Financial Challenges, Inflation, Delay Retirement
Even as participants expect to retire later, the reality is that most end up leaving the workforce sooner than anticipated.
The Retirement Risk Survey by the Society of Actuaries found that over half (59%) of retirees exited the workforce earlier, and only 6% retired later than planned. Different life shocks are the main contributor to why most retirees transition out of the workplace, with health status being the main reason, especially for lower income respondents.
Other drivers include personal or financial factors such as job satisfaction, family obligations, or simply reaching savings goals earlier.
Still, the Society of Actuaries found that a respondents’ financial situations in retirement generally matched expectations but varied by circumstance like income levels and demographic backgrounds.
Pre-retirees experience financial shocks
Those preparing for retirement reported experiencing more financial disturbances. According to the findings, 29% of pre-retirees experienced a family emergency that prompted them to use 10% or more of their savings.
Pre-retirees also reported feeling additional financial strain and more concern about economic events like inflation, while retirees generally seemed better able to adjust spending when needed.
Caregiving responsibilities were also a major concern for pre-retirees—35% said they are very or somewhat likely to need caregiving in the future, while nearly one-third give some form of financial support to adult children and parents.
Finally, pre-retirees felt less prepared than retirees in paying for family-related retirement costs, like medical emergencies, home repairs, and even funerals.
“Retirement risk is shaped by both life events and long-term planning, so it’s important to understand and carefully consider the different risks possible,” said Steve Siegel, senior practice research actuary at the Society of Actuaries. “A financial shock, caregiving need or sustained cost pressure can reshape someone’s financial security—and is why retirement planning should account for the unexpected, not just best-case scenarios.”
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news.