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Study Says 40% of Workers Forced Into Early Retirement: Here’s How to Stay Ahead of the Curve


How would you handle early retirement? Instead of having years of investment and growth left, what if you had to start living on your retirement accounts tomorrow? More importantly, what if you had no choice in the matter?

A financial advisor can help you prepare for life’s curveballs, including forced retirement. Find a fiduciary advisor today.

Being forced into early retirement is a scary thought, but it’s an increasingly common problem, according to a new study from Edward Jones. “Financial advisors across the industry report that 40% of their retiree clients were forced into retirement,” the financial services firm writes.

This is quite a big number and one that’s not likely to drop any time soon. In fact, it matches research published by ProPublica in 2018, which found that more than half of all workers over the age of 50 should expect to get laid off at least once.

The question is, what should you do about this very real risk? According to Edward Jones, there are two things you should do to prepare for this possibility. First, prepare your retirement account for flexibility. Second, adopt that same flexibility in your own lifestyle and spending if this happens to you.

What Is Forced Retirement?

Forced retirement is a frequently misunderstood term.

Officially, forced retirement refers to when you lose your job due to your age. This can be an official termination, meaning that your employer either lays you off or fires you. It can also be informal, or “constructive,” termination, if your employer makes it impossible to remain by changing your job requirements or making it more unpleasant.

This is illegal, though. The Age Discrimination Employment Act (ADEA) bans employers from discriminating against workers over the age of 40, and that includes forced retirement. 

Unofficially, forced retirement refers to when you lose your job late in life. For example, as SmartAsset wrote in an article on the subject, “you may be 62 and planning to work for another five years when your company downsizes. Your department loses its budget and you lose your job. Instead of trying to continue your career somewhere else, as you would have done at 32, you decide to accept early retirement.” This is entirely legal. As long as your employer did not target you due to age, the law considers it a case of poor timing and bad luck.  

Most retirees generally experience informal forced retirement. They lose their jobs late in life with fewer good options for finding new employment. So, they drop out of the workforce and enter retirement.

What Edward Jones Recommends You Do

Edward Jones recommends a few key ways to approach forced retirement. Above all else, the firm writes, nearly all financial advisors surveyed suggested that “preparation, flexibility and willingness to adapt” are essential to building a successful retirement.

Beyond this, they suggest a few specific strategies below:

Prepare for Unexpected Needs

Almost one-third of financial advisors report that their clients have problems with unexpected needs. This includes cost of living increases (29%), financial assistance for family and friends (26%) or needing to make up for declining investments (26%).

These are, Edward Jones writes, “the most impactful financial shocks for retirees” and they can complicate an already difficult situation. A good way to prepare for these risks is to set aside an emergency fund similar to the one you maintain in your working life, so that you can meet unexpected needs with cash separate and apart from the portfolio you will depend on for income.

Build Out Your Insurance Portfolio

Most financial advisors (52%) recommend getting supplemental health insurance for your retirement, and about half (48%) recommend long-term care insurance on top of it. 

This is a way of securing yourself against potentially exorbitant medical expenses. Just as importantly, depending on the nature of your supplemental health insurance, it might also provide you with some coverage between when you lose employer-based insurance and when Medicare kicks in.

Prepare a Strategy for Flexibility, Withdrawals and Social Security

A worker who is being forced into retirement packs up his belongings after losing his job.

When dealing with early retirement, flexibility is key. As Edward Jones writes in their findings, “budgeting and debt management are key to helping retirees prepare for the unexpected.”

This can mean a lot of things, ranging from cutting back on luxuries to moving abroad for a few years. Either way, almost half (48%) of financial advisors surveyed by Edward Jones emphasized that adopting a “more frugal lifestyle” is important to coping with early retirement. 

Meanwhile, another 35% recommend preparing an income withdrawal strategy. This will give you a plan for how to manage your portfolio in ordinary years as well as a way of adapting that plan to unexpected crises. This is ranked just as importantly (35%) as timing your Social Security benefits well. 

Consider Your Working Options

Finally, early retirement doesn’t have to mean complete retirement. In fact, 94% of financial advisors recommend that retirees should at least consider working part time in retirement. 

Getting a job can bring in supplemental income to help make early retirement more practical. With tight budgeting, it might even prevent you from having to tap into your savings. Beyond that, almost all financial advisors (99%) note that this can provide health insurance and even just social or personal benefits. 

Of course, Edward Jones also gives what might be its most unpopular dose of reality in the entire survey: 30% of financial advisors suggest that returning to the workforce means working for someone younger than you. But as long as you can stomach working for someone who’s considerbaly younger than you, it will almost certainly be worth it.

Bottom Line

Around 40% of all retirees got there by being forced into early retirement. That’s according to a new study by Edward Jones, but don’t worry. The have some good advice for how to manage the situation. Financial advisors surveyed by Edward Jones said you can soften the blow of a forced retirement by preparing for unexpected financial needs, being sufficiently insured, adopting a flexible financial plan and potentially working part time.

Retirement Planning Tips

  • A financial advisor can help you build a comprehensive retirement plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • If you have been forced into retirement because of your age, you have rights. You may want to consult a lawyer because this might be a legal problem every bit as much as a financial one. Here’s how to handle a forced retirement.

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