Early retirement happens more often than expected — how to plan for it

Working longer is among the best ways to make up for a retirement funding shortfall, financial experts say.

But there’s a big problem with that strategy: There’s no guarantee you’ll be able to work longer.

Almost half — 46% — of people who retired in 2025 did so earlier than anticipated, according to the Employee Benefit Research Institute, a think tank, which released its annual Retirement Confidence Survey on April 21.

The bulk do so for unforeseen reasons, including health conditions, layoffs, or caregiving for a loved one, experts said.

Those curveballs can hobble people’s retirement plans.

“People retiring earlier than planned can end up with a much worse retirement than expected and may need to rely on others, make significant lifestyle changes, and if they have a spouse, can change the spouse’s retirement plans,” Craig Copeland, director of wealth benefits research at EBRI, a think tank, wrote in an e-mail.

EBRI polled 2,544 Americans age 25 and older in January. That base included 1,007 workers, 1,045 retirees and an oversample of 492 caregivers.

Delaying retirement can have a range of positive financial impacts: Such people don’t have to live off their savings, since they get a regular paycheck. They have more time to save and for their assets to grow, hopefully. They can likely delay claiming Social Security benefits, guaranteeing a higher monthly payout for the rest of their lives.

But retiring early can have the opposite effect, especially when it’s unexpected.

And people “consistently” retire earlier than planned, Copeland said.

Roughly 40% to 50% of people who retired in any given year since the late 1990s said they retired earlier than anticipated, according to EBRI data.

A Gallup poll similarly found a regular gap between retirement expectations and reality. In 2022, the average person said they expected to retire at age 66; that year, the average person retired at age 61, the most recent poll found.

Factors beyond an individual’s control were responsible for 76% of early retirements in 2025, according to EBRI. They included health problems and disabilities, and company changes such as downsizing, closure or reorganization.

More than half, 56%, of full-time workers in their early 50s get pushed out of their jobs due to circumstances like a layoff before they’re ready to retire, according to a 2018 paper published by the Urban Institute, a think tank. The researchers analyzed data spanning 1998 to 2014.

“This can lead to workers being unprepared, as they thought they would be working 5 or maybe 10 years more but end up out of work with the need for retirement benefits sooner than expected,” Copeland wrote. “This changes the retirement equation substantially and leaves people with limited choices as it is hard to go back to work after a health event or to find a completely new job as an older individual.”

It’s important to have “a backup plan or a range of possibilities for what can result” when planning for retirement — otherwise, there aren’t many good options that can help make up for a sudden shortfall, Copeland said.

He recommends considering two numbers: the amount of money you’ll need in retirement if you need to retire earlier than expected, and the amount of money you’ll need if you retire as intended.

There are some steps near-retiree households can take in conjunction with or instead of planning to work longer, said Kamila Elliott, a certified financial planner and CEO of Collective Wealth Partners, a financial advisory firm based in Atlanta:

• Reduce debt. Doing so while you’re working can free up cash flow in retirement. This includes paying off credit cards, car loans, lines of credit and mortgages.

• Increase retirement savings. Make the most of catch-up contributions once you’re eligible. People age 50 and older can contribute an additional $8,000 to their 401(k) and an extra $1,100 to their individual retirement account in 2026. The 401(k) catch-up contributions are even higher for savers age 60 to 63: They can save an additional $11,250 in 2026.

• Obtain necessary insurance. Securing and paying for policies such as long-term care coverage prior to retirement can reduce retirement expenses.

Someone who must retire earlier than planned should consider delaying claiming Social Security and use a “bridge strategy” of pulling assets from their retirement or other investment accounts to fund those gap years, said Elliott, who is a member of CNBC’s Financial Advisor Council.

The best case is to wait until age 70, which maximizes Social Security income, Elliott said. Or, at a minimum, wait until full retirement age, when you’re entitled to 100% of the benefits you have earned. That’s typically age 66 to 67, depending on your year of birth.