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November 29, 2012 at 12:04 PM
There are so many Boomer retirement headlines, it’s difficult to keep up. “Nation’s First Boomer Turns 65 on New Year’s Day”; “What Happens when Baby Boomers Retire”; and the less optimistic “Boomers Report No Savings at All”. As advisors, most of us work with Boomers, most notably as they face retirement challenges that many aren’t adequately prepared for.
And we do see some headlines about early retirement – although not as many now as we did before the housing bubble burst. When I mention early retirement, the first thought is typically of those incredibly fortunate, well-prepared Boomers whose kids are out of college, who own their houses free and clear, and who will be able to afford pre-Medicare retirement plans. But we should be discussing another element of early retirement with all of our pre-retiree clients: an early retirement that may not be their choice.
In its 2012 Retirement Confidence Survey, the Employment Benefit Research Institute (“EBRI”) finds that nearly “half of current retirees surveyed say they left the work force unexpectedly”. The prospect of an unplanned early retirement is real, and is happening more frequently since the US economic downturn. (This is consistent with results from prior surveys, where the percentage ranged from a low of 37% in 2007 to a high of 52% in 1991.) Advisors need to discuss with their clients the risk of early retirement as much as the desire for early retirement.
The most frequent reasons for unplanned retirement mentioned in the study include health problems or disability (51%), employer-driven changes (21%), and the need to care for a family member or spouse (19%). In some cases, the retirees fortunately felt that they could afford early retirement along with the “negative” reasons cited. But only 8% of retirees mentioned only positive reasons, such as being able to afford retirement or wanting to do something else, as the drivers of early retirement.
