Nearly two-thirds of Americans retire earlier than expected, exposing them to a host of financial issues compared with workers who retire at traditional retirement ages, according to a John Hancock survey.
The survey of 2,623 John Hancock retirement plan participants and 525 American retirees found that those who retired early did so at an average age of 56, either by choice or because of circumstances beyond their control.
“While workers often have an age in mind, many end up retiring earlier than planned,” the survey stated. “Our 10th annual survey of U.S. workers reveals that 62% of retirees left the workforce sooner than expected, shortening their savings period and extending their retirement years.”
Workers who stopped working when they planned or later felt better about their overall financial situation than those who had to stop work earlier than expected, the survey found.
“Almost three-quarters (72%) of early retirees wish they’d saved more before retiring compared with 47% of their counterparts,” the survey stated. “As the cost of living rises, these retirees are more likely to need a change in lifestyle and spending habits to manage the gap in their retirement income.”
Some 55% of early retirees considered their financial situation fair or poor, compared to 21% for those who retired when expected, usually at 63 or older. Early retirees were twice as likely to be concerned with emergency savings—54% compared to 26% of on-time retirees, the survey found.
Just 26% of early retirees had a financial advisor, compared to 54% of regular retirees, which perhaps led to just 54% of early retirees having a formal retirement plan prior to retirement, versus 80% for retirees who retired when expected.
Early retirees were three times as likely not to have any sources of income other than Social Security—33% compared to 11% of regular retirees.
This led to three other statistics demonstrating the disruption of an unexpected early retirement: 45% of these retirees either moved or planned to move to save money, 54% changed their spending to close the financial gap, and 48% worried about being in poor health due to the cost of healthcare, compared to 34%, 27% and 32% for their on-time retiree counterparts.
“While early retirement sounds appealing, the reality for many early retirees is far from ideal,” the survey said. “They’re not only in a more precarious financial situation than those who retired as planned or later, but also … likely having to make tough decisions about their lifestyle.”
If early retirees did have access to another source of income 36% of respondents said they had an annuity, 29% had a pension plan, 19% had a 401(k), and 18% had an IRA, respondents said. Meanwhile, 51% of on-time retirees said they had an annuity, 52% said they had a pension plan, 37% said they had a 401(k), and 28% said they had an IRA.
The survey was conducted in May by Edelman Public Relations.