Retiring earlier than planned: What matters most?

[Big_Hitter]

https://crr.bc.edu/wp-content/upload...01/IB_19-3.pdf

"The first section defines and quantifies earlier-than-planned retirement. The second section describes four potential types of shocks: health, employment, family, and financial. The third section presents the results on which shocks matter the most, taking into account both their potency and prevalence. The final section concludes that health shocks are most important in driving workers to an earlier retirement, followed by job-related changes and family transitions."

[dtbach]

I was "retired" earlier than planned by MegaCorp in 2008. Stretched out the 6 month severance they gave me, DW got a job she hated for the HI, and I did odd jobs until I got my military pension 4 years later at 60 (which covered 50% of living expenses plus provided the HI). By that time the portfolio had recovered enough so that I could take some to cover living expenses and the wife had a job she liked which covered the rest plus some. Had to be creative but it all worked out.

[Huston55]

Interesting paper, thanks for the link. The bits that really caught my attention were:

1. ”The share of workers reporting that they expect to work past age 65 rose from 16 percent in 1991 to 48 percent in 2018.”

Wow! It’s tripled in 27 yrs. Perhaps I should have known that but, it’s a surprise to me. I’d like to know what’s caused that change in expectations.

2. “The big takeaway is that changes in health are quite common, as are spousal retirements, marital status changes, and large swings in wealth (which is largely because people have little wealth to begin with).”

Not sure what to make of this. Does it mean that people had unrealistic retirement expectations to begin with?

In the end, the study discounts its own conclusions because it explains only one quarter of the early retirements. So, its interesting but not the final word I suppose.

[ckelly78z]

Quote:

Originally Posted by Huston55 2. “The big takeaway is that changes in health are quite common, as are spousal retirements, marital status changes, and large swings in wealth (which is largely because people have little wealth to begin with).” Not sure what to make of this. Does it mean that people had unrealistic retirement expectations to begin with? .

I think that divorce is more prevalent now than it was in 1991, and many are still trying to recover. The happy nuclear family is a fading dream (I'm lucky to have this). I can't imagine splitting my household in half, and trying to make it.

[Huston55]

Quote:

Originally Posted by ckelly78z I think that divorce is more prevalent now than it was in 1991, and many are still trying to recover. The happy nuclear family is a fading dream (I'm lucky to have this). I can't imagine splitting my household in half, and trying to make it.

If you believe the study, divorce is a minor factor: 0.194 x 0.02 = .004

But, I must admit that this seems smaller than I’d expect.

[Clone]

Quote:

Originally Posted by Huston55 1. ”The share of workers reporting that they expect to work past age 65 rose from 16 percent in 1991 to 48 percent in 2018.” Wow! It’s tripled in 27 yrs. Perhaps I should have known that but, it’s a surprise to me. I’d like to know what’s caused that change in expectations.

It could be possible that people are conditioned to say "I will retire at FRA". In 1991, FRA was 65. Now, for most folks still working, it is something beyond age 65.

[FIREd_2015]

Quote:

Originally Posted by Huston55 1. ”The share of workers reporting that they expect to work past age 65 rose from 16 percent in 1991 to 48 percent in 2018.”... Wow! It’s tripled in 27 yrs. Perhaps I should have known that but, it’s a surprise to me. I’d like to know what’s caused that change in expectations...

I wonder how much of the increase is because people are healthier and living longer and want something to occupy their time at least part time. I've seen other data that shows the number of part time workers over 65 y.o. is growing rapidly. I've met people who have failed retirement and gone back to work part time because they got bored. I've read in many places including this forum that one needs to retire to something and not from something. After working full time for 40+ years, I think a lot of people have a hard time adjusting to all the extra free time plus the lack of belonging to something. I know quite a few people who's self identity is wrapped around their career so suddenly becoming a nobody is quite a shock to their system.

[Big_Hitter]

Quote:

Originally Posted by FIREd_2015 I know quite a few people who's self identity is wrapped around their career so suddenly becoming a nobody is quite a shock to their system.

[brucethebroker]

Quote:

Originally Posted by dtbach I was "retired" earlier than planned by MegaCorp in 2008. Stretched out the 6 month severance they gave me, DW got a job she hated for the HI, and I did odd jobs until I got my military pension 4 years later at 60 (which covered 50% of living expenses plus provided the HI). By that time the portfolio had recovered enough so that I could take some to cover living expenses and the wife had a job she liked which covered the rest plus some. Had to be creative but it all worked out.

Your history is very similar to mine/ours. Recession killed my business and I had to crawl to the age 62/SS "finish" line. DW also got a job to cover HI. But, like you said, it all worked out. And for the better, I might ad.