Baby boomers, the generation born between 1946 and 1964, are retiring at a record pace. Interestingly, they are retiring at high rates despite many pushing off retirement because of various socio-economic factors.
According to data from Pew Research, between 2008 and 2019, more than 1 million US adults retired annually, swelling the ranks of the country’s retirees. By 2021, more than half of adults above 55 years were retired. Among those aged 65 to 74, the percentage of retirees was 66.9 percent.
As of 2023, more than 10,000 people are retiring daily, the highest rate on record. This rate is expected to grow to 12,000 in 2024.
Peculiarly, while more Americans are retiring, they are doing so at much older ages than in previous years. Data gathered by Gallup shows that in 1991, the average retirement age in the country was 57 years. By 2002, it was 59 years; in 2022, it was 61 years. Further, when Gallup researchers in 2022 asked non-retirees when they expected to retire, many gave an even older age (66 years). This implies the trend of retiring late will continue.
There are several reasons why Americans are choosing to work longer and retire much later. One of them is that many do not have any or enough retirement savings.
The US Census Bureau, in its 2018 Survey of Income and Program Participation, found that close to half (49 percent) of adults aged 55 to 66 years had no personal retirement savings. Of those with savings, only 29.6 percent of men and 22.1 percent of women saved $100,000 or more for retirement. Others had less than $100,000 in savings. This reality of minimal retirement savings forces more Americans to work past their 60s.
Further compounding this problem is Social Security legislation. In 1983, the US Congress raised the age at which Americans can claim their full Social Security benefits. Based on those changes, baby boomers are eligible for full Social Security benefits between ages 65 and 67. Adults born after 1960 are only eligible past age 67. Americans now work longer because they have to wait longer to claim their full Social Security benefits. Noteworthy, Congress left an option for Americans to claim reduced benefits starting from age 62.
Another reason Americans are choosing to retire later is prolonged life expectancy. Advancements in disease prevention and treatment have pushed the life expectancy of Americans to 76.6 years as of 2021. With longer life spans, US adults now need more savings for retirement. This is pushing many to work well into their 60s.
Fortunately, baby boomers today have a range of options concerning work. For example, flexible office work arrangements and the gig economy have opened doors for many to work part-time.
Ultimately, even though thousands of people are retiring daily, retirement is not a decision people should make on a whim. It requires planning. Adults eyeing retirement should first sit with a financial planner to candidly discuss their financial position. That way, they will learn the advantages and drawbacks of retiring at their current age. If they are better off retiring later, their advisor will create a retirement plan to place them in a better financial position to enjoy their golden years.
