Most people dream of the day when they can leave their job in the past and enjoy their life in retirement. Reaching this goal is easier said than done but with the right plan, you’ll be well on your way to making it happen. While many people work until they reach the full Social Security benefit retirement age, this doesn’t hold true across the board. Retirement ages differ by demographic, so let’s take a closer look at what’s happening throughout the country and find out how to make the best personal decision on when to retire.
When Does the Social Security Administration Say You Should Retire?
The Social Security Administration defines full retirement age as “the age at which a person may first become entitled to full or unreduced retirement benefits.” If you collect benefits before reaching your full retirement age, you won’t receive as much as you would if you wait. For example, if you were born after 1937, your full retirement age may be 65.
However, you can begin to take reduced benefits at age 62. The Social Security Administration doesn’t tell you when to retire, but it does provide guidance on the ages you can receive reduced and full benefits.
Average Retirement Age by State in the U.S.
Average retirement age varies by state. For example, individuals who live in states with a higher cost of living, such as New York and Massachusetts, often retire later in life. Conversely, states with a high unemployment rate typically see a lower average retirement age, as individuals opt to take early retirement as opposed to continuing their search for work.
The economic health of a state can also affect retirement age, as those experiencing a downturn often have a higher unemployment rate and lower wages.
There are seven states with an average retirement age of 62. They include Michigan, Missouri, Arkansas, West Virginia, Kentucky, Alabama, and South Carolina. You'll notice that many of these states are similar in regard to economy and industry.
For example, West Virginia and Kentucky are border states, with residents of both often facing the same economic circumstances. A lower retirement age in these states is partly tied to a high unemployment rate.
Age 63 is the most common retirement age by state, with the following states making up this list: Oregon, Idaho, Montana, Nevada, Arizona, New Mexico, Oklahoma, Minnesota, Wisconsin, Illinois, Indiana, Ohio, Pennsylvania, New York, Tennessee, North Carolina, Louisiana, Mississippi, Georgia, Delaware, and Florida.
These states fall into the "middle ground" in regard to retirement age and they stretch from one side of the United States to the next. Just the same as other ages, many states, such as Ohio and Pennsylvania, have similar economies and industries.
There are 13 states with an average retirement age of 64, including Alaska, California, Washington, North Dakota, South Dakota, Colorado, Texas, Iowa, Virginia, Rhode Island, Maine, Hawaii, and Maryland.
These states have a higher than average retirement age, with a variety of contributing factors. Hawaii and California, for instance, have a high cost of living in regard to real estate, which often forces its residents to work longer than individuals in other parts of the United States.
The nine states with an average retirement age of 65 include Utah, Wyoming, Nebraska, Kansas, New Jersey, Connecticut, Massachusetts, New Hampshire, and Vermont. As noted earlier, states with the highest retirement age are often those with the highest cost of living.
This is particularly the case in the northeastern corridor of the United States, such as with states like Massachusetts and Connecticut. New Jersey also has a high cost of living, along with some of the nation's highest tax rates.
Average Retirement Age For Men In The U.S.
Of the approximately 22 million men who retired in the United States in 2017, the average retirement age was 59.62 years old. The median male retiree left the workforce at age 62, which is on par with the most common retirement age throughout the United States.
In 2017, there were fewer men who retired than women, with the average retirement age not even reaching 60, meaning these individuals were not eligible for Social Security benefits.
Average Retirement Age For Women In The U.S.
Of the approximately 27 million women who retired in the United States in 2017, the average retirement age was 60.11 years old. The median female retiree left the workforce at age 62, which is on par with their male counterparts.
When comparing the average retirement age of men and women, women stayed working roughly one half of a year longer than men. However, the median retirement age of 62 was exactly the same.
Health Can Impact Retirement Age
You can plan for many things, but your health isn’t one of them. Even if you’re healthy as a horse today, you never know what tomorrow could bring. Poor health as a result of an illness or injury can impact your retirement age. For example, someone who suffers a heart attack at age 60 may decide to hang it up for good, knowing that they can begin to receive reduced Social Security benefits at age 62.
Conversely, someone who has maintained a healthy life through age 65 may continue to work well into the future.
Traditional Retirement Benefits Matter
A research study by ADP outlined the average age of workers in the United States (41), as well as the variance from industry to industry. In most industries, the number of workers in the 60 to 64 age range is lower than others, primarily a result of traditional retirement benefits being available to these workers.
