Saving for retirement is a difficult enough task for most people, even with solid planning and the best intentions. When situations arise that throw a retirement plan out of whack, best intentions are thrown under the bus. A statistic unveiled in a Sun Life Financial study could undo a significant number of best intentions.
A survey of people forced to retire revealed that 22 percent of all retirees are forced to retire several years earlier than they wanted to retire, with 69 percent of those saying their overall retirement plans were affected somewhat or a great deal. The end result often is that people are left far short of their retirement savings goals. To compound the problem, 55 percent said they were ineligible for Social Security when they were forced out.
It would be easy to assume that forced retirement would affect middle-class people to a great extent, but even those with considerable assets were affected. Seventy-six percent of respondents with liquid assets between $250,000 and $750,000 said their retirement plans were affected.
The biggest reasons for forced retirement were layoffs/downsizing (44 percent), personal illness (32 percent) and injury (14 percent). People reporting forced early retirement said they had to make several lifestyle and financial adjustments, including the following:
- Reduction in expenses: 61 percent
- Fewer vacations and social activities: 47 percent
- Collecting Social Security before they wanted to: 43 percent
- Dipping into a 401(k) or IRA: 30 percent
“It appears that unanticipated, forced retirement is occurring at an alarming rate, leaving the impacted retirees unprepared,” said Mary Fay, vice president and general manager, Annuities of Sun Life Assurance Co. of Canada (U.S.). “The survey findings reinforce the importance of pre-retirees to reassess their long-term financial plans and work with a financial advisor to prepare a rainy day scenario to ensure they are protected in case the unexpected occurs.”
For more information about the survey, visit www.sunlife-usa.com.