Have you given any thought to when you will retire?
Do you know the average age of retirement in the United States or what factors may influence the decision to retire?
In this article, we will be discussing the answers to these questions to help you on your retirement journey.
In the United States, there is no specific age for retirement. Instead, the social security retirement age is what is often referred to, which will be discussed later in the article.
Common Retirement Ages In The USA
According to the U.S. Census Bureau, the national average age for retirement is somewhere around 63 years old.
Nearly half of Americans retire between the ages of 61 and 65.
Considering that these numbers are statistics from those who have already retired, what about those who have yet to retire?
According to the research, which was released in April of 2019, 40% of the people who participated in the study expected to retire at age 65 or older.
Only 24% of them plan to retire at age 65; 22% of them plan to retire before the age of 65. Surprisingly, there are the remaining 14% of people who don’t plan on retiring at all!
American Retirement Age – Generation Breakdown
When you look at this data from a generational perspective, you get an interesting result. If you look at three different generations, those being
- Baby Boomers (born 1945-1964),
- Generation X (born 1965-1980), or
- Millennials (born 1980 or later),
you get an interesting breakdown.
Generally, it seems that younger generations are more likely to retire prior to the age of 65 while the number of people who are in the group of ‘will not retire’ remains equivalent throughout all generations.
Retiring On Social Security
When asked what income source these generations expect to have, they had quite a variety of responses. However, throughout all the generations, Social Security and self-funded savings reigned highest. Because of this, Social Security plays a major role when Americans decide to retire.
In the U.S., you can begin your Social Security claim when you reach the age of 62, but with that, you will not receive the full benefits.
Instead, your benefits depend on your ‘Full Retirement Age’ which is based on when you were born:
|Year of Birth||Full Retirement Age|
|1943 – 1954||66|
|1955||66 and 2 months|
|1956||66 and 4 months|
|1957||66 and 6 months|
|1958||66 and 8 months|
|1959||66 and 10 months|
|1960 and later||67|
A Case Study
With that information, let us now assess what would happen if you claim before or after your FRA, or Full Retirement Age. In this scenario, let’s assume that you get $2,000 a month at your full retirement age of 67.
If you wait and claim after the age of 67, you will get an increase of 8% each year until you reach the age of 70. At this rate, you would be getting an extra $480 more each month if you wait the full time.
If you claim before the age of 67, however, your benefits are reduced by 6% for every year. Let’s say, for example, that you begin claiming at the minimum age of 62. With this, you are reducing your benefits to only $1,400 a month, a full $600 less than you would be getting at your FRA. Find below a table that illustrated this.
|Age||FRA Benefits %||Benefit Amounts|
This makes quite a difference, don’t you think?
As a conclusion; you should look at all aspects that influence the decision on when to retire.