Sixty-five: That's the age often associated with retirement. However, it's not the average retirement age in the United States. Nor is it the age at which most people expect to retire, a new survey by GOBankingRates found.
To investigate how long people really expect to work, GOBankingRates asked more than 1,000 adults across the U.S., "Realistically, what age do you expect to be able to retire?" Respondents could choose one of the following answers:
- Younger than 50
- 75 or older
We brought the survey results to a variety of financial experts to get their input into how realistic our respondents were being, or if they're in for a rude awakening as they approach retirement age. One thing is for sure: It's never too early to start saving for retirement — and these are the most valuable ways to do so.
26% Expect to Retire Late
Nearly half of the survey respondents expect to retire between the ages of 60 and 69, which corresponds closely with the actual age people have been retiring. The average retirement age in the U.S. has been 63 in both 2016 in 2015, according to an analysis by financial technology firm SmartAsset.
However, GOBankingRates found that a significant percentage of Americans expect to work past their 60s. According to the survey, 11 percent of workers don't plan to retire until age 70 to 74, and another 15 percent said they won't retire until age 75 or older.
"I don't think most want to work that long, but rather they will have to work that long," said Scott Bishop, executive vice president of financial planning at STA Wealth Management in Houston. In fact, he said he expects more than 26 percent of Americans will have to work until their 70s because they won't be financially prepared to retire sooner.
Indeed, most Americans haven't saved enough for retirement. GOBankingRates' 2017 Retirement Savings survey found that 55 percent of Americans have less than $10,000 in retirement savings.
"I think that many Americans have no savings plan, spend too much — or have spent too much in terms of student loans, mortgage debt and auto debt — and many don't even save in their 401k plans up to the match," Bishop said. "With that in mind, I think it will be very hard to retire when they think. It is like trying to lose weight without having a diet and exercise plan."
Working longer can give you time to catch up on retirement savings and delay the need to start drawing money from your retirement account. However, planning to delay retirement until your 70s could backfire. "My father planned to work until 70," Bishop said. "He had a stroke at 58 and was forced to retire."
Bishop said many Americans aren't in good enough health to let their retirement strategy hinge on working longer. "If you can't guarantee it, how can you plan for it?"
27% Expect to Retire Early
An even greater percentage of those surveyed expect to retire early rather than delay retirement. According to the survey, 16 percent expect to retire between ages 50 and 59. Another 15 percent think they will retire before age 50.
However, Bishop said he thinks fewer than 10 percent of workers will be able to retire before age 60. "Most Americans have little or no savings, and more people are living longer — well into their 90s," Bishop said. "How can anyone other than a very disciplined saver or the financial elite retire before 60?"
You have to be committed to saving your money rather than spending it if you want to retire early. "The key is you have to prioritize freedom and security ahead of lifestyle today," said Todd Tresidder, a retirement coach and the founder of Financial Mentor, a wealth-planning company. "Otherwise, you won't build the assets."
How much you save as a percentage of your income and the return on your investments — minus inflation — will determine when you can afford to retire, said Tresidder, who achieved financial independence at age 35 by saving 70 percent of his income while working full time. "Those two ratios will literally determine your financial outcome in life," he said. "It's just that simple."
Men Expect to Retire Earlier Than Women
Men are slightly more likely than women to think they'll retire before age 60. According to the survey, 29 percent of men said they expect to retire at 59 or younger versus 27 percent of women.
GOBankingRates' 2017 Retirement Savings survey found that men are more likely to have higher retirement account balances than women, which might explain why they're more likely to think they'll retire early. About 22 percent of men have $200,000 or more in retirement savings, while just 15 percent of women do.
Often, early retirement doesn't entail giving up work entirely. Some people find more enjoyable ways to make money or volunteer regularly to feel a sense of purpose.
