Top 3 Reasons You May Have to Retire Before You’re Ready
Policy + Politics

Top 3 Reasons You May Have to Retire Before You’re Ready

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Your golden years are supposed to be a time when you kick back and enjoy a well-earned retirement, but you may find yourself taking retirement long before you planned, increasing the risk you’ll run out of money in old age.

Many Americans say they plan to work as long as they can, due in large part to worries about inadequate retirement nest eggs. While some financial experts advise workers to have $1 million in retirement savings socked away, Americans on average have managed to save only $58,000 each.

Leaving the workforce early can have a real impact on your retirement income, especially since claiming Social Security before full retirement age results in lower payments.

Related: The 10 Best States for Retirement in 2015

Despite the desire – and the need -- to work as long as they can, many Americans end up taking retirement far earlier than they had hoped, and there are several factors that increase the chances of that, according to a new study from Boston College’s Center for Retirement Research.

Here are three of the top reasons Americans take unplanned early retirements.

Health issues. Workers suffering from poor health and those whose health has declined before their planned retirement are “significantly more likely to retire early than others,” the researchers found. That jibes with earlier research from the National Institute on Aging, which found that poor health is cited as a reason for retirement among one-third of people between ages 55 and 59.

Involuntary job loss. Prolonged periods of job losses can heighten the chance that older workers will take retirement before they had planned. Americans who lose their jobs through layoffs or business closings are about 28 percent more likely to retire early than other workers.

Related: Millions of Boomers Are Making This Big Retirement Mistake

The good news is that finding a new job can help reduce that risk. Yet the researchers noted that not all jobs are created equal: Switching to a job with more stress or that pays less actually makes workers more likely to retire early. “This result suggests not all mobility is a good thing – movement has to be to the kind of job that is conducive to an extended career,” the researchers noted.

Family changes: Two family changes can make it more likely that workers will retire early: if their spouse has already retired, and if their parents move in with them, the researchers found. Couples often make a decision to retire at the same time, so the researchers note that the former finding isn’t all that surprising. But the latter could have implications for today’s Baby Boomers and Generation X, given that more of Americans are dealing with aging parents who need additional care.

Regardless of the reason for an unexpected retirement, financial experts recommend Americans create a backup plan for how to cope with an unplanned early retirement, such as financial strategies for living on lower-than-expected income.