Additional Coverage:
- Here’s the Perfect Retirement Age According to Financial Advisors (financebuzz.com)
The “Perfect” Retirement Age: Dream vs. Reality for Americans
Local News Desk – The idea of leaving the daily grind behind forever often sounds like the ultimate dream, but pinpointing the exact moment to step into retirement is a surprisingly complex question for many. While the traditional image of retirement at 65 still lingers, a recent study by Empower reveals a fascinating shift in what Americans consider the “perfect” age to hang up their hats.
According to a survey of over 1,000 Americans, the magic number for the ideal retirement age isn’t 65, but rather a sprightly 58. This figure stands out alongside other “perfect” life milestones identified in the survey, such as buying a home at 30 and becoming debt-free by 41.
However, the reality for many tells a different story. While 58 might be the aspirational goal, data from the Center for Retirement Research at Boston College indicates that, as of 2024, men are typically retiring at an average age of 64, and women at 62.
Interestingly, a 2024 report by the Transamerica Center for Retirement Studies found that 58% of Americans actually retired earlier than planned. The leading culprits for this unexpected early exit? Personal health issues and job losses.
Financial Advisors Urge Caution
While the allure of an early retirement is strong, financial advisors caution against making the leap before a robust financial foundation is in place. Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners, emphasized in an interview with CNBC that retiring too early could lead to “coming up short” and not having enough money to sustain oneself.
One of the primary risks associated with retiring in your 50s is the sheer length of time your savings will need to cover. A retirement starting at 58 could potentially stretch for 30 or even 40 years. With the average American retirement savings balance hovering around $491,022, according to Empower data, this amount may not be sufficient to cover decades of expenses, even with Social Security benefits factored in.
Considering life expectancies-81.1 years for women and 75.8 years for men in the U.S. according to the Centers for Disease Control-a woman retiring at 58 would need her funds to last at least 23 years, underscoring the importance of careful planning.
Strategies for a Successful Early Exit
For those determined to retire early, a realistic assessment of their financial landscape is paramount. Experts recommend calculating how long funds will need to last, identifying all available resources, and clearly defining retirement goals. For instance, if extensive travel is on the agenda, those costs need to be meticulously mapped out on top of regular expenses.
A common rule of thumb, the “4% rule,” suggests having at least 25 times your annual expenses invested for retirement. This means if you anticipate spending $100,000 per year, you’d ideally need $2.5 million invested for a standard retirement timeline.
Beyond the numbers, flexibility can be a game-changer. Many older Americans opt for part-time work to supplement their income and extend their retirement savings. Embracing a “part-time second act” could significantly broaden early retirement possibilities.
Another critical consideration is long-term care. The Office of the Assistant Secretary for Planning and Evaluation estimates that 70% of adults reaching age 65 will eventually require long-term care. Factoring in these potential costs and, if possible, securing long-term care insurance, can protect carefully crafted retirement plans from unforeseen financial burdens.
Signs You’re Truly Ready
Ultimately, the “perfect” retirement age isn’t a universal benchmark. The Empower study itself found that only 17% believe people should hit milestones by a specific age. Instead, personal readiness dictates the ideal time.
Key indicators of retirement readiness include being debt-free, having a concrete plan for healthcare expenses, and establishing consistent income streams independent of active work, such as dividends from investments or rental property income.
Furthermore, emotional preparedness is crucial. Retirement is a significant life adjustment that can be challenging for many. If concerns about filling your time without work arise, it’s wise to begin brainstorming hobbies, volunteer opportunities, or other meaningful pursuits well in advance.
The Bottom Line
Setting yourself up for retirement involves making many important choices, and deciding on the ideal age to transition away from work is undoubtedly one of the most challenging. If you find yourself uncertain about your financial readiness, seeking guidance from a qualified financial advisor can provide clarity and help you navigate your options effectively.
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- Here’s the Perfect Retirement Age According to Financial Advisors (financebuzz.com)