30 Reasons It’s Hard To Retire at 65

Depressed woman drinking coffee in the morning.
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Sixty-five has long been the magic age for retirement. But retirement at this traditional age is becoming less and less common for many Americans.

Some may be choosing to stay in the workforce longer, but others would like to retire but aren’t able to. It’s not always easy to achieve retirement at 65, and there are a variety of reasons why.

Find out the reasons why you probably won’t retire as early as you might think.

You Haven’t Saved Enough

Many people think that if they contribute to an IRA or a 401(k), they should have enough money to retire. Despite our best intentions, sometimes life gets in the way. You might think you’ve been fully funding your 401(k), but sometimes you only contributed enough to get the company match.

You Haven’t Saved Anything

The only good thing about not having anything saved for retirement is that you’re not alone. According to the 2019 Survey of Consumer Finances conducted by the Federal Reserve, half of American households have no retirement savings at all. This means that millions of people are facing an uncertain future.

Get started now: Look at your budget and see where you can trim a few dollars, then put that amount away every week or every month. When you get a little extra cash or a pay increase, put that amount away, too. Before long, you’ll have a little nest egg that will continue to grow.

65 Is No Longer Considered the Full Retirement Age

As we live longer, our retirements are becoming longer, which means people collect Social Security for longer. The Social Security Administration has adjusted the so-called full retirement age so that anyone born in 1938 or later will have to wait until after age 65 to collect their full retirement benefit. And if you were born in 1960 or later, your full retirement age is 67.

Are You Retirement Ready?

You Don’t Want To Leave Money on the Table

You can start collecting Social Security at age 62, but your monthly check will be smaller. If you wait until your full retirement age, you’ll get your full benefit. Wait until age 70, and you’ll get even more — up to 8% per year more, depending on your year of birth.

You Don’t Know How Much You’ll Need

No one holds a crystal ball, so it’s difficult to predict how much money you’ll need to live comfortably in retirement. However, that doesn’t mean you shouldn’t try to estimate. By discussing your situation with a qualified financial advisor, you can get a much better handle on how much you’ll need to retire.

You Didn’t Start Saving Early Enough

When you get your first job, retirement seems an awfully long time away. It’s easy to put off contributing to your retirement plan. Most Americans get married, buy a house and have a few children — and all those things cost money — leaving them little to no extra money to put aside.

Starting early has lots of benefits. You get into a habit of saving, and you don’t feel like it’s a burden. Plus, you get the benefit of compound interest that helps your savings grow.

You Did Your Traveling Before Retirement

A lot of people look forward to traveling in retirement, taking up golf or visiting grandchildren. But if you’ve put a lot towards vacations or other luxuries during your working years, you might not have enough money to retire. Contrary to popular belief, it might not be the lattes or avocado toast that’s preventing you from sourcing a comfortable retirement — it could be larger splurges.

Are You Retirement Ready?

You Claimed Social Security Early

You can claim Social Security retirement benefits as early as age 62, and many people will claim as early as they can. But if you claim at age 62, you’ll receive a benefit that’s 30% less than what it would be at your full retirement age, assuming you were born after 1959.

It’s more beneficial if you can delay until age 70. The amount you get when you first claim is the amount you’ll continue to get — plus cost of living adjustments. Bottom line: If you claim early, you’ll get smaller checks for the rest of your life.

You Cashed In Your 401(k)

Your retirement savings will take a big hit if you take money out of an IRA, 401(k) or another qualified retirement plan before you reach age 59 ½. You’ll have to pay income taxes on the money, and you’ll probably pay a 10% penalty, as well, unless you used the money for certain qualifying expenses.

You’ll also have to contribute more to make up for the taxes and penalties, making it that much more difficult to reach your goals. Make it a point not to touch your retirement savings until retirement.

Your Spouse Has Passed Away

Postponing your retirement can become more appealing for a couple of reasons if your spouse happens to pass away before you retire. You might want the company of co-workers and the routine of going to work every day to help you with the loneliness that comes with being widowed.

In addition, you will only collect one Social Security benefit rather than the two you would have received had you still been married when you began receiving benefits. Granted, the benefit you receive will be the larger of yours or your spouse’s, but it will still be only one benefit.

Are You Retirement Ready?

You Didn’t Contribute to an IRA When You Could

You can contribute to an IRA or Roth IRA even if you have a retirement plan at work. You might not be able to deduct your contribution on your income taxes, so you would be contributing after-tax dollars. You can still get the benefit of savings that grow tax-deferred, however.

You Think You’ll Spend Much Less in Retirement

Certain expenses are associated with working that will stop once you retire, such as commuting expenses, a work wardrobe and lunches out. But you’ll also have lots of free time, and that can be a temptation to spend. Make a retirement budget so that you’ll know what you need to have saved, and then stick to it once you’ve retired.

You’re Relying Exclusively on Social Security

Social Security is designed to replace only about 40% of your pre-retirement income. Even if you delay receiving your benefits until age 70, you won’t come close to the money you were making during the time period when you were working. To continue the lifestyle you have, you’ll need additional income.

You Want To Have a More Lavish Retirement

You might want to keep working if you want to spend more money in retirement than your savings, projected income from Social Security and other sources might allow. For example, if your retirement plans include expensive travel, a second home or costly hobbies, you’ll need the extra funds.

Are You Retirement Ready?

