Contrary to popular belief, working people ready for early retirement aren't necessarily well-off.
Americans who plan to retire early were found to share a few key traits that are helping them reach this goal, according to a survey conducted by Allianz (AZSEY) called Love, Family, Money. More than a quarter (26%) of the 3,449 currently employed people in the study said they plan to retire before they turn 65. Those who said they plan to retire early were no more likely to describe their family growing up as “wealthy/affluent” or “financially comfortable” than people who planned to stay in the workforce longer. (For more, see: Can Retirement Damage Your Health?)
How Early Retirees Are Similar
The study found that those readying themselves for early retirement display the following common traits:
Sharing good habits. Their life partner features a similar approach to how they tackle their own finances, which is described as practical when compared to those who don't plan on retiring.
Staying married. Those who plan to retire early are more likely to be married — 76% vs. 68% who never plan to retire — and are still in their first marriage (77% vs. 70% of those who never plan to retire).
Seeking a benchmark. They use their parent’s financial status as a benchmark to track how they are doing financially (21% versus 14% of those who never plan to retire).
Willing talkers. They are more likely to find it somewhat easy to talk about finances with their families They have also done more to teach their children about money, including encouraging them to work with a financial professional (14% versus 6% of those who never plan to retire). (For more, see: Retirement Too Little? Retire Abroad.)
"It's encouraging to see evidence that incorporating good habits and following good examples can lead to a better chance of retiring on your own terms, and on your own schedule,” said Katie Libbe, vice president of consumer insights at Allianz Life, in the report. “While these survey respondents have not yet achieved early retirement, it's useful to know how they expect to get there and what skills they are using to reach that goal."
Kids Aren't a Hindrance
The study did not find any difference in expected retirement age based on whether or not respondents have children. Those who expect to retire early are worried about other things, namely about dying young (53%) compared with outliving their money in retirement (47%). (For more, see: Is Your Mortgage Robbing Your Retirement?)
In particular those who worry about running out of money in retirement include 53% of those planning to retire at age 65-69, 60% of those planning to retire after age 70 and 53% of those who never expect to retire.
A larger percentage of those who expect to retire early also say that they have not experienced financial hardship as an adult — 46% versus 31% of those who never plan to retire. (For more, see: Top 5 States That Save the Most for Retirement.)
Priorities: Expert Advice and Savings
The key to retiring early requires lots of planning. Making saving money a priority is essential, the study found. Early retirees are more likely to:
– Seek advice from financial professionals when making a major financial decision.
– Get help from financial professionals for retirement planning.
– Be a saver and not a spender when it comes to money.
– Share a similar financial approach with their partner.
– Focus on saving for long-term goals.
– Depend on more sources of funding for retirement.
The Bottom Line
Contrary to popular belief, those planning to retire early tend to come from modest — not wealthy — backgrounds. This segment of the population shares common traits that help them achieve early retirement, including seeking advice from financial professionals. (For more, see: Do Empty Nesters Really Save More?)