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Ensuring Contingency for an Unexpected Early Retirement

For many retirement savers, early retirement is the holy grail. However, the reality is that once an age is reached when early retirement is available, many individuals re-evaluate their plans, putting retirement on hold either out of financial concern or a feeling that they are not yet ready to end their careers.

These people are lucky; they have a choice. But what will happen if ill-health, family commitments or professional circumstances take retirement plans out of your hands. Not only can such a situation make you feel helpless, it can leave you facing a cashflow conundrum that has the potential to plague your sunset years with insecurity and uncertainty.

This is why it is essential your retirement plan accounts for the possibility of the unexpected.

Don't Rely on Social Security

The full Social Security benefit age in the US currently stands at 66 years and 2 months for individuals born in 1955, rising to 67 for those born in 1960 or later*. So, it's unwise to rely on Social Security if there's a possibility that an unexpected, early retirement might be on your horizon.

Although early retirement benefits are available at 62, payments may be reduced by as much as 30%. Over time this reduction will add up, so it is essential that you have alternative sources of cash flow if at all possible.

Get Saving

A regular savings plan is the bedrock of most retirement strategies. The sooner you start saving, the greater your potential for growth and the more tolerance your wealth will have against market volatility over the longer term.

Regular savings vehicles can also be set up to act as an emergency fund in the event that you become ill, are made redundant or have to care for a spouse or other family member. Having regular savings can also protect your pensions or dedicated retirement accounts so that they can continue to grow. Discuss your regular savings goals with your financial advisor to develop a plan that suits your goals and circumstances.

Reduce Your Debt Burden

The more debt you clear, the more able you will be to cope with an unexpectedly early retirement. Debt can weigh heavily even at the best of times, but if you lose your work income it can quickly become unmanageable, eating into your cashflow and, consequently, your financial freedom.

A wealth manager can help you find the best way to structure your finances, including your debts, to help you make the most of your savings and retirement planning.

Manage Your Retirement Accounts

Unexpected storms can blow up quickly in your career so, the more on top of your retirement accounts you are the more likely you will be able to weather the rainy days. Speaking with your wealth manager about how you might build flexibility into your plans should form part of this process as it can help create an effective safety net should the worst happen.

Speak with Blacktower in the US Today

In 2019, a report from the Center for Retirement Research found that 37%** of retirement savers have to stop working earlier than they had planned. Early retirement has significant, potential financial consequences, including lost earnings, reduced social security payments and the loss of investment growth.

Even if you are in good health today there can be no guarantee that you will not have to retire early. Blacktower in the US can help you plan for all eventualities so that you can have confidence in your financial future. Speak to us today about your retirement planning options in the US.


*   https://www.nasi.org/learn/socialsecurity/retirement-age
** https://crr.bc.edu/wp-content/uploads/2019/01/IB_19-3.pdf 

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