Gallup surveys³ show that people on average retire about four years earlier than expected
about 48% of people retire earlier than expected
Based on the data, Blanchett finds that 61 years old is the "magic" retirement age. If you say you're going to retire after 61, you'll probably retire earlier than expected. If you say you'll retire before 61, you'll probably retire later than expected.
In other words, actual retirement ages pull toward 61, with each retirement year planned before or after age 61 resulting in a half-year’s difference in actual retirement age. For example, someone who plans to retire at age 69 will likely retire at age 65 (69 – 61 = 8 × 0.5 = 4; 69 – 4 = 65).
What does it all mean? If you're making a plan based on working to age 65, then you won't have enough money when you find yourself retired at age 63. (Or more, accurately, you chance of failure increases.)
This uncertainty means that if you build a plan based on working to, say, age 65 you probably need to save 20% more than expected to account for the reality that you are likely to retire at age 63.In other words, retirement savers who think they have a 90%-plus chance at meeting their goals might actually have more like a 65% probability of success, something they and their advisors won’t likely be comfortable with
While each individual's position is unique, Blanchett also found that there are no systematic factors that predict retiring unexpectedly early.
To make this actionable: Blanchett's findings suggest that it would be prudent for people to use age 61 as their retirement date when deciding how much to save -- and what their asset allocation should be if they subscribe to glidepaths or are building a bond ladder. If you end up working longer than that -- then treat it the same way as if the market has better returns than the 3% or 5% or whatever that you have in your plan -- as an unexpected bonus.We investigated whether certain worker characteristics foretold unexpected early retirement. The rich HRS data set allowed us to test more than a dozen factors, including general personal characteristics such as gender, marital status, and education, along with factors that might be expected to lead to retiring early, such as job stress level, how physical a job is, and whether health problems limit someone’s work.