The 7 new rules of financial security

Old thinking: Retiring early is a prize.
New rule: Retiring early is a problem.

Ever since Uncle Sam set 65 as the age you could retire and collect full Social Security benefits (it's 66 or 67 for boomers today), workers have been trying to beat that bogey by quitting early. And that seemed well within reach earlier in this decade after a bull market that gave workers confidence that their money could work for them rather than the other way around.

But the reality of early retirement, even before the stock market's sickening plunge, was never quite that rosy. More than half of early retirees leave work before they intended, and of those, nine in 10 depart because they get sick or are downsized.

And now the financial prospects for those who had a shot at a secure early retirement have dimmed: Long-tenured workers nearing retirement have seen their 401(k) accounts shrink an average of 30% over the past 14 months, according to EBRI. There's no way around it: The numbers require you to rethink your plans.

What to do: "By delaying retirement just one year you could increase your annual retirement income by 9%," says Richard Johnson, senior fellow at the Urban Institute. If you can hang on to your current high-paying post, great. The reality, of course, is that in an era of harsh cost cutting, well-paid older workers are more vulnerable. And you might not want to stick it out any longer anyway if the severance is decent. But there's much to be gained from finding another job, even if it's a lower-paid or part-time position. If you can earn enough to avoid collecting Social Security benefits early or dipping into your retirement accounts, research by T. Rowe Price shows, you'll barely feel a hit to your income when you do retire. If your new job comes with health benefits, so much the better. The average health-care tab for an early retiree before he is eligible for Medicare runs to $8,500 a year, says an AARP study.

Despite all those benefits, if you are still many years away from the retire-or-work decision, you should think of working longer as Plan B. As we noted, you won't have complete control over your ability to work - your health or the job market could make it difficult. That means you can't afford to assume that you'll just work a few more years if things go wrong. You will still have to stick to rules 1 through 6.

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