Two-out-of-five pre-retirees (40% of working Canadians age 45-64) say they wouldn’t be able to meet their living costs beyond five years if they were faced with unexpected early retirement, according to a study from Investors Group.

To make matters worse, more than a third of pre-retirees polled say that based on their current method of saving and investing, it’s unlikely they’ll have the retirement lifestyle they had hoped for.

Here are three tips for helping your clients prepare for early retirement:

1. Create a baseline plan
Clients want the comfort of knowing that someone is there to help them if an unexpected life event occurs, says Tim Cottee, vice president, retiree planning at Investors Group in Winnipeg. Creating a baseline plan can make a big difference in helping put clients at ease about their future.

Most people will end up following their “best-case scenario” retirement plan, Cottee says, but it’s not always possible to predict when and why a client may choose — or be forced — to leave the workforce early. By creating a baseline plan, you’re looking to include desired products but also acknowledging that the plan will fluctuate depending on upcoming life circumstances.

2. Stress test against early retirement
Many clients say that they plan to retire at a certain age, but if the market takes a downturn they’ll stick around the workplace for a few years longer. People often use a stress test against the market, Cottee says, but they also need to use the stress test for early retirement.

A stress test means asking clients at 55 years of age, for instance, what their retirement would look like if they had to retire tomorrow, or in five years, at 60, as opposed to an ideal retirement date of 65.

“Sometimes you find that this can be a positive experience because a person realizes they can actually afford to retire at 60 when they were expecting to retire at 65,” Cottee says. However, it’s often the case that the client wouldn’t be prepared for an unexpected early retirement, so a stress test can serve as an important wake-up call.

3. Monitor clients for major life events
Life can be unpredictable, so it’s important for advisors to monitor important life events that could potentially throw a client’s financial plan into disarray, Cottee says.

For instance, Cottee’s own father unexpectedly retired early after Cottee’s mother was diagnosed with early onset Alzheimer’s disease. Three years after her diagnosis, his father decided that it was best to leave the workforce and take care of his partner full-time. Many people will be forced to retire early due to their own critical illness or to care for a loved one, so you will need to stay up-to-date on health concerns from their onset.

Cottee advises clients to not only consider how health will impact their financial circumstance, but their lifestyle as well. “Math isn’t the hard part,” Cottee says. “It’s dealing with missed expectations and the willingness to take a step back from the lifestyle that you thought you were going to have in retirement. And that can be a very hard thing for people to see.”