The Reality of Early Retirement: Are Your Clients Prepared?

Courtesy of Allianz Life Insurance Company of North America

When planning for retirement, the date when a client leaves the workforce is a critical variable. Work longer, and your clients will be able to save longer and delay withdrawing from retirement accounts. It is one strategy to help ensure your clients have enough assets for their lifetime. If your clients’ working years are cut short – are they prepared?

Your clients likely think they are in control of when they retire. The fact of the matter is that retiring earlier than expected is common. Two in five Americans (40%) retire earlier than they planned, according to the EBRI/Greenwald Retirement Confidence Survey 20251. Still, many Americans believe they will continue working – and continue saving – longer than many actually do. Even though 30%1 of workers think they will retire after age 70 or never retire, just 9% do this. So, when planning for retirement, it is important to prepare for the possibility of an early or unexpected retirement.

Retiring earlier than planned could increase stress on a client’s assets to fund those additional years after leaving the workforce, potentially resulting in running out of money.

Why Americans retire earlier than expected

Many Americans retire earlier than expected because of hardships such as a health problem or disability (31%)1 or changes at their company (31%)1. To be sure, some choose to retire earlier than they planned because they could afford to (44%)1. Still, the majority leave the workforce due to circumstances outside of their control.

What’s worrisome is that a health problem or job loss can compound the risks of an early retirement. Not only does a client need to fund more years in retirement but are likely to also face increased expenses for health care or other needs.

Help your clients prepare for an early retirement

Americans’ top desire from a financial professional is to help make sure their money lasts their lifetime, according to the 2025 Annual Retirement Study2. That means preparing their financial strategy for unexpected events – like an early retirement.

While many written financial strategies incorporate contingencies for retirement risks like market volatility and inflation, it is less common to account for an early retirement. A change in plans can overwhelm your clients – having a documented strategy that includes this scenario can help.

A comprehensive retirement income strategy should outline sources of income, total expenses, and identify any income gaps to evaluate financial readiness for retirement. It will also be flexible to adapt as life happens and plans change. This written strategy will be revisited when determining if a client is financially ready to retire.

Additional risk management strategies may be helpful if a client decides to retire earlier than anticipated. This may involve rebalancing the client’s portfolio to ensure it is not overly exposed to high-risk financial instruments or reallocating assets into products that offer growth potential while minimizing downside risk such as annuities. These adjustments can help create a more resilient retirement strategy that will address client’s most pressing concern – making sure they have enough money to last their lifetime.

Retirement planning should account for the possibility of an early retirement. By creating adaptable strategies that include risk management, financial professionals can ensure their clients can achieve the retirement of their dreams – regardless of when their retirement starts.

1 EBRI/Greenwald Research, 2025 Retirement Confidence Survey Fact Sheet #2, Expectations About Retirement (retirees could have retired for more than one reason)
2 Allianz Center for the Future of Retirement™ conducted an online survey, the 2025 Annual Retirement Study, in January/February 2025 with a nationally representative sample of 1,000 respondents age 25+ in the contiguous U.S. with an annual household income of $50K+ (single) / $75K+ (married/partnered) OR investable assets of $150K+.

The Allianz Center for the Future of Retirement™ produces insights and research as a part of Allianz Life Insurance Company of North America.

Allianz Life Insurance Company of North America does not provide financial planning services.

Investments are subject to market risk, including the possible loss of all principal.

Annuities are issued by Allianz Life Insurance Company of North America, 800.542.5427 www.allianzlife.com. In New York, annuities are issued by Allianz Life Insurance Company of New York, www.allianzlife.com/new-york. Registered index-linked annuities are distributed by their affiliate, Allianz Life Financial Services, LLC, member FINRA, 5701 Golden Hills Drive, Minneapolis, MN 55416-1297.

Only Allianz Life Insurance Company of New York is authorized to offer annuities in the state of New York.

For financial professional use only – not for use with the public.