Retirement marks a significant milestone in many people’s lives. This is the point when you take a step back from active employment and enjoy the fruits of your labor. But when this happens can vary widely, influenced by factors like health, financial readiness, and personal choice. In 2023, the retirement landscape in the United States and Canada shows some interesting contrasts.
Retirement: What’s the Norm in the US?
In the United States, there isn’t a one-size-fits-all retirement age, but the average tends to hover around 64 to 66 years. Several key ages factor into this average. For instance, 62 is the earliest age Americans can claim Social Security benefits, although doing so reduces the monthly payout. Waiting until full retirement age (66 to 67, depending on birth year) secures 100% of the entitled benefit, and delaying further until 70 increases the monthly amount. However, most don’t wait that long.
Why don’t Americans hold out for the maximum benefit? It’s a mix of personal choice and necessity. Some opt to retire as soon as they can for leisure or to start new ventures, while others are pushed out of the workforce due to layoffs, health issues, or the need to care for family members. Moreover, employer-sponsored retirement plans, like 401(k)s, often incentivize earlier retirement.
Canadian Retirement Trends
Retirement in Canada is a bit different. The average retirement age is slightly higher, typically around 65 to 67. The Canadian Pension Plan (CPP) can be taken as early as 60, but, like the US system, the earlier you take it, the smaller your monthly checks. Most Canadians aim for the age of 65, which is considered the full retirement age for CPP benefits.
In addition, the cultural perspective on retirement in Canada seems to lean more toward retiring at or beyond the full benefit age. Work-life balance and the societal value placed on enjoying a longer retirement period may influence this trend. Moreover, many Canadians also have access to workplace pensions, which are structured to supplement government benefits and savings, often pushing the retirement age slightly higher.
Economic Factors and Retirement Choices
The economic environment has a significant role in deciding when to retire. Inflation, cost of living, healthcare expenses, and the performance of investments like 401(k)s or RRSPs (Registered Retirement Savings Plan in Canada) can all push that average age up or down. In 2023, both Americans and Canadians are facing economic uncertainties that could compel some to delay retirement to ensure financial stability.
In the coming years, retirement ages could change. Policies evolve, economies fluctuate, and societal attitudes shift. Both countries may see an upward trend in retirement age due to better healthcare leading to longer lifespans, meaning longer careers could become the norm. Additionally, as younger generations enter the workforce with different expectations and savings habits, the retirement age could be subject to even more change.
The Bottom Line
While the average retirement age in the US and Canada is close, they are shaped by a complex blend of policy, economy, and personal circumstances. The current landscape suggests that most people in both countries opt for retirement sometime in their mid-60s. Nonetheless, individuals on both sides of the border will continue to balance the dream of a leisurely retirement against the practical need for financial security. The perfect retirement age, it seems, is not just about a number but also about the readiness to embrace a new chapter of life.
Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.
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