Determining when to retire can be difficult. There are several factors to consider, including your financial situation, your health and the lifestyle you want to enjoy once you retire. While deciding when to retire is a personal one for you, it may help to know when they typically retire. So, what is the average retirement age and how is it changing? And what financial considerations should you weigh before you retire? While we answer these questions below, talking with a financial advisor can help you answer all of these questions about your personal situation.
Average retirement age and How it changes
Workers in the United States generally retire at about age 64, although data show the average age varies by state. For example, the average retirement age in Washington, DC, is around 67, while the average age in many states is around 65, including Iowa, Kansas, Maryland, Vermont and Texas. Other states have even lower ages, such as Alabama, Kentucky and Michigan at 63, or Alaska and West Virginia at 61.
In recent years, the average retirement age has increased. In 1986, the average retirement age for men was about 62 and for women about 57. By 2016 the average retirement age for men had risen to about 65 and for women to about 63. Changes to Social Security, less employer pensions, and even extended life expectancy may force many to postpone retirement, at least for a few years.
Plus, with the average Social Security benefit just $1,503 a month and pensions shrinking, hopeful retirees may find that their retirement budget and expected expenses far exceed their expected income. This may also force them to postpone retirement.
Retirement age and social security
Once you reach your 60s, Social Security becomes a factor in deciding when to retire. You can start collecting Social Security benefits at age 62, although you are not yet considered full retirement age (FRA) at that time and will only collect 75% of your expected benefits. In comparison, if you wait until age 65 to start collecting benefits, you will receive 93.3% of your monthly benefit. The FRA is 66 for people born between 1943 and 1959 or 67 for those born in 1960 or later.
But your FRA is not the year you receive the largest possible benefit. Retirees can also receive more than their FRA benefit if they wait past that age to start receiving benefits. For example, waiting a year past your FRA results in you receiving between 108% and 115.3% of your FRA, depending on the month you were born. And if you wait until you’re 70 to start getting Social Security, you’ll get 132% of your FRA benefit.
What to do before retirement
But to really enjoy your hard-earned retirement, there are a few important things you should check off your bucket list. First, if you haven’t already maxed out your retirement savings plan, now is the time to start doing so.
Remember, starting at age 50, you’re eligible to contribute up to $6,500 in catch-up contributions to your 401(k), 403(b) or 457(b). If you have a traditional or Roth IRA and are age 50 or older, you can contribute up to $1,000 in catch-up contributions.
Once you turn 65, you’re eligible to start receiving Medicare, a federal government program that provides health care for seniors. To qualify for Medicare, you must be a US citizen or legal permanent resident or have worked long enough to qualify for Social Security. This is an important factor in the retirement puzzle. That’s because health care costs are one of the biggest expenses you can expect to pay during retirement. Some studies estimate that a retired couple should expect to spend $285,000 on health care and related medical expenses during their golden years.
And don’t forget Social Security. Use the Social Security Administration’s benefit calculator to determine your estimated benefit. What that number looks like and how it plays into your retirement budget can also affect your timeline.
The bottom line
While the average retirement age for workers in the United States is 64, that number varies as a result of many factors, including your Social Security benefit, your retirement savings, any pensions you may have, and even the lifestyle you want to live in retirement. . You can start collecting Social Security benefits at age 62, but keep in mind that at that age, you’ll only be collecting a portion of your benefits. However, if you wait until age 65, you will receive 93.3% of your monthly benefit.
Tips for retirement
Consider talking to a financial advisor about when to retire so you can determine not only when the time is right, but whether you’re prepared. Finding the right financial advisor to suit your needs doesn’t have to be difficult. SmartAsset’s free tool matches you with financial advisors serving your area in five minutes. If you’re ready to be matched with local advisors to help you reach your financial goals, get started now.
Deciding when to retire means sorting through several key issues: the balance of your retirement savings, the Social Security benefit and Medicare you qualify for when you turn 65 can all affect when you decide to retire. Here is a calculator that can help you make the right decision.
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