There is no shortage of reminders urging you to prepare for your retirement in advance – even in your 20s, as far in advance as you possibly can. These days, people are also considering other kinds of preparations that go beyond finances. For example, there’s a move toward emotionally preparing for retirement, which seems like a good idea since new research has linked depression with retirement, especially for men.
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No matter where you are with your preparations, or how closely your own retirement looms, it’s always good to have as much information as possible. There are a few surprising facts about retirement, and the retirement age specifically, that you’d be wise to consider during your preparations. Understanding these points might just save you money, or worry, down the road. Let’s take a look.
1. The average age of retirement is currently 62.
Gallup reports that the average retirement age is up to 62, the highest it has been since they started this survey in 1991. The average retirement age fluctuated back and forth from 59 to 60 for the 10 years between 2002 and 2012, and in the early ’90s it was more like 57, so the recent increases (in the last couple of years) are significant and worth noting.
Something about this number is a little surprising though. It seems like more and more people are working well into their 60s, and we’re certainly living longer these days. Perhaps part of the reason this number seems low is that so many plan to retire later than they actually do. Maybe it’s often a reality that hits before we’d have imagined it would.
2. People plan to retire later, at age 67 on average.
Since Gallup began their study, respondents have planned to retire much later than they actually did. While the current age for retirement is 62, on average, people plan to retire around age 67. So, why do so many of us end up retiring earlier than expected? For various reasons.
Most commonly, our health makes the decision for us. Over 60 percent of retirees report leaving because of their health, according to survey results from the Employee Benefit Research Institute. Similarly, another 18 percent said they left to care for a spouse or family member. There is some good news though: 26 percent of respondents said that they were able to afford to retire earlier than they’d expected to, and reported that as the reasons for their earlier-than-anticipated transition.
Retirement might not come exactly when we think it will. We should prepare (financially, and in other ways) to leave the working world behind a little earlier than expected, just in case. Maybe, we’ll even get to retire a little earlier than we’d thought because of these preparations. They certainly couldn’t hurt anything.
3. There are a lot of retirees living in poverty, especially women.
The American middle class is shrinking, and along with it, a lot of workers’ preparations for retirement as well. The percentage of retirees living below the poverty line has been on the rise since 2005. The rate is around 10 percent for retirees ages 65 to 74, while 75- to 84-year-olds had a poverty rate closer to 11 percent. The oldest retirees were the hardest hit, with almost 15 percent living in poverty when this data was gathered in 2009.
For women, the statistics are even worse. Recent data show that women over the age of 65 are twice as likely to live in poverty as men, largely due to the gender wage gap and issues with social security benefits connected to it. It’s helpful to have a realistic understanding about the pervasiveness of the problem of poverty and retirement. Anticipating healthcare costs and other unforeseen financial challenges could be helpful.
4. There are fewer supports in place from employers these days and it’s harder for workers to prepare in general.
Although the economy is improving, few workers are seeing a significant pay increase since the end of the Great Recession. Largely, this is because of a shift in employer policy. Pay-for-performance policies are on the rise, and it’s changing the way managers control pay increases. A decline in workers’ bargaining rights has also made this situation worse.
Additionally, employers aren’t contributing to retirement plans and pensions the way they did in the past. More ownership for these preparations falling to workers. Workers who aren’t getting raises don’t tend to have a lot of extra cash to put away. Without the same level of company support, it’s growing more and more difficult for workers to adequately plan and prepare for a secure retirement.
It’s important to keep it firmly in our minds that it’s up to us to prepare for our retirement. In order to have financial security during these years, we’ll have to make significant, early preparations. This is especially true for women. It’s also good to keep it in mind that retirement could come earlier than we’d like to think, and to be prepared for that, too – just in case.
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What surprises you about these retirement facts? Will you be ready to retire when the time comes? We want to hear from you! Leave a comment or join the discussion on Twitter.