The biggest financial risk most American retirees still underestimate is not the market. It is longevity. The risk of outliving the plan.
Fortune‘s Sasha Rogelberg reported in May on new research from the National Bureau of Economic Research showing that Gen X workers who retire early pay a steep cognitive price for it. That is the health story, and it is real. The financial story underneath it is bigger, and it is the one most still do not understand.
Retiring at 62 instead of 67 amplifies longevity risk in three directions at once. It locks in a permanently lower Social Security benefit. It stretches the most fragile decumulation window by five years, exactly the years when sequence-of-returns risk does the most damage. And it accelerates cognitive decline in the very period when retirement decisions get more complex, not less. For an average earner, that single set of choices is roughly a quarter-million dollars in lifetime income left on the table.
The conventional wisdom told a generation that early retirement was the reward. The math, the data, and now the neuroscience tell a different story.
The 65 myth
