- Full retirement age in the United States refers to the age at which you can draw your full Social Security benefits.
- Continuing to work beyond full retirement age can allow you to receive higher Social Security benefits while continuing to build a larger nest egg with your retirement savings.
- The optimum retirement age varies from person to person and your health, financial stability and many other factors affect what age is the best time for you to retire.
What’s the Full Retirement Age?
Full retirement age is the age at which you can start drawing the full amount of Social Security benefits. For people born in 1960 or later, it’s 67. For people born in 1954 through 1959, the full retirement age is 66 — but it increases by months after your birthday depending on which of those years you were born in.
You can file for Social Security as early as age 62 — called early retirement — but you’ll receive reduced Social Security benefits. You can also wait until after your full retirement age — called delayed retirement — and receive increasingly larger benefit payments the longer you wait up until age 70.
Full Retirement Ages Based on When You Were Born
|Birth Year||Full Retirement Age|
|1943 through 1954||66 years|
|1955||66 years, 2 months|
|1956||66 years, 4 months|
|1957||66 years, 6 months|
|1958||66 years, 8 months|
|1959||66 years, 10 months|
|1960 and later||67 years|
Social Security is only one part of your retirement planning. Other factors may help you decide on the right time for you to retire.
The average age Americans retire is 62, according to Gallup’s 2021 Economy and Personal Finance survey.
The dream for many workers is to retire young and live a life of leisure, enjoying the fruits of a career and working through a bucket list, or relaxing by the beach.
But financial and health considerations may make that dream unachievable for many Americans. And others prefer to keep working as long as possible because they enjoy the feeling of productivity and a sense of identity through their careers.
The decision is ultimately up to you, but there are important factors to consider about your physical and financial health when deciding what age to retire.
Average Retirement Savings by Age
On average, Americans had $98,800 in retirement savings in 2021, according to Northwestern Mutual’s 2021 Planning and Progress Study.
Data in the Federal Reserve’s Survey of Consumer Finances can be broken down to give an estimate of retirement savings by age.
It’s difficult to pin down exact figures for how much Americans have saved for retirement. Savings depend on individual financial situations and retirement goals — among many other factors.
Simply put, it means figuring out how much income you’ll need each year in retirement and multiplying it by 25. This should give you a grand total that will allow you to withdraw 4% of your savings each year — and it should last for 30 years.
Pros & Cons of Retiring at Different Ages
There are advantages and disadvantages to retiring at different ages. These often involve the amount of income you’ll have based on when you retire. Your health and life expectancy may also play a role in the pros and cons of retiring at a particular age.
Pros and Cons of Retirement Based on Different Ages
- Enjoying retirement sooner
- Longer retirement
- Taking advantage of typically better health upon retirement
- Working longer may result in better health and happiness
- Less time to save and potentially less money in retirement
- Lower Social Security benefits
- Unable to enroll in Medicare until you are 65
- Maximizes Social Security benefits
- Can enroll in Medicare at a cheaper rate than most private health insurance plans
- Retirement savings given more time to mature
- Allows you to take advantage of “catch-up contributions” to retirement plans, maximizing retirement accounts
- Less time to enjoy retirement
- Better quality of life if you enjoy your work
- You’ll have more money from both job income and retirement savings
- You draw the maximum amount possible in Social Security benefits
- Retiring later in life means you have a shorter time period to depend on your savings.
- Social Security delayed retirement increases top out at 70
- Continuing to work can increase your income taxes as you take required minimum distributions (RMD) from retirement accounts
There are obviously lots of reasons to want to retire early. At a minimum, once you can live off your savings, you no longer have to worry about losing your job.
For many, retirement means freedom.
Your time becomes your own, and you can pursue what makes you happy. You can enjoy your leisure time before your health begins to decline.
The concept of retiring young has exploded in recent years from being able to retire in your 40s and 50s to some being financially able to retire as early as their 20s and 30s.
Very early retirement is becoming trendy to the point that it’s gotten an acronym — FIRE — for Financial Independence Retire Early.
The idea is to build up enough savings to be able to live comfortably without having to hold a job. There are several online communities built around the idea of reaching financial independence in as little as 10 years of work.
People in the FIRE movement work multiple jobs, find ways to earn money from their hobbies, invest aggressively and live frugally to get to the point where they feel they have enough money to attain financial freedom.
The earlier you retire, the more money you need to save. This is because your money will have less time to grow and will have to support you for a longer amount of time.
You won’t be able to collect Social Security to supplement your savings until you’re older. And when you’re old enough to collect Social Security, the amount will be reduced or perhaps even be eliminated by the fact that you spent fewer years in the workforce.
Social Security allocations are determined, in part, by averaging 35 years’ worth of earnings. For each year short of 35 that you worked, your earnings will be zero, which will significantly affect your average.
In addition, people with children can’t save money and live as frugally as others. And for people who live in areas where the cost of living is higher, spending more is unavoidable.
For these reasons and others, most people will be unable to retire young.
COVID-19 Led to Increase in Early Retirements
The U.S. Federal Reserve estimates that the COVID-19 pandemic led to 5.8 million fewer Americans in the labor market by mid-2022. An estimated 70% of those former workers were 55 or older, according to a study by investment banking firm Goldman Sachs.
That suggests COVID-19 led to a rash of early retirements between 2020 and 2022.
A strong stock market and rising housing prices may have allowed a lot of people to consider early retirement during the pandemic.
Delaying retirement can improve a retiree’s financial outlook. There are several reasons for this.
Researchers at the National Bureau of Economic Research found that a 66-year-old who works just one year longer will see a 7.75% increase in retirement income adjusted for inflation.
Social Security benefits account for 83% of that increase.
On the other end of the spectrum, several factors have left some people feeling like they have no choice but to keep working and delay retirement.
- Decline in pensions
- Low retirement savings rates
- Incentives in Social Security
- Less physically demanding jobs
When Delaying Retirement Isn’t an Option
Delaying retirement is often not an option for many. According to research by the Urban Institute, even though life spans have increased since Social Security was first introduced, there is little evidence of improvement in the ability of people to work at older ages than in the past.
A little more than a third of nondisabled workers develop work limitations related to their health by age 65.
In addition to health limitations, finding and keeping a job is more difficult for many older Americans due to ageism in the workplace.
Older workers who lose their jobs face an uphill battle to find new ones.
|Ages||Remained Out of Work for at Least 12 Months|
|25 to 34||35%|
|35 to 49||39%|
|50 to 61||47%|
|62 and older||65%|
Frequently Asked Questions About When to Retire
24 Cited Research Articles
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