Do you think you will retire at 65? You may need a backup plan.

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Do you plan to work up to 65 or maybe even later?

If so, it would be good to come up with a backup plan.

While 70% of people plan to work up to 65, in fact, less than 30% do so, according to Michael Conte, a chief strategist for retirement of JPMorgan Asset Management. In fact, most retire 62.

“It’s a big gap,” a Contest said in a recent retirement episode (see the video above or listen below). “It just shows that people have plans, and then life comes to them and things change.”

Sometimes people make retirement decisions that are entirely under their control, Conte said.

But this is not always the case. Your company may reduce the size or you may experience a health problem or damage. Sometimes you become a caregiver. There may be any number of reasons, according to the JPMorgan management for retirement.

“What people mean years before retirement may not be where they land,” he said. “So you have a plan for those situations.”

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At the same time, a considerable number of workers will remain at work. More than 27% of those aged 65 to 74 are still in the workforce and even among those 75 and more, over 8% remain busy.

“Retirement is no longer a binary decision to work or retire,” Conte said.

This change is clearly visible in the data. Using anonymized information from Chase Banking customers, Conrath noted that the company found that 53% of households were partially retired. These persons draw from sources such as social security, pensions or annuity, while they still earn salaries income.

“There is this hybrid approach,” Conte said, and he comes with nuances.

Some people continue to work simply because they enjoy them. “They love what they do,” he said. “They love social elements … have a goal.”

But others remain in the workforce of necessity. According to the Contest, partially retired households tend to bring more debt and spend more, which influences their retirement. As a result, this group often moves to full retirement later than those who retire at once.

“They work so that they can maintain these costs, but also to pay off their debt,” he said.

A key part of the planning is the preparation for the time horizon, which can last 35 years or more, partly because you live longer, but also because you can retire earlier than expected.

“I think many people, when left on their own devices, will sometimes plan on average values,” Conte said. “But you usually have to plan a long life.”

If you have planned to retire at 65, but in the end you left the workforce at 62, this change raises important questions. Withdrawal only three years earlier may not sound like a big job, but financially, it can make it a significant difference, as you will have less years to save more years to fund.

That is why it is important, said the Conte, to consider your options carefully. You can look at the claim for social security earlier, but this comes with compromises. As an alternative, you will want to consider whether your portfolio or other sources of income can help you overcome those extra years before the full retirement benefits begin.

It is here that pension savings control points can help workers decide whether they are about to fund their lifestyle in retirement.

Take, for example, a $ 80,000 home, which is approximately the US average for 2023. In this scenario, JPMorgan’s retirement management suggests a 30-year-old should be saved $ 90,000 a retirement, while 65-year-old should have $ 615,000 saved (see the ranking below).

Read more: How much money should I save up to 30?

These checkpoints are intended to be the starting point for the conversation, Conte said. According to JPMorgan research, about 56% of US households have not even made a basic calculation to understand how much they will need for retirement.

If you find that you are not on the road, the purpose of these checkpoints is not to cause fear or shame – this is to provide clarity and guidance. And once you find out where you are standing, the Conte said, you can start taking steps to get closer to your retirement goals.

The Conte also stressed how the retirement costs do not follow a straight line, contrary to what many suggest.

“I think historically people thought that costs were this linear progression and you just spend to keep up with inflation,” he said.

In fact, retirement costs tend to follow a “smile” model, Conte said. Costs are usually higher in the early years, led by travel, free time and lifestyle. It decreases in the middle phase of retirement and then rises again later in life, largely due to increasing costs of healthcare.

“So the costs are not linear,” he said. “It adjusts over time. But it is important to have a strategy that is dynamic and flexible so you can take into account this.”

The key, the Contest emphasized, is preparing for both the expected and the unexpected. This means creating a plan that not only finances long -term goals, but can also adapt to short -term cost and lifestyle changes.

A time revered by time suggests that you should plan to need 70% to 80% of your retirement income at retirement to fund your lifestyle. But in fact, JPMorgan’s studies have found that this conventional wisdom is not applicable to many households.

“These so -called thumb rules, 70%, 80%, they can feel a little broken,” he said.

Read more: Pension Planning: Step by Step Guide

In fact, the needs of income replacement vary greatly depending on the income of households. For example, those who earn about $ 30,000 before retirement may need to replace up to 104% of their income to maintain their standard of living, while households with an income before retirement of $ 300,000 can only replace about 55%.

One of the reasons for this is just the differences in cost models, the Conte explained. Lower income households usually spend the entire income they get from need. In contrast, higher-income households tend to save more, which is encouraging given the amount of financial needs when retirement.

Another consideration is inflation, which often crawls gradually and can quietly erode your portfolio and your purchasing power over time, Conte said. It is therefore important to analyze inflation both widely and through the cost category.

“Not only do people spend differently in different ways over time, but things also inflate at different rates,” he said.

One area that deserves special attention is healthcare – especially Medicare – as its costs have historically increased much faster than overall inflation.

In fact, Conte said that many councilors treat health care inflation individually in their planning models, often using an annual estimate of about 6%, which is aligned with the forecasts of the Medicare Trustees report.

With the age of health, they need health needs, along with costs. This makes a critical reporting of higher health care costs in later years of retirement, including the potential need for long-term care.

Each Tuesday Retirement Expert and Financial Teacher Robert Powell gives you the planning tools for your future RetirementS You can find more episodes of our Video center or watch your A preferred streaming serviceS