A model that solves every shortfall by moving the retirement date may be mathematically tidy and practically fragile.
Changing the date does affect both sides of the plan. Retiring later can create more time to contribute and grow capital, while reducing the number of years that capital may need to fund. Retiring earlier does the opposite. That makes retirement age a powerful assumption.
It is not always a freely adjustable one. Health, retrenchment, family care, employer policy and job availability can bring work to an end earlier than planned.
It is also useful to separate leaving full-time work from stopping all earned income. A phased transition or part-time work can change cash flow, tax and withdrawals, but it should be treated as a scenario rather than guaranteed employment.
Try this now
Run three dates through your retirement discussion: preferred, expected and unexpectedly early. For each, note contribution years, first income date, debt remaining and any employer benefits that end.
Ask your advisor
- How sensitive is the result to retiring two years earlier or later?
- What plan supports an involuntary early retirement?
- Which assumptions rely on continued earnings after the formal retirement date?
A retirement date is both a life decision and a major financial input. It deserves more than one scenario.