Be Realistic About When You Plan to Retire

Workers expect to retire later than retirees actually do, according to the 2018 Retirement Confidence Survey published by the Employee Benefit Research Institute (EBRI).

The truth: Only half of those who say they want to work longer are able to do so. The rest leave the workforce due loss of a job, disability, health care shock, and the like, according to EBRI.

But how can you know if you will be in the half that gets to work longer or the half that doesn't? David Blanchett, head of retirement research at Morningstar Investment Management, recently studied the variables that can help predict when someone might retire earlier than expected.

And here's what he found.

"I tested a bunch of different possible variables (20 to be exact), and there wasn't really much that was predictive," he says. "The most important was definitely when the person plans on retiring, whereby the odds of there being a difference increases at older targets."

So, if you're targeting 61 as your retirement date you'll probably retire around 61. But if you're targeting 70 as your retirement date it will probably be closer to 66, he says.

"The second most influential variable was the self-assessed probability of working to age 65," says Blanchett. "In some sense this is providing a certainty estimate of the retirement age estimate. The higher the self-assessed probability, the longer the individual actually worked."

And this, to Blanchett speaks, to being "honest" about the retirement age forecast. "Don't just pick a later age because it improves the projection, pick a realistic age based on your ability/willingness/likelihood of actually working to that age," he says.

Tip: How to Make This Work in Your Favor

My takeaway from this: If you do plan on retiring at age 70, don't use that age as your expected retirement date when calculating how much you should be saving and how much will need in your nest egg by that age.

Instead, use age 66. If, on the other hand, you plan to retire at age 61, use 61 as your retirement age when calculating how much you need to accumulate in your nest egg.

Got questions about money, retirement and/or investments? Email Robert.Powell@TheStreet.com