NCPA - National Center for Policy Analysis

What Causes Workers to Retire Before They Plan?

October 5, 2015

The number of workers who planned on working past their 65th birthday increased by 22% from 1991 to 2014.  Yet future plans and reality often do not coincide, and due to unforeseen circumstances workers often retire earlier than planned.  The primary causes of earlier retirement are poor health, fluctuation in employment for either spouse and a change in retirement wealth. 

  • Deteriorating health seems to be the most common reason for retiring early, accounting for about 4.8 percent.
  • Yet even if these top five "shocks" were removed there would still be about 27 percent of workers retiring earlier than they expected.

If health should improve in the upcoming decades, it would follow that people would likely work longer and perhaps a greater number would reach their retirement goals. Increasing job-to-job transitions is often the reason employees stay in the workforce but if layoffs increase so might early retirement. It is also important to note that often when a parent moves in, the worker will retire early than expected. With more parents of Baby Boomers in need of care, there could be an increase in earlier-than-planned retirement.  All of these factors combined are necessary to take into account when predict future employment trends.

Source: Alicia H. Munnell et al., "What Causes Workers to Retire Before They Plan?" Center for Retirement Research at Boston College, September, 2015.

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