Most people make this retirement mistake, often failing to account for unforeseen life events that derail carefully laid financial plans. New research reveals a significant portion of retirees left the workforce earlier than anticipated, highlighting a critical gap in traditional retirement strategies.
According to a recent survey from the Society of Actuaries Research Institute, nearly 6 in 10 (59%) retirees reported an earlier-than-planned exit from their careers, with only a small 6% retiring later. Health changes emerged as a primary driver for lower-income individuals. This finding is echoed by research from the Employee Benefit Research Institute and J.P. Morgan Asset Management, underscoring a pervasive challenge.
The Unpredictable Path to Retirement
The implication is stark: if your retirement target is 65 or 67, it’s time to re-evaluate and stress test your plan. The focus shouldn’t just be on affording the retirement you desire, but on preparing for the retirement you might actually get. The survey also revealed that 29% of pre-retirees experienced a family emergency requiring them to tap 10% or more of their savings. Furthermore, 35% of pre-retirees and 29% of retirees anticipate needing future caregiving, yet nearly half have no plans in place. A significant number (nearly one-third of pre-retirees and one in five retirees) also financially support adult children or aging parents, further straining their ability to save.
“Many people don’t fully appreciate how vulnerable the final working years can be.”
— Melissa Caro
Confidence levels around retirement finances are alarmingly low. The Employee Benefit Research Institute Retirement Confidence Survey found only 25% of retirees were very confident about their financial security throughout retirement, with worker confidence even lower at 15-18%. This coincides with a concerning trend: workers are saving less. Dayforce research indicates a decline in average 401(k) contribution rates to 8.9% in 2025 from 9.2% the previous year – the first drop since tracking began. Loans and hardship withdrawals from retirement savings are also on the rise.
Mounting Financial Pressures
The retirement landscape is increasingly complex. Traditional defined-benefit pensions have dwindled from 35% in the early 1990s to about 14% in 2025. Simultaneously, Americans are living longer, demanding savings that can stretch for decades. The Social Security Administration projects a 65-year-old man today to live to 83, and a woman to nearly 86. Compounding this, Congressional Budget Office projections suggest the Social Security Old-Age and Survivors Insurance trust fund could face depletion by 2032, potentially leading to a 28% benefit reduction without legislative action.
Healthcare costs remain a significant burden. KFF reported the average annual premium for employer-sponsored family health coverage reached nearly $27,000 in 2025. Fidelity Investments estimates a 65-year-old retiring in 2025 could spend approximately an additional $172,500 on healthcare and medical expenses throughout retirement, or $345,000 for couples. Many are navigating these challenges as part of the “sandwich generation,” supporting both children and aging parents.
Fixing This Retirement Mistake: Actionable Steps
Melissa Caro, founder of My Retirement Network, emphasizes that treating retirement as a straight-line plan is a significant error. “In reality, life interrupts the timeline all the time,” she states, citing health issues, layoffs, and caregiving responsibilities. She advises stress-testing plans for an earlier retirement by two to five years. Can expenses be reduced? Is part-time work an option? Could Social Security claiming be delayed? These questions are crucial.
Financial advisors like Catherine Valega of Green Bee Advisory suggest planning to retire at age 62, retaining the option to work longer. Ryan Noble, a certified financial planner with Prosperity Planning, highlights the need to move beyond purely investment-focused discussions. He advocates for analyzing prudent risks and modeling various scenarios to build client confidence.
Jeffrey Judge of Chesapeake Financial Planners reinforces the urgency. He recommends planning as if retirement will happen five years earlier than expected. “Run the numbers at 60, not 65,” he advises. If the plan holds, great; if not, that’s a conversation for now, not after a health crisis. He also stresses shoring up emergency reserves, suggesting a minimum of six months of liquid savings, particularly for those supporting adult children or aging parents. Finally, Judge urges proactive long-term care assessments before age 60, noting that Medicare does not cover custodial care and premiums are lower and qualification easier before health events occur.
The most common retirement mistake is underestimating life’s unpredictability. By proactively planning for an earlier retirement, building robust emergency funds, and addressing long-term care needs, individuals can significantly improve their financial resilience and secure a more stable future, regardless of when the unexpected arrives.
