Median Retirement Age Reveals a Startling Trend
The median retirement age in the U.S. is 62, according to new research from the Transamerica Center for Retirement Studies. Notably, nearly 60% of retirees say they stepped back from work earlier than planned, with health issues cited as the primary reason by nearly half of these individuals. Job losses and organizational changes also prompted early exits from the workforce.
Financial Precarity in Retirement
The research highlights a fragile reality for many older Americans who retire before they are financially ready. With life expectancy rising—survey respondents believe they will live to age 90 on average—many face decades of financial uncertainty.
“Many of them are financially precarious. If they were to experience a major financial shock or need long-term care, they would have a hard time affording it,” said Catherine Collinson, CEO and president of the Transamerica Center for Retirement Studies.
The Disconnect Between Retirement Plans and Reality
While experts recommend working longer to save more, the findings reveal a gap between aspirations and reality. The nonprofit Employee Benefit Research Institute similarly found the median U.S. retirement age to be 62, underscoring the challenges in aligning financial goals with unexpected life events.
Collinson warns that being forced to retire early is a “cautionary tale for people currently in the workforce.” She advises individuals to actively maintain their health, update skills, and prioritize financial literacy to better prepare for retirement.
Why Americans Claim Social Security Early
Many retirees claim Social Security benefits earlier than their “full retirement age,” locking in lower monthly payments. The median age to start receiving Social Security is 63, despite experts urging individuals to wait until age 70 to maximize benefits. Only 4% of retirees delay filing until age 70, which can boost monthly payments by over 30%.
A key factor driving early claims is insufficient retirement savings. Transamerica found that only about half of retirees participated in a 401(k) or similar plan during their careers, while more than 25% worked for employers who never offered retirement benefits.
Social Security: A Critical Source of Income
Social Security serves as the primary income source for 60% of retirees, while just 10% rely mainly on retirement accounts like 401(k)s or IRAs. This underscores the importance of understanding and maximizing Social Security benefits, especially in spousal situations or scenarios where rejoining the workforce temporarily may be an option.
Finding Happiness Despite Challenges
Despite financial concerns, most retirees report high levels of happiness and fulfillment. Nearly 90% describe themselves as generally happy and maintaining close relationships with family and friends.
“Retirees are really enjoying their time in retirement,” Collinson said. “Retirement is more about freedom and the ability to spend their time as they want to, rather than financial freedom specifically.”
A Dream Worth Preparing For
The research reveals that while retirees face financial and logistical challenges, the overall satisfaction of retirement remains a source of optimism. The findings underscore the importance of preparing for retirement both financially and emotionally to ensure a fulfilling post-work life.
