When life events intervene in your retirement plan

Financial plans typically assume a normal retirement age in the mid-60s or beyond, but life events have a way of intervening. Half of all retirees say they left the workforce earlier than planned, according to the 2015 Retirement Confidence Survey conducted by the Employee Benefit Research Institute. The key culprits include health problems or disability and workforce downsizings.

Events like that aside, early retirement might just look like an attractive option for affluent people  in their 50s or early 60s, but the risks are substantial and need to be weighed carefully.

The major risk is having to stretch savings over more years of retirement. There are also fewer years of saving at the high levels just before retirement. Couple that with possible lower-than-expected market returns, asset allocation problems and uncertainty about safe withdrawal and spending rates, and the risks to the plan become all too apparent.

You can learn more about this in my column at WealthManagement.com. But also check out blog posts by Dirk Cotton, founder of JDC Planning and a blogger on retirement research, who worked with me on this piece. Dirk developed four scenarios for retirement at different ages to help demonstrate the risks, and he takes that analysis further here.

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