Americans Favor Early Retirement Age but Face Financial Realities

Americans Favor Early Retirement Age but Face Financial Realities

According to a new survey, a lot of Americans are dreaming of retiring at 58. Financial advisors are sounding alarms that this target may not be suited for the long-term and multifaceted nature of financial planning. As noted by none other than the Financial Independence subreddit, experts decry early retirement as a path to significant financial catastrophe. With a possible retirement length approaching 40 years, it is important to plan thoughtfully.

Carolyn McClanahan, a physician and financial advisor, warns about the dangers of aiming to retire at 58. She emphasizes the risks involved, stating, “You may end up coming up short or not having enough money if you quit work too early.” This feeling is an understandable one as it turns out that more than half of American workers share this fear of outliving their savings in retirement. New data shows that a remarkable 51% of workers find themselves fearful of outliving their money when they retire. They think it’s at least somewhat or very likely.

Survey data showed that men typically retire around age 64. Women are more likely to retire around age 62. Even with these statistics in mind, the dream retirement age according to Americans surveyed is much younger – just 58 years old. This imbalance raises questions about the readiness of each person. How are individuals preparing themselves for the fiscal cliff that lies ahead?

The whole picture regarding retirement finances seems dire. Experts agree that you’re going to need close to $1.26 million to retire comfortably. The impacts are already being felt by many Americans, as 58% of Americans say they have retired sooner than expected. Getting coverage that works for them in health care is essential. Since Medicare eligibility is not available until age 65, individuals who retire early will need to plan for different health care coverage.

Given all of these obstacles, millions are making the decision to work longer than they expected or hoped to. As it stands, a staggering 52% of workers expect to work at least some in retirement. By March 2022, over 1.5 million retirees had officially rejoined the labor force. Of those who expect to keep working beyond age 65, almost all — about 80 percent — say financial reasons are why.

Gloria Garcia Cisneros, a Carmen R. Taylor retirement specialist, understands the challenges many older U.S. adults face as they near retirement. She states, “We don’t just turn off and then live half of our life just doing nothing.” For most, the decision to work in retirement is more a matter of income necessity than desire.

Health-related reasons are another major driver behind when people retire. Of those who retired early, 46% reported health problems pushed them to retire early. At the same time, 43% mentioned employment issues, and 20% reported that family responsibilities had an influence. These macroeconomic trends further illustrate the difficulty of planning for retirement and the necessity for workers to adequately prepare for multiple outcomes.

For anyone considering an early retirement, this risk can be avoided by waiting to start Social Security until you reach your full retirement age. Financial advisers lament that delaying these benefits can go a long way in reducing the chances of outliving your savings. If someone can defer their retirement until 65, they double their chances of having a secure retirement. They have a stunning 92% probability of not exhausting their savings over retirement.

Statistics tell a different story when zooming in on retirement preparedness statistics. Any 62-year-old making the decision to retire today is making a huge gamble. In fact, there’s a 64% probability that they’ll run out of funds before they die. This harsh truth has led countless others to readjust their expectations and find expert advice in charting their rosy retirement path.

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