Americans are indeed working longer and retiring later than they used to, with an average retirement age that is four years later than it was in 1991. And if active workers actually retire when say they will, the average retirement age will increase even further in the coming decades.
According to Gallup’s annual Economy and Personal Finance survey, conducted each April, the average reported retirement age in the U.S. today is 61—four years older than the same survey found in 1991, when on average people reported they retired at age 57. And notably, the average expected retirement age among non-retirees is now 66, up sharply from 60 in 1995.
Gallup has asked about retirement ages in this survey since 2002, updating trends asked periodically in other Gallup surveys in 1991, 1992, 1993 and 1995.
Later retirement ages are coming at a time when U.S. workers are not eligible for full Social Security retirement benefits until past age 65. In 1983, Congress increased the age at which people can receive full retirement benefits. Those born between 1937 and 1959—the youngest of whom are age 62 now—are eligible for full benefits at a prespecified age older than 65 but younger than 67, depending on the year of their birth. All of those born after 1960 are not eligible for full benefits until age 67. Retirees are eligible for reduced benefits starting at age 62.
CRR brief also finds increases
A July 2022 Research Brief from Alicia Munnell at the Center for Retirement Research at Boston College also found increases in the average retirement age, and divided it by sex.
That research found that in 2021, the average retirement age for men was 64.7, roughly three years later than it was in the mid-1980s and early 1990s.
The research also found that changing work lives of women make it difficult to interpret trends in their average retirement age, but data suggests that the retirement age for women rose dramatically from 55 in the 1960s to 62.1 in 2021.
The brief also notes that with all the changes raising the full retirement age in the Social Security program nearly complete, recent changes to Social Security should have no effect on the average retirement age going forward.
Gap between expected, actual retirement
In addition to the upward trends in both expected and actual retirement ages, Gallup has consistently found that retirees’ reported retirement age has been about five years younger than non-retirees’ expected retirement age.
The Gallup study concludes this could largely reflect the reality that many current retirees were able to retire at a younger age and get full Social Security benefits than today’s workers will be able to. However, as both the expected and actual retirement ages have increased in the past two decades, and more recent retirees are subject to new age requirements for receiving full benefits, the gap between expected and actual retirement ages has persisted.
This continuing gap could indicate that workers incorrectly predict they will be able to work longer than they will end up doing, either because their employer has other plans or because an unexpected health or family situation may leave them unable to work at an older age.
But the Gallup data cannot determine whether that is the case. Gallup asks expected retirement age of a sample of non-retirees, and actual retirement age of a sample of retirees, so while the findings can show whether averages at the group level are changing, they cannot speak to whether individual workers retire at an earlier age than they had planned to.
Confounding effects of individuals’ age at the time of interview and their retirement status at that time may contribute to the persistent gap in actual versus expected retirement age among retirees and non-retirees. Many currently retired people stopped working at a relatively young age, so the sample of retirees aged 65 and under will tend to lower the average retirement age of all retirees interviewed in a given survey. Likewise, nonretired people in their mid-to-late 60s or 70s will report an older expected retirement age, pushing up the average expected retirement age of non-retirees interviewed in a given survey.
Gallup can isolate the effects of age on retirement status by looking at the proportion of all adults who are retired among different age groups, to see if those percentages are changing over time.
For the analysis, the 21 years of data from the Economy and Personal Finance survey were divided into three roughly equal time periods to ensure adequate sample sizes for relatively narrow, five-year age ranges.
The data show there has been relatively little change in retirement status among Americans younger than 55, or 75 and older, between 2002-2007 and 2016-2022.
Among Americans nearing or past the traditional retirement age—those between the ages of 55 and 74—significantly fewer people are retired than was the case for people in the same age group at the start of the 21st century. In each five-year age group, there has been a decrease of between five and nine percentage points in the number of retired Americans, with the biggest drops in the 55-59 age range (from 19% to 11%) and in the 60-64 age range (from 41% to 32%).
There are smaller but still meaningful declines in the number of U.S. adults aged 65 to 69 (from 76% to 70%) and those aged 70 to 74 (from 88% to 83%) who are retired.
It is unclear to what extent these patterns of later retirement are related to household income. The survey collects data on current income status, and retirees generally report much lower incomes than non-retirees given the lack of regular wages for retirees. Thus, it is not possible to know whether the shift toward later retirement ages is occurring more among lower-income or upper-income workers.
Bottom line
Galllup concludes that changes to Social Security payouts enacted in the 1980s are coming into play for today’s workers of retirement age, and they provide incentives for people to stay employed longer to maximize their monthly benefits after they retire.
Longer life spans for U.S. adults may also be a factor in later retirement ages, with workers perhaps seeing a need to save more money, anticipating a retirement that could last 10, 20 or 30 years, particularly with the cost of living increasing. Also, a shift away from a manufacturing economy to one primarily focused on delivering services and information facilitates working to an older age.
SEE ALSO:
• Workers Seriously Rethinking that 2022 Retirement Date
• What Raising Retirement Age Does to Retirement Rates
• No! Economic Anxiety Has Americans Taking Social Security Early
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
