Key Points
What’s your plan for retirement? Every investor should have a solid plan in place for what happens when the work ends, which includes taking the time to study their expenses, estimate how much income they’ll need in retirement, and, importantly, figure out how they’ll get that income.
But as the Scottish poet Robert Burns noted in a poem, “The best laid schemes o’ Mice an’ Men, / Gang aft agley” — that is, our plans often go awry.
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Indeed, according to the 2026 Annual Retirement Study from the folks at Allianz Life, “42% of Americans retire earlier than expected — often due to circumstances beyond their control.”
Retiring earlier than planned is a recipe for trouble
Retiring before you plan to is obviously a big problem, and it’s apparently affecting 2-in-5 Americans. That’s millions and millions of people. Imagine planning to retire at 70. (You might be doing so in part to maximize your Social Security benefits, as multiple studies have found that most people will get the most out of Social Security by delaying claiming their benefits until age 70.) If you suddenly find yourself retiring at 63 instead, and not by choice, here are some problems you’ll face:
- You’ll lose out on seven years of saving and investing for retirement.
- Some of the money that you’ve amassed in your retirement accounts will have seven fewer years in which to grow for you, because you’ll have to withdraw it early to support yourself.
- You won’t be able to sign up for Medicare for another two years, so you may have to pay for health insurance on your own for a while — and it costs a lot.
- Your retirement nest egg will now have to help support you for longer. If you end up living to 90, for example, retiring at 70 would have given you a 20-year retirement. But retiring at 63 means your nest egg will need to help support you for 27 years — a much taller order.
- You may have to start collecting Social Security at 63. (You can do so as early as age 62, but the earlier you claim your benefits, the smaller the checks will be.)
Why are people retiring earlier than planned?
So why are people retiring earlier than planned? You can probably guess at the answers. The Allianz Life study offered these as common reasons:
- Health issues that prevent performing their job — 30%
- Unexpected job loss — 21%
- Financially ready earlier than expected — 21%
What to do
What should you do with this information? Well, go ahead and hope for the best. Many people do retire according to plan. But also remember that many do not. So plan for the worst, just in case. Perhaps save more aggressively now, to make up for money you may not have time to earn and invest in the future.
Also, think about how you might avoid retiring early, and how you might manage if you do. For example, getting healthy and staying healthy might delay health issues, or prevent them from interfering with work. And setting up a side gig or reining in your spending can also keep you financially healthy for longer.
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