There are countless articles on retiring early, I’ve even written some of them. It’s a goal many Americans dream of, work towards, and aggressively save for.
However, according to the Center for Retirement Research, 37% of retirees had to stop working sooner than expected. A forced early retirement might sound like an oxymoron, like “too long of a vacation,” but, for many. the reality is far from rosy.
The most common reasons cited for exiting the workforce prematurely are health issues, followed by employment problems (i.e. being laid off), and, lastly familial, difficulties. I would posit that the last concern may soon begin to weigh far more heavily on your working-age clients in their peak earning years.
The State of Family Caregiving
Demographic changes may occur in slow-motion, but their momentum is inevitable. According to the Urban Institute, over the next 50 years the number of older Americans with disabilities is expected to increase by 2.5 times. The bulk of this increase is expected to occur amongst the “oldest old”, those over the age of 80. Medicine is helping prolong the quantity of life, not always the quality. Simultaneously, the birth rate in developing nations is declining. This combination of more folks needing care and less available to offer it can have far-reaching effects.
Who Are the Caregivers?
In 2016, the National Alliance for Caregiving showed that roughly one in six Americans are taking care of a disabled family member, the average caregiver is 49 years-old, and 60% of those caregivers are female. Relatives who step up to the responsibility often realize relocation, house reconfiguration, additional expenses, and of course work interruption.
How a Caregiver Can Prepare
Caregiving can offer newfound stressors and rewards. For the grateful it could feel like the ultimate repayment to Mom or Dad for all those years of child rearing and support. However, some level of stress in this breaking of routine is unavoidable.
The steps to prepare for this unwanted early retirement often involve the same retirement strategies you’ve heard, just doing more and earlier. Liquidity in the 50s may become critical for financial support of the disabled as well as your own family. This is where savings inside of non-qualified accounts, Roth IRAs (contributions available tax and penalty-free at any time), or cash value life Insurance can avail funds sooner than originally planned.