The Next Transition Blog

Ready or Not, You’re Retired! Unexpected Transition Planning

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There’s a Big Difference Between Planned and Actual Retirement Ages. 

by Steve Stanganelli, president, Clear View Wealth Advisors.

It has become commonplace for people to retire at a younger age than they originally planned. In 2009, a whopping 47% of retirees left the workforce earlier than they expected*.  It would be great if most of these people were retiring early because they had plenty of money and no longer needed to work, but this simply isn’t the case. Ninety percent gave negative reasons for retiring early, citing such causes as health problems, company downsizing and/or closure, outdated skills, and the need to care for a family member*. The news here is not that planning to retire at a particular age is a waste of time, but that it may be a good idea to prepare for the possibility that you may be forced into retirement as early as five years before your ideal retirement age.

Hallmark of Uncertainty

Did you know that only 10% of current retirees were still working after age 65, even though 31% of workers expect to stay with it past 65?* If you keep telling yourself that you can make up for a potential shortfall by working longer, it could be an indication of how you view your financial situation.

In general, people who lack confidence in their retirement security expect to retire later than people who are more confident*. Retiring in a Recession or a Bear Market One good reason to be prepared early is the possibility that you may be forced into retirement during (or because of) a recession or a bear market - like now, for instance. If you are trying to make up for lost time by working longer, you may also be tempted to take investment risks that can cause havoc for your finances if a downturn occurs when you are close to retirement.

Generally, otherwise rational people feel anxious and start making risky bets on exotic investments or overly concentrate into highly speculative areas.  There are other steps that people can take to help shore up their retirement finances while making it possible to still sleep well at night.

Many of the recommended steps to take during the final years before retirement are designed to help protect you from dramatic swings in the market or the economy, in order to help insulate your long-term outlook from short-term developments. These steps usually include a gradual migration away from riskier assets seeking capital appreciation and toward more conservative, income-producing investments.

Finding Out Too Late

Another risk of planning to work longer is the possibility that you could overestimate the benefits of doing so and, as a result, fail to evaluate exactly how far behind you are and what steps are necessary to reach your goals. Any options that you have to make up for a shortfall could be limited by a shortened time horizon.

Obviously, there may be no way to see a forced retirement coming. But by recognizing the risk now, you may be able to take steps to help ensure that your retirement is everything you dreamed it would be.

Consider getting a second opinion on your plan from a financial professional who has the experience to help.

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Steve Stanganelli is President of Clear View Wealth Advisors with offices in Woburn and Wilmington, MA.  He specializes in accessible, affordable financial advice not dependent on the sale of investment products.  His retirement planning advice offers practical tools and ideas that go beyond just investing.  His goal is to be a trusted and reliable resource for families, mid-career professionals and retirees who seek objective and sound advice.  Steve can be reached at 978-388-0020, or www.clearviewwealthadvisors.com. 

The Successful Transition Planning Institute of Cambridge, MA teaches Baby Boomers and their advisors how to avoid boring, meaningless retirements.  STPI's books, tools, training and seminars empower Baby Boomers to "Think", "Live" and "Decide" what to do with their companies and careers.  By doing so,  Baby Boomers create plans for dynamic new lives, full of meaning and purpose. (see video).