Suze Orman: 3 Retirement Curveballs To Watch Out For
Written by
Nicole Spector
Edited by
Molly Sullivan
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Most people don’t know how long they’ll live or what their old age will look like, and there’s no shortage of brutal realities. For example, most people will have to reduce or all together stop driving by their mid-70s. Additionally, the lifetime risk of dementia increases to over 50% among those who reach age 75. And most people are likely to develop a condition requiring long-term care in their senior years. You can hope for the best, but you have to prepare for the worst.
In a recent post on her blog, financial expert Suze Orman discussed three common retirement curveballs. Even if you’re lucky enough to dodge these curveballs, you need to know what they are and to stress-test your retirement plan to make sure that if you are struck, you — and your finances — can handle it.
Not Being Able To Go Back To Work, Even If You Want To
This year’s Retirement Confidence Survey by the Employee Benefit Research Institute found that 3 in 4 people working expect to go on to continue to earn money in retirement. But that doesn’t usually happen.
“In reality, only three in 10 people surveyed who are retired are working for pay,” Orman wrote.
The top reason retirees opt to go back to work is to be able to make money amid rising costs of living. But what if you physically or mentally can’t return to a working lifestyle?
Around 46% of Americans ages 75 and older and 24% of those ages 65 to 74 reported having a disability, according to estimates from the Census Bureau’s 2021 American Community Survey (ACS). Who’s to say that you won’t be among the Americans who have a disability in retirement, and one that renders you unable to generate income?
Retiring Earlier Than You Intend To
Maybe you’re set on retiring at the full retirement age of 66 or 67, depending on when you were born. Maybe you’re thinking you may even push it back a couple years to make some more money before you bid adieu to working life. Consider the cruel possibility that you may not have a choice but to retire early.
“About two-thirds of people surveyed who reported they retired earlier than planned said it wasn’t their idea,” Orman wrote, citing data from the Retirement Confidence Survey. “About 30% said they stopped working due to downsizing or other strategic staffing changes at their job, and another 30% had a health problem or disability that pushed them to retire early. Some people reported stopping work earlier to care for a spouse or another family member.”
Retiring Abruptly, Rather Than Gradually
Do you want to sail smoothly into retirement? Maybe do leave the full-time hustle and bustle but work as a consultant for a few years before exiting the workforce? Well, yet another brutal reality could strike. A bad health event or some other serious situation in your life may force you to pull the plug fast on the working life.
“Half of the surveyed workers said they plan to have a gradual transition to retirement where they have reduced hours, rather than a cold-turkey full-time stop,” Orman wrote. “Yet nearly 3 in 4 retirees said they, in fact, didn’t have the gradual transition, and instead did an abrupt change from working on Friday and being retired on the following Monday.”
They’re called curveballs because we don’t see them coming. But that doesn’t mean we can’t prepare for them so that if they do hit us, we’re not taken down with them.
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