People Are Retiring Earlier Than They Plan
People assume that most retire at age 65 or a bit later. Some plan to work later in life or not retire at all. But that turns out to be wishful thinking. Our research has shown that the average retirement age over the last decade is closer to 63, and is currently at 63.5!
The Motley Fool quotes surveys from the Employment Benefit Research Institute (EBRI) that say 39% of people intend to work until age 70 or older. The reality is, only 4% report that they actually do so. And I saw a census-based survey that reports 21% of people retire at age 70 or after.
That’s still almost half of the ones that intend to, but it may also include more people that didn’t…
9% of people indicated that they planned to retire before age 60, but 39% of current retirees actually did. The census survey said 18% retired before age 60, still far more than intended. That’s what creates a younger average than the ‘official’ age of 65. Just over 40% of retirees did so due to health issues. While 26% did so due to corporate re-organisations that offered early retirement incentives for termination.
For decades I’ve observed the statistics and demographics. Around their early 60s is when many people get their first serious health challenge — like a stroke or heart attack, a cancer diagnosis, Dementia or Alzheimer’s, etc…
After rising steadily over time, about one and a half years per decade since the surge of four years per decade, which occurred between 1910 and the 1950s, our research has shown that life expectancy has started to stall between ages 78 and 79. That suggests that we are no longer getting healthier. The opioid crisis doesn’t help this. Neither does the inflation adjusted wage gains, which have been flat or declining since 2000.
Even with longer life expectancies, women tend to outlive men by five years. If you live to be 63, around the average age when a person retires, you’re likely to live to be 84, and one spouse (typically the woman) is more likely to make it to 90 or older.
So, people tend to underestimate how long they’ll live and how big a nest egg they’ll need. And retiring early can cause a gap between your employer health insurance coverage and when you qualify for Medicare/Medicaid, or force you to sign up for social security earlier with lower annual payments.
The retirement and entitlement crisis
We already have a retirement crisis with baby boomers overwhelming the system. Their retirement numbers have increased, and will continue to do so, between 2000 and 2024, then don’t begin to die off until 2016 to 2040.
Only overly rosy economic projections without recessions make it look remotely possible to fund through present entitlement programs.
Especially as the economy faces downward trends into the early 2020s with near zero workforce growth and low productivity for decades to come.
And even if you do get your promised social security, which is likely be less in the future, it only covers about 40% of the average peak working wages. Retirees need about 80% to live comfortably.
A survey from the Nationwide Retirement Institute shows that 26% of people that have been retired for over 10 years say life is worse, and 27% of recent retirees say the same. About 75% of recent retirees blame a lack of income, while 85% of those retired for over 10 years blame higher living costs — things like health care and housing.
Modest social security adjustments with low inflation over the last few decades don’t reflect what’s happening in these two areas of senior living costs.
The retirement and entitlement crisis we have been predicting for decades has begun!
So, try to stay healthy, save more, and invest wisely during this treacherous bubble era that’s about to come to its dramatic end.
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