Retiring Earlier Than You Might Have Planned

Lately I’ve been writing more about the concepts of financial freedom and independence. While there’s certainly nothing wrong, with going the “traditional path” of retiring in one’s 50’s/60’s, time is definitely finite, so exploring ways to achieve this, or perhaps use it to pay down debt have become inspiring. However, some may get faced with retiring earlier than expected for unforeseen reasons, and it can help to be prepared.

From Jonathan Pond’s Ponderings:

The statistics are scary. Among those who retire early, 40% do so involuntarily. Job loss is a major culprit, but unplanned early retirement may also be caused by health problems of the worker or having to care for a family member – a spouse or other relative in ill health or an aging parent.

While retiring earlier than you had planned may be the furthest thing from your mind, you should prepare a retirement projection that assumes an earlier retirement. Here’s how:

  • If you are in your 40s or younger. Prepare two projections assuming you will have to retire at age 55 and at age 60.

  • If you are in your 50s or older. Prepare a projection assuming you will have to retire next year. This is probably unpleasant to contemplate, but it’s better to find out in advance should such an eventuality arise.

There are numerous websites that have programs to help you prepare retirement income projections. Also, the Social Security Administration website,, can provide an estimate based on your earnings record of the impact of leaving the workforce early and/or a decrease in earnings later in your work life.

Unplanned early retirement may not be as financially deleterious as you may fear. Throughout your working years, everything you do with your financial planning and your career is geared toward an overriding objective – to be able to retire comfortably. The more diligent you are in these endeavors, the better able you will be to cope with an involuntary early retirement. Consider the following couple:

  • I left work several years earlier than planned. It’s one of those things that we thought only happened to other families. The financial impact wasn’t as severe as we had originally feared, thanks to health insurance and our savings. Looking back on this a decade later, my leaving work early was frightening at first and while it resulted in a somewhat lower standard of living, I’m really surprised at how well we can live despite the disruption in our financial and retirement plans.