The retirement age is not set in stone. Major financial disruptions such as unemployment, illness or divorce take a toll on the average Americans’ retirement, postponing the expected starting age by roughly five years. Some life events are so disruptive that they can take the most financially prepared individual off course and leave them in a position where they anticipate having to delay retirement or forego it completely. In newly released data, TD Ameritrade’s 2015 Financial Disruptions Survey reveals how the targeted retirement age has changed for many Americans as a result of financial disruptions and provides helpful tips to rebuild lost long-term savings.

New Age of Retirement

  • The two-thirds of American survey participants, who experienced a disruption to their financial plan (“Disrupted Americans”), expected to retire at age 63, on average, prior to experiencing a financial disruption.
  • Of the 34 percent who now expect to fully retire later than they had planned, on average they expect to retire five years later (age 68 vs. age 63).
  • Fifty-eight percent of divorced, separated or widowed Disrupted Americans were not prepared to deal with the financial consequences of the disruption they experienced.
  • Only four out of ten believe the recent U.S. economic recession hindered their ability to recover financially.
  • Only one out of five feel that they have recovered financially.

Recovering from a Disruption

  • Forty-one percent of Disrupted Americans feel they are now back on track with their long-term/retirement goals.
  • Forty-six percent say that the event or situation had a high impact on their ability to reach their long-term/retirement goals, particularly for those who lost a job or suffered an illness.
  • To get back on track, 32 percent have increased the proportion of income they save or invest post-disruption, 26 percent are not willing to take as great financial/investment risks.
  • Those who discussed their long-term financial plans with others prior to the disruption were more likely to have recovered financially (37 percent ,of those who recovered, discussed plans with a lawyer or accountant, 28 percent with a financial planner or advisor, 27 percent with a spouse or partner).

Solutions for Retirement Setbacks

Thirty-two percent of Disrupted Americans would recommend having a financial plan that accounts for unexpected events or situations while 20 percent advise that financial education is key to prepare for the unexpected. The recommendations emerged from the 44 percent of Disrupted Americans who confirmed they were not prepared to deal with the financial consequences that resulted from the disruption.

“Recovering from a significant hit to retirement savings and investments does not have a one size fits all path. While there are no guarantees, history has taught us that over the long run, if we increase our investment risk profile in a diversified portfolio it could help us in the ‘catch up’ game. However, your investment profile has to factor many issues before you blindly increase your portfolio risk. To name a few, how many more years you'll work, your own ability to stomach volatility and actual losses, etc. Other catch up options include saving or investing more — all by watching your spending and making some big budget decisions,” said Lule Demmissie, managing director of retirement at TD Ameritrade. “Keep track of your spending and bills for a month to examine your spending habits, assess what spending you can change in moderation, identifying ‘big’ expenditures and consider alternatives.”

Additional Tips:

  • Stay the course. Suffered a job loss or received a deep cut in income? This can be one of the most challenging times to think about retirement. If there is emergency savings, don’t automatically stop making retirement contributions upon losing the job or income. Continue to save — keep in mind, money saved or invested in an independent retirement account (“IRA”) or 401k won’t disappear even in bankruptcy. Those funds are protected assets.
  • Social Security has its benefits. Save 25 percent or more of Social Security payments if it’s possible to wait to take the distribution. Locking in Social Security payments at the age of 62 will do just that — a monthly check that’s around a quarter smaller than it should or could be at age 67 or older. Plan on taking out smaller withdrawals from retirement savings, such as IRAs. The traditional rule-of-thumb has been to withdraw four percent a year from your retirement as income. But if it’s possible to cut expenses, try withdrawing three percent annually instead, saving thousands over time.
  • Working in retirement may not have been planned, but for many retirees it can be a second career or a great way to meet new contacts and earn more money for expenses in retirement. Consider holding off on retirement as long as possible. Every year of income is another year you can put away money for retirement. Or consider a new career or line of work that’s fulfilling as well as financially rewarding. Income in retirement, even part-time income, can be helpful in paying the bills. But, be aware of the income limits for Social Security taxes to start kicking in.

Investors interested in getting back on track for retirement are encouraged to visit TD Ameritrade’s Retirement Planning Page, which offers a number of retirement planning resources that can help investors pursue their goals.

For the latest news and information about TD Ameritrade, follow the Company on Twitter, @TDAmeritradePR.

TD Ameritrade does not provide tax or legal advice, please consult your own attorney or tax advisor.

About TD Ameritrade Holding Corporation
Millions of investors and independent registered investment advisors (RIAs) have turned to TD Ameritrade’s (NYSE: AMTD) technology, people and education to help make investing and trading easier to understand and do. Online or over the phone. In a branch or with an independent RIA. First-timer or sophisticated trader. Our clients want to take control, and we help them decide how – bringing Wall Street to Main Street for more than 39 years. An official sponsor of the 2016 U.S. Olympic and Paralympic Teams, as well as an official sponsor of the National Football League for the 2014, 2015 and 2016 seasons, TD Ameritrade has time and again been recognized as a leader in investment services. Please visit TD Ameritrade's newsroom or www.amtd.com for more information.

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Source: TD Ameritrade Holding Corporation

About Head Research
Head Research is a division of Head Solutions Group (U.S.) Inc., a leading market research partner for Financial Services companies in North America. With offices in New York, Toronto and Montreal, Head delivers the deep customer insights that increase institutional knowledge and propel business action. TD Ameritrade and Head Research are separate and unaffiliated firms and are not responsible for each other’s services or policies.

About the 2015 Retirement Survey Methodology
An online survey was conducted with 2,019 U.S.-based adults who had experienced an event or situation that had an effect on their financial plans for the long–term/retirement by Head Research, on behalf of TD Ameritrade Holding Corporation. Sample was drawn from major regions in proportion to the U.S. Census. The statistical margin of error for the total sample of N=2,019 adults within the target group is +/- 2.2% (assuming that participants are the same as non-participants). This means that, in 19 out of 20 cases, survey results will differ by no more than 2.2 percentage points in either direction from what would have been obtained from the opinions of all target group members in the U.S.