When workers gain access to traditional retirement benefits, such as a 401(k) account and Social Security, they’re more likely to have the money necessary to leave the workforce.
The Type Of Retirement Plan Affects Retirement Age
The Bureau of Labor Statistics shares important data on defined contribution retirement plans, noting that “51 percent of private industry workers had access to only defined contribution retirement plans through their employer.”
The type of retirement plan that an employee has access to while working can impact when they retire, as a lack of quality options can slow down their savings rate. This is particularly true of employees who don't seek to establish their own retirement plan outside of work.
Are You A Union Worker?
The Bureau of Labor Statistics also notes that union workers are more likely than non-union workers to have retirement benefits. The most telling statistic is as follows: “Ninety-four percent of civilian union workers and 67 percent of nonunion workers had access to retirement benefits through their employer in March 2019.”
The department also notes that defined benefit plans are available to 79 percent of union workers, but only 17 percent of nonunion workers. This is a big difference that can contribute to nonunion workers working longer.
Higher Paid Workers vs. Lower Paid Workers
In another interesting data point from the Bureau of Labor Statistics, higher-paid workers are more likely to have access to retirement benefits than lower-paid workers. According to the data, access, take-up, and participation rates were all higher for workers in higher wage-earning groups than those in lower wage-earning groups.
In order to stay on par, lower-paid workers often have to set up a retirement plan outside of work to reach their goals.
Is Retiring Early An Option?
Many people dream of retiring early, but most hold back because of financial concerns. However, there are many good reasons to consider, including: you want to live your best life while you’re healthy, you don’t like your job, you’re unable to find employment, and/or you have annuities to fund your retirement,
Some people make the choice to retire early, while others are forced into it due to a job layoff or to take care of themselves, their spouse, or an elderly parent. Retiring early may be a more feasible option than you ever considered.
Keep Your Life Expectancy In Mind
You can work for as long as you want, but if you’re looking for time to enjoy yourself in retirement, take your life expectancy into consideration. According to the Social Security Administration, “a man reaching age 65 today can expect to live, on average, until age 84.0.” It also states that “a woman turning age 65 today can expect to live, on average, until age 86.5.”
These are just averages, but it gives you a basic understanding of how many years you might live in retirement and the amount of time you have to live life to its fullest.
Social Security Delayed Retirement Credits Impact Retirement Age
The Social Security Administration makes it clear that you can receive greater retirement benefits by delaying them. It notes that “retirement benefits are increased by a certain percentage (depending on date of birth) if you delay your retirement beyond full retirement age.”
The one thing to keep in mind is that the benefit increase no longer applies once you reach age 70, even if you neglect to take benefits at that time. So, there's no reason to wait past this age.
Cumulative Retirement Age For Retirees In The U.S.
In 2017, there were 49,261,056 retirees in the United States. That’s a huge number, but one that doesn’t tell the entire story. For example, of these people, 61.9% waited until they were at least 60 years old to retire.
Furthermore, 15.1% of them waited until they were 66 years old to retire. The 60-69 age bracket may be the most common time to retire, but there are people of all ages deciding to permanently leave the workforce.
Is Working Longer The Smart Move?
This is a personal question with no right or wrong answer. It depends largely on your finances, personal circumstances, and goals. In simple terms, you’re in a position to save more money the longer you work.
Also, if you retire before your full Social Security retirement age, you’ll receive reduced benefits. To some, this is more than enough to work longer. To others, they don’t care as much about the money, as they’re more interested in leaving their professional life in the past and enjoying the future.
Start Planning Your Retirement In Advance
An understanding of when different demographics are retiring may have you considering your own future. If you neglect to plan in advance, it’s possible you’ll find that you don’t have enough money to retire when you want.
As you close in on retirement age -- somewhere around five years out -- take stock of where your savings stand and the changes you need to make to hit your target date. Advanced planning is essential to retiring when you want, with the amount of money you need.
Make Your Own Decision
By now, it’s easy to see that different demographics retire at different ages. While you can use this information to guide your retirement planning, this is a decision you have to make on your own. If you attempt to follow the crowd, you may end up retiring too early or sticking with your career past the point of enjoyment.
A knowledge of the previous pages, combined with a budget and your personal financial goals, will have you better understanding when to retire for good.