Interesting chart here from the Employee Benefits Research Institute analyzing the frequency at which people are able to retire on their own terms compared to those who have been forced to retire earlier or later than planned.
Twenty years of survey data suggests that people retire about when they plan to 48% of the time. More than 42% of retirees on average over the past two decades have retired earlier than planned. And only 5% of those retiring early offered positive reasons for their decision, indicating that they could afford to do it. Over half of early retirees were forced to due to health or disability. It’s not always their own health. Many cases include children who retire in order to provide full-time care for a parent who does not have long-term care insurance or adequate retirement income.
MetLife’s Mature Market Institute indicates that the percentage of adults providing care to a parent has tripled since 1994.
“Nearly 10 million adult children over the age of 50 care for their aging parents,” said Sandra Timmermann, Ed.D., director of the MetLife Mature Market Institute. “Assessing the long-term financial impact of caregiving for aging parents on caregivers themselves, especially those who must curtail their working careers to do so, is especially important, since it can jeopardize their future financial security.”
Research suggests that the cost impact on the individual female caregiver in terms of lost wages and Social Security benefits equals $324,044. Leaving the labor force early because of caregiving responsibilities equated to $142,693 of lost wages. The estimated impact of caregiving on lost Social Security benefits is $131,351. A very conservative estimated impact on pensions is approximately $50,000. Men forced to retire early to become caregivers forgo approximately $283,176 of earnings and retirement income.
What financial planning and life planning decisions are you making to increase the probability that you’ll be able to retire on your terms?
~ Brooks, Hughes & Jones, Partners in Wealth Management, Tacoma, WA