New research from the Transamerica Center for Retirement Studies reveals that most Americans retire much sooner than they anticipate, and this early retirement is frequently not voluntary.
In the U.S., the typical age for retiring stands at 62, where approximately sixty percent of retirees mention that they left their jobs sooner than intended. Around half cited health concerns—like bodily constraints or impairments—as the primary cause. Other factors included involuntary unemployment or significant shifts within their company leading individuals to cease work prematurely prior to their envisioned retirement date.
"Financially precarious"
The research highlights the vulnerability of retirement in the U.S., where numerous older Americans end up retiring before they have adequately saved for it. Given that many individuals now expect to live longer than previous generations—most respondents informed Transamerica that they anticipate living until at least 90—they must manage their finances over an extended period during retirement, potentially depleting their savings much faster than anticipated.
"A lot of these individuals are in a tenuous financial position — should they experience significant monetary setbacks or see a deterioration in their health requiring prolonged medical attention, they would struggle to cover such costs," stated Catherine Collinson, CEO and president of the Transamerica Center for Retirement Studies, during an interview with CBS MoneyWatch.
The study supports prior findings regarding the usual retirement age, as the nonprofit Employee Benefit Research Institute reported earlier this year that the median retirement age For Americans, it is 62. This highlights a disparity between their retirement aspirations and actual circumstances, with business leaders And policy experts frequently encourage Americans to extend their working years in order to accumulate more savings for retirement—a strategy that commonly fails to go according to plan.
A "warning" for those still working, retirees being compelled to exit their careers sooner than anticipated represents a cautionary tale, according to Collinson.
She emphasized that individuals ought to proactively take care of their health and continuously update their abilities, along with informing themselves about retirement and financial planning, not forgetting to set aside some savings.
Why do Americans often choose to collect Social Security benefits sooner rather than later?
Leaving work earlier than anticipated might account for why many Americans apply for Social Security benefits before reaching what is known as their "full retirement age," the point at which they can receive their complete entitlements.
Pension specialists typically advise Americans to hold off by delaying Social Security until later due to the significant financial advantages of holding off. Individuals have the option to apply for their retirement benefit at age 62, though this comes with approximately a 30% reduction in benefits. reduction In their periodic payments as opposed to delaying until they reach their full retirement age, typically at 66 or 67 years old, based on when they were born.
However, according to Transamerica’s survey of over 2,400 retirees, the typical age at which Americans start receiving Social Security benefits is 63. This indicates that numerous senior citizens are committing themselves to consistently reduced monthly payments for the duration of their retirement years.
Conversely, opting to receive Social Security at age 70—when benefit claims reach their peak—results in an increase of over 30% in your monthly payments. Nevertheless, according to Transamerica’s findings, merely 4% of retirees choose to delay filing for their benefits until they turn 70.
One of the key actions they should take is thoroughly understanding their benefits and exploring whether there are ways to extend these advantages," Collinson stated. "In cases involving spouses, if there’s a need for additional income, one might claim initially while the other waits, or perhaps one could return to work temporarily and suspend Social Security benefits to increase overall earnings.
A key factor driving people to claim Social Security prematurely could be the insufficient savings in their retirement funds. According to Transamerica’s findings, roughly half of American retirees did not participate in a 401(k) or comparable plans during their employment years, and over a quarter reported that their employers didn’t offer any form of retirement benefits when they were working.
Roughly six out of every ten retirees identified Social Security as their chief source of income, highlighting the critical role this program plays for elderly citizens. In contrast, merely one out of every ten respondents indicated that retirement savings vehicles such as 401(k)s or IRAs were expected to serve as their principal financial resource during retirement.
Challenged but happy
Even though they face various difficulties, numerous retirees remain optimistic about retiring from their jobs, according to the study. Nearly nine out of ten reported feeling overall happiness and maintaining strong bonds with loved ones.
What sets apart is that retirees are truly relishing their retired life, which I believe is good news for everyone," Collinson stated. "They have made certain modifications, particularly concerning their finances, and generally speaking, they are thriving.
Americans dream of retirement, she mentioned. Retirement is primarily associated with liberty and the capacity to utilize their time according to their preferences, rather than being chiefly about financial independence.
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