At What Age Do Most People Retire In America?

At What Age Do Most People Retire In America?

If you plan to retire, it’s good to know what age do most people retire in America. You don’t want to be a misfit and retire too soon. Otherwise, what are you going to do with your life? You also don’t want to retire too late and miss out on doing all the things you want to do.

Many Americans are in a difficult financial situation with only about $17,000 in retirement savings for those between the age of 56 and 61. With such low retirement savings according to the Economic Policy Institute, you’d think most Americans are never going to retire.

The truth is, most Americans do eventually retire.

What Age Do Most People Retire?

According to the Life Insurance And Market Research Association (LIMRA), 69% of Americans retire by age 66. Roughly 51% retire between the ages of 61 and 65. By age 75, 89% of Americans have left the labor force.

It surprises me that less than 1% of Americans retire before age 50. With the way the Financial Independence Retire Early (FIRE) movement has taken off, as well as the rise of freelance work, you’d think the percentage would be higher.

ONIG Financial Blog has been writing about early retirement since 2009. Tens of millions of readers have read this site since.

Take a look at this graphic below that shows what age do most people retire in America.

Not sure why they have two “Age 50-54” groups

How Are Retirees Able To Survive?

LIMRA estimates the average American household has about $253,200. But most of that is owned by the wealthy. The median holding is just $17,500, which matches up well with the Economic Policy Institute’s estimate of $17,000 (from 2013). 75% of Americans have less than $100,000 saved.

Percentage of wealth ownership by decile
The top 10% own 77.1% of all wealth

The reason why most Americans are able to retire by 66 despite so little wealth is due to Social Security, a traditional pension, and retirement work plans. LIMRA reports that some 41% of retirees have annual income less than $25,000. Of retirees with income over $50,000 a year, about 80% draw from a pension or retirement plan.

Unfortunately, very few Americans under 40 will have a traditional pension that can fully support a retirement anymore. And even if there was such a thing as a pension, with the typical American changing jobs every three years, there’s no way today’s workers will stay long enough to ever collect.

Retirement Savings Is Mostly Up To You

Therefore, the focus on retirement savings needs to be on maxing out a 401K, an IRA, and other pre-tax retirement plans while also saving additional money in after-tax investment accounts.

Just in case there’s a job change, a need for liquidity, or the desire to retire before the 10% early withdrawal penalty goes away, having a robust after-tax investment portfolio is a wise move.

For added security, it’s wise to build even multiple income streams to reduce concentration risk. There’s not one person I know who retired before the age of 50 who doesn’t have at least three income streams beyond a traditional retirement plan.

To learn more about building passive income, take a look at my newly updated post: Ranking The Best Passive Income Investments. This posts highlights the best passive income investments to support your retirement. Because frankly, having a 401(k) and Social Security is not enough.

Median retirement account savings by age group

Part-Time Work As A Supplement

Despite the anemic retirement income figures, the gig economy enables millions of Americans to work part-time and supplement or replace a full-time income source.

I’m pretty sure if all went to hell, I could earn at least $50,000 a year driving for Lyft, assembling furniture for Task Rabbit, and being the friendliest greeter at Walmart. But then, by working 50+ hours a week, I wouldn’t really be retired.

Working to help supplement your retirement income is what I call Barista FIRE. You’re essentially working to build an income buffer or cover an income gap between your desired lifestyle expense and how much your taxable passive investments spit out. You might even be able to get subsidized healthcare if you work enough hours.

The one expense that is really weighing heavily on my wife and I in retirement is our healthcare insurance. We pay a whopping $2,380/month in unsubsidized healthcare insurance for a family of four.

Number of part-time workers in America
Part-time work is a double-edged sword

Keep Housing Costs Low

The key to surviving retirement on a low income is owning a home debt free and having sufficient medical coverage. With health and living expenses taken care of, surviving off just $2,000 a month, while challenging, is doable.

I highly recommend trying to keep housing expenses to 10% of your annual gross income. If you do, retiring early becomes much easier.

If you’re fortunate enough to have children who call you back, they might even come to your rescue if things get too difficult. That said, raising children can be very expensive.

For those living in a high-cost area of the country with a couple kids, earning $300,000 a year only provides a comfortable middle class lifestyle. You won’t be able to retire before 60, let alone 50.

With mortgage interest rates at all-time lows in 2021+, I highly recommend everyone refinance their mortgage ASAP. I refinanced my mortgage for free to a 7/1 jumbo ARM at 2.625% and am saving about $1,000 a month in cash flow.

Check out Credible for some competitive rates where qualified lenders compete for your business. They are my favorite lending market place to get free mortgage rate quotes.

Record-low mortgage rates

You’ll Stay Busy In Retirement

Although I left full-time work at age 34, I’ve never stopped doing some things here and there to keep busy. For example, I’ve continued to publish three times a week on ONIG Financial Blog since 2009 out of enjoyment and mental stimulation. As a result, this site brings in some advertising revenue to supplement my retirement.

Regardless of what age do most people retire in America, you should always stay active once you retire. Most will be fine because most will retire to something, not from something.

Your focus simply shifts from something you’re sick of doing to something that’s much more interesting. If you’re lucky enough to love what you do, then by all means work until the very end!

Manage Your Retirement More Effectively

Check out Personal Capital’s free Retirement Planning Calculator, using your real data to run thousands of algorithms to see what your probability is for retirement success. Once you register, simply go to Planning -> Retirement Planner to run your various retirement scenarios. There’s no better free tool online to help you track your net worth, minimize investment expenses, and manage your wealth.

Personal Capital Retirement Planner Tool
Are you on track? Sign up for free to plan for your retirement future

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