You Want To Keep Working

Retiring at 65 isn’t always a necessity. Some people choose to continue working, either at the same job or a different one. They might cut back to a few days a week or choose to work fewer hours a day, but they want to keep working. A recent Gallup Poll found that 74% of Americans plan to work past retirement age.

Your Mortgage Isn’t Paid Off Yet

Low interest rates have made it attractive for a lot of people to refinance their homes. But for those in their 50s or 60s, refinancing to a 30-year mortgage means potentially making mortgage payments into their 90s. A 15-year mortgage might be a better choice, but if you have a 30-year, try making double payments to get it paid off quicker. Entering retirement with little or no debt will help your savings go farther.

You Have Too Much Other Debt

Just like interest compounds to make you richer, debt compounds to make you poorer. And debt has been on the rise for people in the retiree age group. In fact, debt held by 50- to 80-year-olds increased 60% in a twelve year period, according to the Center for Microeconomic Data. Consider beginning to reduce your debt now, because being debt-free in retirement could help your savings go a lot farther.

You’re Still Paying Off College

Even if you did the right thing by not robbing your retirement account to pay for the children’s college, you might have had to take out loans. These loans can have terms of 15 or 20 years, so you might still be making payments if your children cannot. It’s a good idea to get those student loans paid off before you stop working.

Are You Retirement Ready?

Your Children Still Need You

Some people postpone retirement because their children still need them. Having children later in life means they might not have finished college by the time you are 65 and might need your support. Or, they might be just starting families, and you want to be in a position to help them financially, which requires that you continue to work.

Your Parents Need You

In a development that was nearly unheard of a generation ago, some people who are approaching retirement are still caring for aging parents. Although a 65-year-old might not be actually providing the care for an 85-year-old parent, they might be paying for it, which would prohibit them from retiring at 65.

You’re Afraid You Won’t Have Enough To Live On

You’re not alone if you wonder how far the money you’ll have saved at retirement will take you. There are a lot of variables, but sitting down with a financial professional will help you make sense of your situation and let you come up with some strategies to get from where you are to where you want to be.

You Made a Risky Bet That Didn’t Pay Off

Sometimes people who are concerned about having enough money to retire comfortably will take unnecessary risks with the money they do have. They think they have to go big in order to boost their savings.

Are You Retirement Ready?

Your retirement savings should be invested based on your age and how much risk you are willing to take, according to The Vanguard Group. Determine the right asset allocation for your situation. But stick with your NCAA bracket or Super Bowl square if you feel like gambling.

You Fell Victim to ‘Sequence of Returns Risk’

You might have done a good job saving for retirement and feel you have enough put aside to live comfortably. Then you run up against the dreaded ‘sequence of returns.’

You might plan to withdraw $40,000 per year for the rest of your life if you retire with $1 million. But if the market drops 50%, now it’s as though you were taking out twice as much money each year. In addition, you’ll need a 100% return to get back to where you were.

You Didn’t Account for Taxes

When you withdraw from your IRA or 401(k), that money is treated as taxable income. You didn’t pay taxes on it when you invested it, so you have to pay them now. Most people think they will be in a lower tax bracket in retirement, but that might not be true. Be sure to account for taxes when you’re calculating how much to withdraw from your IRA.

You Assumed You Wouldn’t Be Taxed on Social Security

You might have to pay taxes on up to 50% of your Social Security if you are single with an income between $25,000 and $34,000 or married with a combined income between $32,000 and $44,000. The amount you’ll pay varies based on your income and filing status, but you will never pay taxes on more than 85% of your benefit.

You Didn’t Master the Market

Some people simply have the bad luck to reach age 65 just at the moment the market takes a nosedive. Unless they have saved considerably more than they need, they might need to postpone retirement so they can save more and wait for market conditions to improve.

Careful planning can keep the negative effects of a downturn to a minimum, but in a serious market reversal, you might need to work a few more years.

You Love Your Job

Some people don’t retire at 65 because they don’t want to. Keep working as long as you want, if you love your job.

Once you reach your full retirement age — 67 for those born in 1960 or later — you can collect Social Security and still work. But if you collect before full retirement age, your benefit might be reduced if you work. It might make sense to wait until age 70 to collect your Social Security retirement benefit and get a bigger check every month.

You Have a Dream

Sixty-five is the new 45, and many people feel they still have a lot more living to do. Even if you retire from your lifelong career at 65, you could start a new venture. Perhaps you’ve always wanted to start your own business. Or you might want to teach, imparting the wisdom you’ve gained from your years of working.

You Make Money From Your Hobbies

You might find a new way to keep your mind sharp, interact with other people, and earn a little money — maybe even something related to a hobby you enjoy. For example, if you’re a golfer, you might enjoy teaching lessons or being a caddy. You could also teach cooking or art appreciation lessons if those things appeal to you.

Think about what makes you happy, and then find a way to make it a second career.

You Don’t Want To Be Bored for 30 Years

Sixty-five became the retirement benchmark in the United States in 1935, when the Social Security Act was enacted. When the program first began paying monthly Social Security benefits in 1940, the average life expectancy for men reaching age 65 was 76.9 years old and 78.4 years old for women.

Since that time, life expectancy in the U.S. has steadily increased overall, but recently it has dropped slightly. Today, life expectancy for someone reaching 65 has increased by about six years for both men and women — to 82.5 years old and 85.1 years old, respectively.

Retirements now are far longer, and many people will miss the stimulation and socialization of working.

Laura Beck and David Hardin contributed to the reporting for this article.

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