Early retirement is a dream shared by many but achieved by few. In fact, although half of U.S. workers say they’d like to retire by age 60, according to a survey from TD Ameritrade, only a third expect to be able to do so.
Retirement is expensive enough as it is, so if you want to be able to leave your job earlier than the traditional retirement age, you’ll likely need to have a mountain of cash saved up to last the rest of your life. So when you picture what types of people can afford to retire early, you may be imagining doctors, lawyers, and other affluent professionals.
However, new research shows a surprising reality: Workers who hold unskilled positions tend to retire earlier than their professional counterparts, and they also spend more years in retirement. But before you quit your job, there’s more to the story.
How your career affects your retirement age
This surprising tidbit comes from a report published in the Journal of Epidemiology and Community Health. Researchers spent over a decade studying citizens in the U.K. to find out how occupational social class and overall health affected the age at which workers retired. In part, they looked at the differences between those who worked unskilled jobs like cleaners, messengers, and manual laborers and those who worked professional jobs such as doctors, accountants, and engineers.
Ultimately, they discovered that those who held unskilled positions retired earlier, on average, than those in professional roles. Furthermore, these unskilled workers also tended to spend more years in retirement. In fact, unskilled workers in poor health still spent around five years longer in retirement than professional workers in good health.
That said, the study also revealed that the reason unskilled workers retired earlier usually had to do with health problems. The professional workers who spent fewer years in retirement did so because they were in better health and were able to work longer before retiring.
Early retirement is more common than you may think, and it’s not always a positive thing. Roughly 43% of current U.S. retirees said they were forced into retirement earlier than they’d anticipated, a report from the Employee Benefit Research Institute found. When asked why they had to leave their jobs early, the most common responses included health issues and unexpected job loss.
If you have to leave your job earlier than you planned and your savings aren’t retirement ready, your golden years may not be as enjoyable as you’d hoped. Especially if you’re forced to retire due to health issues and can no longer work, you may have no choice but to make do on whatever you have saved — whether you can actually afford to retire or not.
Protect yourself against an early retirement
Some factors — like health issues and unexpected job loss — are out of your control, so you may not be able to avoid an earlier-than-expected retirement. But you can prepare yourself the best you can and protect your financial future.
One way to do that is to start building a robust retirement fund sooner rather than later. If your retirement strategy is to simply work into your 70s or 80s so you don’t need to save as much now, your plans could be thrown out the window if you end up retiring before you’re financially prepared. While it’s not necessarily a bad thing to want to work past the traditional retirement age, make sure you have a backup plan in case you have to retire earlier than you anticipate.
A second option is to increase your Social Security benefits. Waiting to file for benefits until your full retirement age (FRA) will ensure you’ll receive the full benefit amount you’re entitled to. But if you wait until after your FRA to claim, you’ll receive extra money each month in addition to your full amount. That boost can be significant, too — those with a FRA of 67 can expect to receive an additional 24% each month by waiting to claim until age 70.
The downside to this strategy is that if you’re forced into retirement in your early or mid-60s, you’ll need to be able to survive on your savings alone until you’re ready to claim benefits. But if you can swing it, you can collect fatter Social Security checks every month for the rest of your life.
Early retirement can either be a dream come true or a nightmare, depending on your financial situation. While you can’t know whether you’ll be forced into an early retirement or not, you can protect your finances to give yourself the best shot at retiring as comfortably as possible.
