More than half of retired people said they left the workforce earlier than planned—a possibility that retirement experts say you should prepare for in order to avoid derailing your savings.

Nearly 6 in 10 (58%) of the 2,400 retirees surveyed by Transamerica said they retired earlier than expected, and many expect to spend about 30 years in retirement. Health or employment-related issues were among the top reasons for leaving the workplace early, meaning some retirees didn't have a choice when leaving the workforce.

Advisors say this is all the more reason for pre-retirees to prepare for the possibility of having to stretch their retirement dollars for longer.

“People are retiring earlier, maybe not by choice, and don’t necessarily understand the long-term implications of that,” said Joe Petry, CFP and founder of Mayfair Financial.

That's causing some financial stress among those retiring early. According to experts, here are some things you can keep in mind when saving and spending your retirement funds in case you need them earlier than anticipated.

When Retiring Before 65, Beware Higher Health Care Costs 

Health care expenses can often put a strain on early retirees’ finances, according to Byrke Sestok, CFP and founder of Rightirement Wealth Partners. That’s because when workers retire before age 65, they’re typically not eligible for Medicare. 

“If you're not wealthy, that [health insurance] is going to put a massive dent into your cash flow, particularly until you get to Medicare age,” Sestok said.

Early retirees have several options for health insurance, such as Medicaid, Affordable Care Act (ACA) insurance, private insurance, insurance through their spouse, or COBRA. However, some of these options can be pricey, like COBRA and insurance from the ACA marketplace, notes Petry.

For example, many of those who receive health insurance from the ACA exchange could see the cost of their monthly premiums increase substantially because certain government subsidies will expire in 2025.

“I am seeing clients whose Affordable Care Act insurance costs are nearly doubling in 2025 compared to 2024," Petry said. “It’s also possible that subsidies are limited going forward.”

You Could Lose Out On Substantial Social Security Benefits If You Collect Early

Early retirees may also choose to take Social Security before they reach full retirement age (FRA), which means losing out on the larger monthly benefit they would get by waiting.

In the Transamerica survey, the median age for collecting Social Security was age 63. However, FRA is between age 66 and 67, depending on your birth year. For every year after FRA that people delay collecting benefits, their monthly benefit increases 8%.

For example, if you collect Social Security at age 62 (and your FRA is 67), your monthly benefit would be $1,400. But if you waited an extra eight years, until age 70, to collect, your benefit would grow to $2,480.

“If you can wait until age 70 compared to taking it at age 62, [the monthly benefit] is 77% more. Not everyone can afford to wait, though," Petry said. “If you think your longevity is going to make it worthwhile, you want to do some analysis… There’s a breakeven age, typically between age 80 and 83.”

The breakeven age is when the value of claiming benefits later (at FRA or after) exceeds the value of taking them early. If you think you'll live past the breakeven age, it could be worth delaying.

According to the Transamerica survey, respondents expected to live to age 90. However, the average life expectancy for Americans in 2024 is roughly 79 years.

If you want to avoid taking benefits early, Petry advises creating a ‘bridge fund’ to help you cover costs in your early retirement years. You could tap brokerage accounts, individual retirement accounts (IRAs), or 401(k)s.

You Can’t Always Plan For An Early Retirement, But Start Thinking About 

Experts acknowledge that while many of those who retire early don’t expect to, there are ways to prepare for it.

“The number of people who experience cognitive decline is growing because people are living longer," Sestok said. "So, by 55, you’ll want to focus on completing a financial plan."

During your working years, experts emphasize the importance of saving consistently over time and doing part-time or gig work for an additional stream of income. 

“Don’t assume you’re going to make it until age 65 because stuff can happen. Prepare in your earlier working years: max out your 401(k) if you've got it, and contribute to a Roth IRA,” Petry said.

He notes that those who are ineligible for a Roth IRA can consider doing a backdoor Roth or a Roth conversion.