If your retirement savings account isn’t quite as robust as it should be, the idea of working longer may seem like a useful remedy. So it’s not surprising that when you ask people when they plan to retire, about one-third say they’ll work into their 70s or later.
There’s just one problem: Odds are fairly high that life will throw a curveball your way — and you’ll end up needing to retire a lot earlier than you expected.
In 2017, half of retirees retired before age 62 and an additional 25% retired between 62 and 64, according to a Federal Reserve survey. Another survey, by the Employee Benefit Research Institute in 2018, found that while about 30% of workers say they plan to work to 70 or beyond, only 7% of retirees actually waited that long.
All told, almost half of retirees say they left the workforce earlier than planned, according to the EBRI. Often retirees say their own health worsened, a family member needed care, or they lost their job.
“In many cases, the age of retirement is largely, if not mostly, driven by factors that are beyond the control of the individual employee, things like family health, personal health or employer health,” says Shane Bartling, senior director, retirement, at consulting firm Willis Towers Watson.
Prepare for the unexpected
What does this mean for you? Rather than hoping to work as long as you want, it makes sense to take steps now to plan for the unexpected. That means making choices that improve your odds of being able to work longer, as well as helping to reduce the chances one of those curveballs will take you out of the workforce earlier than you planned.
Here are four steps to consider:
1. Do your best to stay healthy
Among retirees who retired earlier than expected, 41% said a hardship such as a health problem or disability caused their retirement, according to the EBRI.
“If you think you’re going to keep working,” says Steve Vernon, author of “Retirement Game-Changers” and a research scholar at the Stanford Center on Longevity, “take care of your health so you’re able to work longer.”
2. Keep up your network
Staying in touch with people in your professional network is a good career move at any age, and it’s also a way to ensure you’re on track to keep working as long as you want — or need — to.
“Start purposely nurturing a network of people who might have employment for you later on,” Vernon says. “Be on the lookout for different job opportunities because there’s just no guarantee that your employer will keep you working.”
3. Steel yourself for lower pay
If your plan is to work into your 70s, keep in mind that you may not command the same salary you claimed at the height of your career. Be prepared for the mental and financial reality of making less money.
“The mental part is, ‘I used to make $100,000 a year and now I can only make $50,000 a year?’ Put your ego aside, and make money,” Vernon says.
To be prepared financially, try living on half your salary before you retire, he says. That has two benefits: You practice for your retirement job, and you free up more money to put into savings now.
4. Aim for financial independence
Instead of focusing on when you will retire, think about what you'll need. Using a retirement calculator can help you figure out where you’re at — and how much you might need to save.
One way to think about your retirement savings is in terms of financial independence, Bartling says. “How much does it cost me in today’s lifestyle to buy financial independence at an earlier age?”
Making small sacrifices now can pay off later. “I have to give up some of [my current spending] if I want to buy financial independence at an earlier age,” he says. For more on how to plan for retirement, check out our complete retirement guide. And for more on financial independence, read about how to retire early.
If trimming your spending on a small scale isn’t going to get you to financial independence fast enough, think bigger. One of the biggest costs retirees face is housing. Can you reduce your housing costs by downsizing or moving to a less expensive area?
“If you have that typical large home in the suburbs and you have to drive everywhere, that may not be the best place when you’re retired,” Vernon says. “In your 50s to 60s is a good time to reexamine your housing with the idea of making it more suitable for this current stage of life — and also paying less.”