U.S. Census Bureau data shows that the retirement age in the United States averages 65 for men and 63 for women. Retiring at the average age can be a smart move if key factors have lined up in your favor.
The factors that affect your age of retirement are your personal circumstances such as health and residence, the recognized retirement age to receive Medicare and Social Security, and how well you have planned financially.
- The average retirement age in the United States is 65 for men and 63 for women, but you might find that you have to wait longer.
- You can’t collect the full amount of Social Security you’re entitled to until full retirement age for the year you were born, which is usually after age 66.
- Medicare benefits aren’t available until you turn 65, unless you have a qualifying physical condition.
- Your retirement age can also depend on whether you have retirement savings and, if so, how much you've saved.
Circumstances Determine Your Retirement Age
The age when you can retire varies according to your circumstances. In states with a higher cost of living, such as Hawaii, California, or New York, you might not be able to retire early or at the age you want, because you need to save more money to continue living in those areas.
People with college degrees generally have higher-paying jobs, which means that they are more likely to be able to retire at the average age if they plan well. A person's retirement age also depends upon their standard of living.
If two neighbors make the same amount of money in a year, but one saves and invests while the other spends, the saver might be able to retire earlier than the spender.
The map below shows a breakdown of the mean retirement age by state.
Social Security and Medicare Retirement Ages
Many people have to rely on their Social Security benefits as a primary source of retirement income. To retire comfortably, you can plan to use your Social Security benefit as a supplemental retirement income source. However, you have to wait until you're 66 or 67 to receive the full amount, depending on your birth year. The Social Security Administration (SSA) uses a person's age and date of birth to determine the amount of Social Security retirement benefit they will receive. The SSA calls this age the "full retirement age" (FRA), which represents the age at which you can take your benefits and receive 100% of them. If you take them earlier, you'll receive less, and if you take them later, you'll receive more.
Your birth year determines your FRA. The chart below shows the ages, birth year, and age you need to be in order to receive your full retirement benefit.
|Social Security Benefit Birth Year|
|Birth Year||Full Retirement Age|
|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|
If you retire before your FRA, you'll receive a reduced benefit that will be your permanent benefit amount.
If you retire before age 65, you'll need to have a healthcare plan in place until you are eligible to enroll in Medicare. (Medicare benefits begin at age 65.) The SSA requires that you register three months before you turn 65. Otherwise, there can be a delay, and you may be subject to a late-enrollment penalty.
You might not always be able to set money aside for everything you want. It's essential to make sure that your health and financial future are taken care of first, then help your children if they need it, for instance. If you don't, you could risk burdening them later with your own care and expenses.
Planning for Your Retirement
Long before you want to retire, you should look at building up cash reserves and develop projections based on various ages to start Social Security. Then, figure out how much you'll need to spend in each year of your retirement. Depending on how you plan and prepare, you could spend between 10 and 40 years in retirement. Some expenditures you should take into account are:
- Housing and utilities
- Healthcare costs and premiums
- Children's college savings
- Entertainment and traveling goals
- Maintenance and/or replacement costs on homes and vehicles
- Spending on grandchildren
- Leaving money to family
As you are looking for ways to fund your retirement, consider letting your money work for you by investing it. Investing uses the power of compounding returns to make more money. Try to build enough to cover your retirement expenses and goals. Individual retirement accounts (IRAs), 401(k) plans, mutual funds, and many other investment instruments exist that can help fund your retirement.
Retirement accounts, mutual funds, and the various investment types all have different return and risk rates. A financial advisor can help you decide what to use to fund your retirement if you're unsure.
For example, if you start contributing $500 per month into a Roth IRA with a 6% rate of return when you're 25 years old and don't miss a single contribution, you'll have about $1.1 million in the account at age 67. You'll be able to make withdraws of close to $4,000 per month tax-free, plus receive your FRA Social Security benefit.
The same Roth IRA and contributions made until you're 55 years old will net you about $500,000 in the account. At age 60, it would have about $700,000, and at 65, you'd have close to $990,000.
The returns in the later years of a retirement account net more because of compounding; more money is generating returns. The longer it is left in the account, the more it will likely generate.
Can I Retire Early?
While it's nice to think that you can retire early, that isn't always possible. Sometimes life throws things at you that can throw the best plan off track. This is why it's essential to develop your retirement plan with realistic goals and lots of flexibility so that you don't miss a contribution payment.
The decision to retire early can be a smart move if you've planned and can afford it. Knowing how much you'll need, when you can receive your benefits, and saving for retirement can help you reach your goal of retiring early.
Frequently Asked Questions (FAQs)
What is early retirement age?
There's no set age for what's considered early retirement. Given that the average retirement ages are 65 for men and 63 for women, anything before that could be considered early retirement. In terms of Social Security, early retirement is drawing Social security benefits before your full retirement age. For those born in 1960 or later, full retirement age is 67.
How much money should you have saved for retirement by age?
The amount of money you need to retire and have saved by age depends on your income, lifestyle, and other factors. Fidelity recommends having the equivalent of your salary saved by 30, three times your salary by 40, six times your salary by 50, eight times your salary by 60, and 10 times your salary by 67.
Center for Retirement Research at Boston College. "What Explains the Widening Gap in Retirement Ages by Education?" Accessed Dec. 28, 2020.
Social Security Administration. "When to Start Receiving Retirement Benefits." Accessed Dec. 28, 2020.
Fidelity. "How Much Do I Need to Retire?" Accessed Sept. 12, 2021.