Deciding what age to retire at goes beyond your financial planning. To retire smarter, it’s wise to evaluate non-financial factors, such as longevity, part-time work, social connectivity and purpose. Retirement today is often much longer period of time than it used to be. So, you’ll want to factor in how you envision making the most of that time. When you consider what specific age to retire at in your particular case, certainly focus on financial security, but be sure to develop a vision of what your life in retirement will be like.
Here are some data points on retirement to help you balance your retirement planning and retire smarter:
What age to retire is typical in the US?
The median age of retirement is 62, according to the Employee Benefit Research Institute. Notably, workers surveyed reported (as they have consistently over the years in this annual survey) that a median expected age of 65. That gap between expectation and reality highlights the importance of including a back-up scenario into your retirement planning. 43 percent of retirees surveyed reported that they had left the workforce earlier than planned.
Source: 2019 EBRI/Greenwald Retirement Confidence Survey
How long does the average retirement last?
According to the Center for Retirement Research at Boston College, in 2020 the average retirement is expected to last 20 years – up from 13 years in 1960 and 18 years in 1990. (While that underscores the importance of saving and investing wisely to fund that, it also is a reminder to plan for how you want to invest your time. Most people find that it is not a twenty-year vacation.) When thinking about what age to retire at, include a projection of how long your retirement is likely to last. Here’s a highly regarded longevity calculator that can help.
Why do people work past the “traditional” retirement age?
While financial need is a driver for many people, non-financial considerations lead people to want to work longer. Work offers many benefits beyond a paycheck. A survey of 14,400 workers and 1,600 retired people in 15 countries found that 56 % cited wanting to stay active and keep their brain sharp – and 38% explained that they simply enjoy their work. When contemplating what age to retire at, think about what role, if any, work will play for you. Many people conclude that they’re not done yet. In fact, studies show that about 1 in 5 un-retire within the first five years.
Source: Successful Retirement – Healthy Aging and Financial Security, Aegon Retirement Readiness Survey 2017.
Work in retirement. Isn’t that an oxymoron?
Actually, it’s a growing trend. 80% of workers in the 2019 Employee Benefit Research Institute/ Greenwald Retirement Survey say that they plan to work for pay in retirement. Financial interests are one reason, but more people cite wanting to stay active (91%) and because they enjoy work. However, there’s a notable gap. Only 28% of retirees report that they actually are working. Ageism is one factor. However, other surveys indicate that most people aren’t keeping their skills up to date or preparing for work in retirement.
Sources: 2019 EBRI/Greenwald Retirement Confidence Survey, (2019). 19th Annual Transamerica Retirement Survey of Workers
Isn’t it very difficult to work longer today, especially given the prevalence of ageism?
Ageism is certainly a reality and a hindrance to working longer. On the other hand, labor market demographics offer some promise for older workers. According to the Bureau of Labor Statistics, workers 65 and older is the fastest-growing segment of the workforce in the US. By 2022, the Bureau projects that workers 55 and older will make up 26% of the US workforce.
Source: (2017). Tossi M, Torpey E. Older Workers: Labor Force Trends and Career Options. Washington, DC: US Bureau of Labor Statistics, Washington,
How many people currently working have developed a formal plan for retirement?
Only 16 percent of workers globally have a written plan for retirement (28 percent U.S.). Globally, only 35 percent of workers have a backup plan to provide an income in the event they are unable to work before they reach their planned retirement age (41 percent U.S.).
Source: (2019). 19th Annual Transamerica Retirement Survey of Workers
Do men and women describe retirement differently?
A 2018 survey of 990 adults in the US, by Chaiwoo Lee & Joseph Coughlin of the MIT Age Lab, found that men frequently used words consistent with views of a traditional retirement, perhaps influenced by decades of financial services ad campaigns and media reports on retirement life. Men cited words such as “travel”, “hobbies”, and “relax”. In contrast, women frequently used words such as “calm, “time”, and “peace”. The authors note that the words used to describe retirement were rather limited. In their view, the word choices indicate that there is a lack of a clear vision of what life post-career looks like.
Source: Lee, C., & Coughlin, J. F. (2018). Describing Life After Career: Demographic Differences in the Language and Imagery of Retirement. Journal of Financial Planning, 31(8).
Is retirement lonely?
It can be. There are a few data points to consider on why planning for the social side of retirement is important. One study found that the average amount of time spent with friends and family declines as we age and the average time spent alone increases. At 35, there’s an average of 4 hours per day spent alone which increases to 6 hours in the late 50s and to over 8 hours a day in the late 70’s.
Loneliness, including feeling a lack of companionship or feeling socially isolated, has major implications for the health of older adults. In October 2018, the University of Michigan National Poll on Healthy Aging asked a national sample of adults age 50–80 about their social connectivity.
One in three respondents (34%) reported feeling a lack of companionship (26% some of the time, 8% often) and 27% reported feeling isolated from others (22% some of the time, 5% often) during the past year. If you want to retire smarter, keep social connectivity on your radar.
Source: (2018, November 23). The Wall Street Journal
Why is purpose important in retirement?
People transitioning to retirement often feel a loss of purpose, since that is often derived from the workplace. Discovering a new purpose in retirement is vital. A 2019 study by the University of Michigan of 6,985 adults 50 and older found that “people with a greater sense of purpose live longer. Having a strong sense of purpose in life leads to improvements in both physical and mental health and enhances overall quality of life.” When we’re immersed in our career, our purpose is clear. To retire smarter, think about what your purpose in retirement could be.
Source: Alimujiang, A., Wiensch, A., Boss, J., Fleischer, N. L., Mondul, A. M., McLean, K., … & Pearce, C. L. (2019). Association Between Life Purpose and Mortality Among US Adults Older Than 50 Years. JAMA network open, 2(5), e194270-e194270.
At Retirement Wisdom, we help people retire smarter by planning for the transition to retirement on the non-financial side.
We help people create second careers with purpose or design a new “portfolio life” of meaningful activities. Make your next chapter the best one yet. Schedule a free consultation.
Listen to our podcast where we discuss the non-financial side of retirement with authors, experts, and interesting retirees who are living their next chapters.