"I've been 'retired' since age 35, and I'm still working 21 years later," Tresidder said. "Through experimentation, I've found the balance point that leads to greatest fulfillment for my life has been three to four months of vacation per year and eight to nine months of focused, concentrated productivity. I have a hard time imagining ever retiring in the traditional sense because there's nothing it would give me that I don't already have, but it would remove many benefits I enjoy from my work."
Keep Reading: How Women Can Get Ahead of the Retirement Savings Gap
Boomers Expect to Retire Soon
About one-third of baby boomers ages 55 to 64 expect to retire between ages 60 to 64, which means some in that age group could already be retired. And another 18 percent expect to retire by age 65 to 69.
Because this age group is closer to retirement age, their projections of when they'll retire are more likely to be accurate, said Dominique Henderson, a certified financial planner and founder of DJH Capital Management in Cedar Hill, Texas.
Nonetheless, some might be overly optimistic. Many boomers won't be able to retire soon because they don't have enough savings. The GOBankingRates 2017 Retirement Savings survey found that 29 percent of adults ages 55 and older have $0 saved for retirement.
When your retirement planning confidence doesn't match the reality of how much you have saved, Tresidder said you'll have to do one of three things: Reduce your current expenses to save more, work longer or redefine retirement to include income-producing activities.
"It takes a certain amount of assets to support the spending in retirement," he said. "So if the assets aren't there, then something else has to give."
Millennials More Inclined to Expect to Retire After 75
Millennials are more likely than any other age group expect to retire later in life. The survey found that 18 percent of adults ages 18 to 24 and 20 percent of adults ages 25 to 34 said that they will retire at age 75 or older. In addition:
- 10% of adults ages 35-44 and 55-64 expect to retire at age 75 or older.
- 14% of adults ages 45-54 said they will retire at age 75 or older.
- 16% of adults 65 and older expect to retire at age 75 or older.
Henderson said that most young adults likely don't have an accurate idea of when they'll be able to retire. "They just haven't spent enough time looking at their financial picture to make a good guess," he said.
However, those who expect to retire at 75 or older are likely not far off in their estimate. That's because a survey by GOBankingRates found that 33 percent of adults ages 18 to 24 and 41 percent of adults ages 34 to 34 said saving for retirement is not a priority.
Southerners Most Likely to Expect to Retire Early — or Late
Respondents in the South are the most likely to expect to retire early, with 32 percent saying they'll retire before age 60. However, they're also the most likely to believe that they won't retire until their 70s. The survey found that 33 percent of respondents in the South said they will retire at age 70 or older.
The only other region that comes close to having such a large percentage of people who expect to retire late is the Northeast, where 30 percent said they will retire at age 70 or older. However, the Northeast has the smallest percentage of respondents who expect to retire before age 60 — 23 percent. The survey also found:
- The West has the second-highest percentage (29%) of respondents who said they plan to retire before age 60.
- The Midwest has the smallest percentage (19%) of respondents who expect to retire at 70 or older.
- The Midwest has the largest percentage (52%) of respondents who expect to retire between 60 and 69.
How to Pick Your Retirement Age
Because so few people have a financial plan or have calculated how much money they need to retire, most don't have an accurate idea of when they'll be able to retire, Bishop said. "It is like asking Americans how long they will live without having done an annual physical in 10 or more years," he said.
You shouldn't rely on guesses or rules of thumb. "Get an honest assessment and figure out what you need to do hit your goals," Bishop said.
You might be able to get financial advice through your workplace retirement plan provider, or you could work with a financial planner. You can find fee-only financial planners through the National Association of Personal Financial Advisors, or planners who charge by the hour at GarrettPlanningNetwork.
Methodology: The GOBankingRates survey posed the question, "Realistically, what age do you expect to be able to retire?" Respondents could select one of the following options: 1) "Younger than 50," 2) "50-54," 3) "55-59," 4) "60-64," 5) "65-69," 6) "70-74," or 7) "75 or older." Responses were collected through a Google Consumer Survey conducted May 3-5, 2017, and responses are representative of the U.S. online population. The survey had a sample size of 1,019 and a margin of error of 2.8 percent.