The average retirement age in the US is age 65 for men and age 62 for women, but those numbers don’t reveal the extremely wide range of ages at which people can and do retire.
Some people retire in their 50s, some in their 70s; some people find ways to keep pursuing their profession and thus never completely “retire” from the workforce. The age at which someone retires depends on a host of factors, including how much they’ve saved, their overall state of health, and their desire to keep working versus taking on other commitments.
Still, having some idea of the average age of retirement can be helpful as a general benchmark for your own retirement plans.
What Is the Average Age of Retirement in the US?
Overall, the average retirement age in the U.S. is 64.
Age 65 may be what most of us think of as the best age to retire, but not all regions of America are hitting this goal. According to the U.S. Census Bureau’s American Community Survey, the average U.S. retirement age in:
• Hawaii, Massachusetts, and South Dakota is 66.
• Washington, D.C., is 67.
• Residents of Alaska and West Virginia it’s 61.
A lower cost of living may be what’s helping West Virginia residents retire so young. West Virginia was one of the 10 most states in the country with the lowest costs of living, according to a 2023 study by Consumer Affairs.
Recommended: Cost of Living by State
While those previously mentioned states give a look at two ends of the average retirement age spectrum in the United States, many states have an average retirement age that falls closer to what one might expect.
Colorado, Connecticut, Iowa, Kansas, Maryland, Minnesota, Nebraska, New Hampshire, New Jersey, North Dakota, Rhode Island, Texas, Utah, Vermont, and Virginia all have an average retirement age of 65.
Expectations vs Reality
Expectations can lead to disappointment. Any kid with an overly ambitious wishlist for Santa Claus knows that.
Now imagine a person spending most of their adult life expecting to retire at 65 and then realizing their retirement savings just isn’t enough. Ideally, that won’t happen, but it has happened to many.
According to The Employee Benefit Research Institute’s Retirement Confidence Survey Summary Report, the expected average age of retirement in 2023 was 65. However, as noted previously, the Census places the average retirement age in the US at 64. Retiring earlier than planned could lead to not having enough money to retire comfortably.
How to Know When to Retire
Not everyone retires early by choice. More than four in 10 people retired earlier than they expected, mostly because of health problems, disabilities, or changes within their organizations.
It can be difficult for workers to exactly predict at what age they will retire due to circumstances that may be out of their control.
In order to bridge any financial gap caused by not having enough retirement savings, 51% of pre-retirees expect they will earn an income during their retirement by working either full time or part time.
While the survey found that respondents are aware of what they need their retirement savings to look like, there is a gap between their expectations and their actions.
Seventy-nine percent of pre-retirees reported that they agree they should be doing more to prepare for their retirement. However, only 48% reported having a strong retirement plan in place, with 19% of Gen Xers and 31% of millennials admitting to not saving for retirement at all.
A lack of awareness seems to be leading to a lack of preparedness: 25% of pre-retirees surveyed said they aren’t sure how much money they are currently saving for retirement.
💡 Quick Tip: Before opening any investment account, consider what level of risk you are comfortable with. If you’re not sure, start with more conservative investments, and then adjust your portfolio as you learn more.
How Much You Should Have Saved for Retirement?
To retire comfortably, the IRS recommends that individuals have up to 80% of their current annual income saved for each year of retirement. With the average Social Security monthly payment being $1,177, retirees may need to do a decent amount of saving to cover the rest of their future expenses.
This is something to keep in mind when choosing a retirement date.
It’s Never Too Early to Start Saving for Retirement
Retirement can last 30 years or more. As lovely as that sounds, financial security is key to enjoying a relaxing retirement.
Any day is a good day to start saving, but saving for retirement while a person is young could help put them on the path toward a more secure retirement. The more years their savings have to grow, the better.
The Department of Labor (DOL) estimates that for every 10 years a person waits to begin saving for retirement, they will have to save three times as much every month to play catch-up.
