According to surveys from Gallup and Pew Research Center, the average age to retire in the US is 62, with the majority of Americans retiring by the age of 69.
The general trend shows that Americans are retiring later, or for the very least are using the opportunity to work less days or remotely as a way to extend their professional careers. Today, it is not uncommon to retire at 70 or beyond this date depending on the type of field you work in and the State.
The reason for 62 being the average for Americans to retire is because from this age you can start to claim Social Security retirement benefits, even if it means that they are reduced benefits because they are taken at the earliest age. At the full retirement age (which varies by birth year) entitles to you to your full retirement benefits.
What Should Americans Consider Financially When They Retire?
- Medicare – you are eligible for Medicare, a federal government health insurance program, 3 months before you turn 65. This gives you access to a lot of affordable or free treatment if you have a certain illness, disease or disability
- 401k – you can withdraw money from your 401k, something that builds up from your employment, and it is penalty-free starting from 59.5 years of age.
- Roth IRA tax-free – You can withdraw any money that you have put into a Roth IRA once you retired (from age of 59.5 years) and take out the first $50,000 without any tax liability.
Things That Americans Need To Consider When Retire
How Much Money Do I Need To Retire?
Calculating all your in goings and outgoings is essential when you are retiring including any accommodation, living costs, transport, hobbies, gifts, food, entertainment, vacations and more.
Do I Have Any Other Income Coming In?
With rising living costs, it is very healthy for any savings to continue to grow in your pension pot or through other savings accounts and also to continue receiving income. This could be from renting out a property you own, having a small share in your business and receiving a dividend or any investments that you have long term. There may be a strong demand for people with a lot of experience in your field and an advisor role could be very useful and generate some healthy income. You could advise on staff, expansion or even mergers and acquisitions if you have been through this yourself.
It would be healthy to diversify this due to the potential risk of financial shocks – but having something that is always building and growing and earning residual income is very healthy.
Should You Sell Your Existing Property?
You may find that selling your existing property is the best way to fund your retirement. If you have a family home that is sellable and in good condition, you can earn a nice lump sum to fund the rest of your life, especially if the market is hot right now. There are other ways to approach this, considering that holding onto the property for another 5 to 10 years should only help the property increase in value and you might want to save this for a later date.
If you would like to hold onto the property but would like some immediate cash to fund your everyday lifestyle or a vacation, you can look at equity release from a bank or lender to help you access some of this cash, but this comes with risks and added costs if you live very long.
Should You Move To An Affordable Retirement Area?
The cost of living in certain areas is a lot more than others and staying in major cities like New York or San Francisco will certainly be more expensive than living in a quiet town, village or retirement area. You may find areas like Florida are popular for retirees, especially if you can earn additional income and pay 0% tax on this.
Speak To a Financial Professional
A financial advisor or professional will be in a good position to help you plan your retirement. There are a lot of horror stories about people losing their pensions and savings and getting a few opinions is always useful and preparing for the unexpected. Having an emergency fund aside is always healthy and involving your children and relatives may be a good way to safeguard your financial future and savings.
Last Updated on August 7, 2024 by Daniel Tannenbaum, Founder of Pheabs