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 lead in retirement. While the decision of when to retire is a personal one, it can help to know when people typically retire. What is the average retirement age and how does it change? And what financial considerations should you make before you retire? Although we answer these questions below, talking to a financial advisor can help you get all of these questions answered for your personal situation.
average retirement age and How it changes
Workers in the United States generally retire around age 64, although data shows that the average age varies by state. For example, the median retirement age in Washington, DC, is around 67, while the median age of many states is around 65, such as Iowa, Kansas, Maryland, Vermont, and Texas. Other states have even lower ages, such as Alabama, Kentucky and Michigan’s 63, or Alaska and West Virginia’s 61.
The average retirement age has risen in recent years. In 1986, the average retirement age for men was about 62 years and for women about 57 years. In 2016, the average retirement age had risen to about 65 for men and about 63 for women. Social security changes, fewer employers’ pensions, and even longer lifespans could lead many to postpone retirement, at least for a few years.
Additionally, with an average Social Security payment of just $1,503 per month and pensions falling, hopeful retirees may find that their retirement budget and projected expenses far exceed their projected income. This can also lead to them postponing their retirement.
Your retirement age and social security
Once you reach 60, Social Security becomes a factor in deciding when to retire. You can begin collecting Social Security benefits at age 62, although you’re not considered full retirement age (FRA) at that point and will receive only 75% of your expected benefits. By comparison, if you wait until you’re 65 to start collecting benefits, you’ll 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 in which you get the largest possible benefit. Retirees can also get more than their FRA benefits if they wait past that age to start drawing benefits. For example, if you wait a year after your FRA, you will get between 108% and 115.3% of your FRA, depending on the month you were born. And if you wait until you turn 70 to get Social Security, you’ll receive 132% of your FRA benefit.
What to do before retirement
But before you can really enjoy your hard-earned retirement, there are a few important things to check off your list. First, if you haven’t already contributed the maximum amount to your retirement savings plan, now is the time to start.
Remember, starting at age 50, you are 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 are eligible for Medicare, a federal government program that provides health care to the elderly. To qualify for Medicare, you must be a U.S. citizen or permanent legal resident or have worked long enough to qualify for Social Security. This is an important factor in the pension puzzle. That’s because healthcare costs are one of the largest expenses you can expect to spend in retirement. Some studies estimate that a retired couple would have to spend $285,000 on health care and related medical expenses during their golden years.
And don’t forget about 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.
It comes down to
While the average retirement age for workers in the United States is 64, that number varies due to many factors, including your Social Security benefits, your retirement savings, any pensions 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 you will only receive a portion of your benefit at this age. However, if you wait until you are 65, you will receive 93.3% of your monthly benefit.
Tips about retirement
Consider talking to a financial advisor about when to retire so you can determine not only when is the right time, but whether you’re prepared. Finding the right financial advisor to meet your needs doesn’t have to be difficult. SmartAsset’s free tool connects you to financial advisors who can serve your area within five minutes. If you’re ready to be matched with local advisors who will help you achieve your financial goals, get started now.
Deciding when to retire means going through several important considerations: Your retirement savings balance, your Social Security benefits, and Medicare, which you’ll be eligible for when you turn 65, can all affect when you decide to retire. Here’s a calculator that can help you make the right decision.
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