EBRI Study Reveals 58% Of Retirees Retire Earlier Than Expected, Here's Why

Planning to retire at a specific age often involves careful preparation, but reality doesn't always align with expectations. A new study by the Employee Benefit Research Institute (EBRI) found that 58% of retirees leave the workforce earlier than planned, frequently due to factors beyond their control.

EBRI's 2024 Spending In Retirement study, which surveyed 3,600 retirees aged 62 to 75, reveals some of the reasons for early retirement and the financial challenges that come from it.

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Why Do People Retire Early?

For some, retiring early is a strategic choice. They've built their nest egg and have methodically planned for early retirement. For others, it isn't always within their control.

Health issues and workplace reorganization are the leading factors behind why many Americans retire early. According to the EBRI survey:

38% of those who retired earlier than expected cited health problems or disabilities as the main reason.
23% stated that company-related issues like downsizing, closures or reorganizations were the cause.

Roughly two out of five of those who retired early did so because they felt financially prepared. However, this group represents a minority compared to those whose circumstances necessitated an earlier exit.

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Financial Struggles Among Early Retirees

Leaving the workforce sooner than expected can have negative financial implications. Early retirees have less time to save for retirement, requiring them to stretch their existing savings across a longer period of time.

A similar study by John Hancock Financial found that early retirees are more likely to face financial stress for several reasons:

33% of those who retire early rely solely on Social Security for their income, compared to just 11% of those who retired when they planned.
Over half reported cutting back on spending and 45% downsized their living arrangements to reduce costs.
With longer life expectancy, Americans must plan for funding a retirement that could span multiple decades, extending longer if they retire early.

The EBRI study also revealed that many retirees are unprepared for the financial demands of retirement. Half of retirees said they did not save as much as they needed and only one-third thought they had enough.

A Broader Retirement Reality

Despite the financial challenges, many retirees remain optimistic. Two-thirds of respondents in the EBRI study said they are living the retirement lifestyle they envisioned, even if getting there was difficult.

For those still working, start planning early and revisit your savings goals frequently to help mitigate challenges that may come if you must unexpectedly retire.