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INSIGHT #8:

Workers Ready for Early Retirement Come From Ordinary Means

Allianz LoveFamilyMoney Study finds common traits among those planning to leave the workforce early

Rather than coming from a lifetime of privilege, Americans who plan to retire early were found to share a few key traits that are helping them reach their early retirement goals, according to the Allianz LoveFamilyMoney Study of 4,500 Americans. More than a quarter (26%) of the 3,449 currently employed people in the study said they plan to retire before they turn 65, with many in this group setting themselves up for success through connecting with a like-minded partner, willingness to talk about their finances, and use of their parents' financial success as a benchmark.

Many assume a wealthy upbringing is essential for early retirement, yet 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.

The study suggests that the following traits were common among those positioning themselves for early retirement:

  • Sharing good habits – They reported that their spouse's or significant other's relationship with money is similar to their own because both have a "practical" approach to money compared with those who never plan to retire.
  • Staying married – They are more likely to be married (76% compared with 68% who never plan to retire) and are still in their first marriage (77% compared with 70% of those who never plan to retire).
  • Seeking a benchmark – They compare themselves to their parent's financial status to track how they are doing financially (21% compared with 14% of those who never plan to retire).
  • Willing talkers – They are more likely to find it "very easy" or "somewhat easy" to talk with their spouse or significant other about family finances (90% compared with 77% of those who never plan to retire). They have also done more to teach their children about money, including encouraging them to work with a financial professional (14% compared with 6% of those who never plan to retire).

"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. 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," said Katie Libbe, vice president of consumer insights, Allianz Life.

74% of respondents who expect to retire at age 65-69 worry about running out of money in retirement.
Age respondents expect to retire at:
  • 26%before age 65
  • 38%between age 65-69
  • 20%after age 70
  • 16%never expect to retire

Kids Not a Barrier to Early Retirement

The LoveFamilyMoney study also offers insights into what motivates people who plan to retire early, the role of planning, and impact of raising children in landing them in a financially comfortable position.

While it's expensive to have children – an estimated $245,340 to raise a child from birth to age 181 – the Allianz study did not find any difference in expected retirement age based on whether or not respondents have children.

Those who expect to retire early reported facing other worries. According to the survey, they are more likely than all other groups to worry about dying young (53%) compared with outliving their money in retirement (47%) Specifically, respondents who worry about running out of money in retirement include 53% of those planning to retire on time at age 65-69; 60% of those planning to retire late, after age 70; or 53% of those who never expect to retire.

A larger percentage of those who expect to retire early also report that they have not experienced financial hardship as an adult – 46% compared with 31% of those who never plan to retire.

Essential: Saving, Planning

Planning for an early retirement requires making saving a priority and seeking expert advice, the LoveFamilyMoney study finds. Those who plan to leave the workforce before age 65 report that they are careful, practical types who count their pennies and work closely with their life partners to achieve the early retirement dream.

According to the Allianz survey, early retirees are more likely to:

  • Seek advice from financial professionals when making a major financial decision
  • Be a "saver" and not a "spender" when it comes to money
  • Share a similar financial approach with their partner
  • Get help from financial professionals for retirement planning
  • Focus on saving for their long-term goals
  • Depend on more sources of funding for their retirement

The Allianz LoveFamilyMoney Study was designed to seek insights into the unique financial needs of today's families. The modern family types identified include same-sex couples, single parent households, those with adult children returning home (boomerang families), multi-generational families, blended families and families with older parents and young children. Survey participants were between 35 and 65 years old with household incomes of at least $50,000.

1 U.S. Department of Agriculture, Expenditures on Children by Families, August 18, 2014.

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