4 Reasons You Might Have No Choice When To Retire (And How To Plan Ahead)
Written by
Kerra Bolton
Edited by
Amber Barkley
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Many people envision a grand exit when they finally retire.
However, unforeseen circumstances, such as health issues, job loss or increased caregiving responsibilities, can force early retirement. But factoring these possibilities into retirement savings can still keep the vision alive.
Here are four reasons you might have no choice when to retire and how to plan.
Personal Health
Chronic illness, disability or unexpected medical events can make full-time work difficult and force an early retirement, said personal finance expert Erika Kullberg.
“Those who retire before Medicaid eligibility at 65 may struggle with high insurance premiums, which can drain savings much faster than expected,” Kullberg said. “Losing a steady income stream earlier than planned can put big pressure on your savings, especially if Social Security benefits or a pension plan haven’t kicked in yet.”
Melissa Pavone, founder of Mindful Financial Partners, said a robust emergency fund is one of the best defenses against unexpected retirement.
“I recommend saving at least six to 12 months of essential expenses in a high-yield savings account to cover unexpected job loss or health-related early retirement,” Pavone said. “This fund provides a cushion while you evaluate your next steps and protects long-term investments from unnecessary withdrawals.”
Job Loss
Corporate restructuring can often lead to layoffs, putting older workers at risk. An AARP survey found that 74% of older adults surveyed said they were worried about age discrimination during their job search this year, including 42% who said ageism is a major barrier to finding new work.
“Layoffs can be particularly devastating for older workers, and not just 60 plus,” said Sean Lovison, CFP, founder and lead planner at Purpose Built Financial Services. “Ageism is real, and it can start in your late 40s and early 50s, making it hard to find comparable positions and frequently forcing workers to accept significantly lower salaries.”
Planning for an early retirement, even if older adults plan to work longer, can also help.
“This means maximizing savings contributions to retirement accounts like 401(k) [plans] and IRAs, keeping fixed expenses low and creating a financial plan that accounts for various scenarios,” Lovison said.
Christopher Stroup, founder and president of Silicon Beach Financial, said older workers should build an emergency fund, consider long-term insurance and focus on diversifying their investments.
“With these pillars in place, you can help mitigate risks to your finances while ensuring financial security if forced to retire early,” Stroup said.
Shifting Family Responsibilities
Experts said older adults also face shifting family responsibilities as they near retirement.
“The most common is their own health challenge or that of a close family member, making the time and energy required for a career impossible,” said Elizabeth Zelinka Parsons, a retirement transition expert, lawyer and author of “Encore: A High Achiever’s Guide to Thriving in Retirement.”
Parsons explained, “However, we also see a spouse’s retirement date influence timing, as well as a desire to reach goals that have been deferred during working life. We also see people ‘pause’ their careers to raise their kids, although they plan to return to a new chapter of working life later.”
Nevertheless, older adults need a plan even while facing shifting family responsibilities.
“It’s really important that you keep an emergency fund, adapt your financial plan to account for evolving goals and regularly review your retirement plan to ensure that you remain flexible for unexpected life events,” Stroup said.
Changes in Financial Stability
Financial planners often recommend saving about 75% of pre-retirement income to maintain a comfortable standard of living during retirement. However, an unplanned retirement can also cause a significant financial strain.
“They may face the challenge of replacing lost income while simultaneously trying to meet their retirement savings goals,” Lovison said.
Pavone said that older workers can prepare for unexpected retirement by strategically withdrawing from taxable, tax-deferred and tax-free accounts to minimize an increased tax bill.
“Ensure longevity of funds by balancing Social Security, pension and investment withdrawals,” Pavone said. “Avoid costly mistakes, such as withdrawing too much too soon, triggering higher tax brackets or missing required minimum distributions (RMDs).”
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