Key Takeaways:
- Retirement at 65 is no longer the norm, as some Americans retire earlier while others continue working well into their 60s and beyond.
- Healthcare costs, changing employer benefits, personal finances, health, and the type of work you do can all influence how long you remain in the workforce.
- Rather than focusing on a specific retirement age, it can be more useful to determine whether your finances, health, and personal goals support the retirement you want.
How true is it that a person in America retires at age 65? The numbers may surprise you.
Clearly, some Americans do retire at age 65, however others are working well into their 60s and beyond. Changes in health, finances and the economy are reshaping how Americans think about retirement.
Do Americans Retire at Age 65?
Age 65 marks when we become eligible for Medicare and has long been the benchmark for leaving the workforce. However, a significant portion of Americans retire before age 65. According to the Center for Retirement Research at Boston College, the average retirement age for women is 62.6 and the average age for men is 64.6.
Early retirement isn’t always a choice. There are those that must retire early due to health conditions. Then there is the situation of “downsizing” by companies. Since the Covid pandemic, companies have been reducing their workforce.
Why Americans are Working Longer
A Changing Retirement Landscape
Social Security reforms such as raising the full retirement age, removing the earnings test and increased delayed retirement credits have made it financially smarter to work longer.
There has also been a significant shift away from company-sponsored pensions to employee-sponsored 401 (k) plans that have eliminated incentives to retire at a fixed age. This change has also increased an individual’s financial risk pushing many to stay employed longer to build up savings.
Education and Work Availability
As education levels have risen, older workers are more likely to have higher skilled, less physically demanding jobs that support longer careers. The shift toward a service and knowledge based economy has made work more accessible and sustainable for older adults.
Limited Health Coverage
With fewer employers offering retiree health benefits and healthcare costs rising so rapidly, many workers stay employed to maintain coverage. This creates a strong incentive to work at least until Medicare eligibility at age 65.
Improved Health and Longevity
Even though health issues are often cited as a major factor people leave the workforce early, people are living longer and staying healthier as they age making it more physically and mentally possible to continue to work past age 65.
Will the Retirement Age Continue to Rise?
Given current economic and demographic trends, Americans will likely continue to retire later in life. For those who retire early, the challenge is twofold: there is less time to save and those savings need to last longer.
Meanwhile, younger generations may face even greater financial hurdles than baby boomers. Issues such as student debt, the viability of Social Security, and rising housing costs are huge financial stumbling blocks. As a result, millennials and Generation Z workers may find themselves working well into their 60s or beyond.
The type of work someone does affects how long they can work. Physically demanding jobs make it harder to continue working into older age while less physically demanding occupations can lead to a longer working career.
The Bottom Line:
Retirement in America is no longer defined by a single age. While age 65 was once seen as the standard retirement age, there are those who retire earlier, while others remain working well beyond that age.
As these trends continue, retirement is becoming a highly personal decision that is less about reaching a specific age and more about achieving financial stability, maintaining health and meeting individual goals.
At Retirement Solutions, we have, for over 40 years, been counseling individuals on how to work towards a retirement that they always envisioned, as well as helping those in retirement maintain the retirement that they always envisioned.
We invite you to contact us to discuss your personal situation to determine whether we can be of assistance to you.
You talk, we listen. No obligation, no cost for the discussion.