3 Steps to Start Preparing for Retirement
It’s not enough to have an idea of the best time to retire. To really reach that goal, it’s important to have a financial plan in place. These steps break down how to prepare for retirement.
Step 1: Estimate how much money you’ll need
One of the first steps a person could take toward their retirement saving journey is to estimate how much money they need to save. There is a retirement savings formula that can help you estimate: Start with your current income, subtract your estimated Social Security benefits, and divide by 0.04. That’s the target number of retirement savings per year you’ll need.
Step 2: Set up retirement saving goals
It might be worth considering what retirement savings plans are available, whether that is an employer-sponsored 401(k), an IRA, or a simple savings account. Contributing regularly is key, even if big contributions can’t be made to retirement savings right now.
Making small additions to savings can add up, especially if extra money from finishing car payments, getting a holiday bonus, or earning a raise can be diverted to a retirement savings account.
If an employer offers a 401(k) match, it might be beneficial to take advantage of that feature and contribute as much as the employer is willing to match.
Along with receiving free money from an employer, there are also tax benefits of contributing to a 401(k). Contributions to a 401(k) happen pre-tax — that lowers taxable income, which means paying less in income taxes on each paycheck.
In addition, 401(k) contributions aren’t taxed when deposited, but they are taxed upon withdrawal. Withdrawing money early, before age 59 ½, also adds a 10% penalty.
Step 3: Open a Retirement Account
If access to an employer-sponsored 401(k) plan isn’t available — or even if it is — investors might want to consider opening an IRA account. For investors who need a little help sticking to a retirement savings plan, they could consider setting up an automatic monthly deposit from a checking or savings account into an IRA.
In 2023, IRAs allow investors to put up to $6,500 a year into their account ($7,500 if they’re older than 50). There are two options for opening an IRA — a traditional IRA or a Roth IRA, both of which have different tax advantages.
Traditional IRA
Any contributions made to a traditional IRA can be either fully or partially tax-deductible, and typically, earnings and gains of an IRA aren’t taxed until distribution.
Roth IRA
For Roth IRAs, earnings are not taxable once distributed if they are “qualified”—which means they meet certain requirements for an untaxed distribution.
Late to the Retirement Savings Game?
Starting to save for retirement late is better than not starting at all. In fact, the government allows catch-up contributions for those over the age of 50. Catch-up contributions of up to $7,500 in 2023 are allowed on a 401(k), 403(b), SARSEP, or governmental 457(b).
A catch-up contribution is a contribution to a retirement savings account that is made beyond the regular contribution maximum. Catch-up contributions can be made on either a pre-tax or after-tax basis.
As retirement gets closer, future retirees can plan their savings around their estimated Social Security payments. The official Retirement Estimator tool provided by the U.S. Social Security office could help by basing the estimate on an individual’s actual Social Security earnings record.
While this estimate is not a guarantee, it might give a retiree — or anyone planning when to retire — an idea of how much they might consider saving to supplement these earnings.
Social Security benefits can begin at age 62, which is considered the Social Security retirement age minimum. However, full benefits won’t be earned until full retirement age, which is 65 to 67 years old, depending on birth year.
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FAQ
Does the average retirement age matter?
The age at which you retire affects your Social Security benefit. For instance, if you retire at age 62, your benefit will be about 30% lower than if you wait until age 67.
What is the full retirement age for Social Security?
The full age of retirement is 67 for anyone born in 1960 or later. Before that, the full retirement age is 66 for those born from 1943 to 1954. And for those born between 1955 to 1959, the age increases gradually to 67.
How long will my retirement savings last?
One strategy you could use to help determine how long your retirement savings might last is the 4% rule. The idea behind the rule is that you withdraw 4% of your retirement savings during your first year of retirement, then adjust the amount each year after that for inflation. By doing this, ideally, your money could last for about 30 years in retirement. However, your personal circumstances and market fluctuations may affect this number, which means it could vary. It’s best to use the 4% rule only as a general guideline.
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