. This circumstance could call for significant financial adjustments—and a fresh look at where you stand now in relation to your retirement savings and income objectives.
Could Working a Little After 70 Become Routine?
Some baby boomers and Gen Xers hope that they can work into their 70s. Is that hope unfounded? It may not be. Consider the nation’s shifting generational demographics and how they may reshape the workforce.
In 2035, Americans older than 65 will outnumber Americans younger than 18 for the first time, and by the mid-2030s, the percentage of physically demanding jobs may be lower than it is now. Jobs in information and service technologies could predominate—an ideal environment for highly educated adults who see no reason to stop being productive.
Many of these seniors will be aware that the longer you can put off claiming Social Security in your 60s, the larger the monthly benefits are expected to be. Currently, they are projected to be as much as 75% larger when claimed at the latest possible age of 70 versus age 62.
Evidence suggests that the population of employed Americans is already skewing older. As a Forbes article notes, the percentage of working men age 65–69 increased 10% from 1995 to 2016; for women age 65–69, the increase was 12%. Once again, baby boomers could defy expectations.
On the Bright Side
According to the TransAmerica Center for Retirement Studies, 76% of U.S. retirees own homes. Just 28% of these homeowners have outstanding mortgages, and the median balance of those home loans is about $52,000.
Registered Representative, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Lighthouse Financial, LLC., a Registered Investment Advisor. Cambridge and Lighthouse Financial, LLC., are not affiliated.
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty.
1 – fool.com/retirement/2019/03/04/what-to-do-if-youre-forced-to-retire-before-youre.aspx [3/4/19]
2 – forbes.com/sites/kerryhannon/2019/03/04/reimagining-retirement-with-purpose-and-a-paycheck [3/4/19]
3 – worldatlas.com/aatlas/infopage/nsewusa.htm [3/4/19]
4 – foxbusiness.com/personal-finance/how-to-successfully-navigate-financially-in-retirement [3/1/19]