Americans retire later than they did in the 1990s

Between Inflation is at a record high and the recent stock market volatility, many seniors approaching retirement are considering retirement options later in life.

Based on a new Gallup surveyinterviewing 1,018 US adults, the median retirement age is reported to have increased from 57 years – in 1991 – to 61 years in 2022. The survey also found that individuals’ planned retirement ages also increased, from age 60 in 1995 to 66 in 2022, showing a trend of people retiring later and expecting to work longer.

Option talk to Jeffrey M. Jones, Ph. D.a Gallup senior editor, on why people might retire later or plan to do so.

While retirees can collect Social Security benefits starting at age 62 they get a reduced monthly benefit – to get 100% of your monthly check they must start receiving benefits at full retirement ageie between the ages of 66 and 67 for those born after 1943.

In 1983The Reagan administration raised the full retirement age for Social Security benefits from age 65 to 67 due to sponsorship problema change will be made in phases over the next 22 years.

Retirees who delay receiving their benefits beyond their full retirement age may end up receiving an incremental benefit. For every year you quit collecting after you reach full retirement age – that is, up to age 70 – you will receive an additional 8% of your pension. That means retirees have a 132% chance of earning their benefit just by waiting a few more years, depending on their full retirement age.

Despite the benefits of delaying benefits or waiting until full retirement age, most seniors still end up receiving benefits early. Follow Congressional Research Servicein 2021, 29% of new beneficiaries have claimed retirement benefits by age 62.

A second factor that can affect retirement age and planned retirement age are changes in relation to the average longevity.

According to the Social Security Administration, when Congress increased the full retirement age from 65 to 67 in 1983, it did so, in part because of a longer average life expectancy. In other words, most people now reaching retirement age should plan for this period of their life to include almost 20 years – in 2019The average life expectancy of a 65-year-old man is 83.3 years, while that of a woman is 85.7.

“I think people realize that they are living longer,” says Jones. “Maybe 20 or 30 years ago, they lived 5 or 10 years [after full retirement age]. “

The annual inflation rate – as measured by the Consumer Price Index in June 2022 – was 9.1%, the highest in more than 40 years. As a result, consumers are now paying more for everything from rent to groceries to gas.

Medical costs are rising also. Fidelity Investments found that, in 2022, a 65-year-old couple could spend $315,000 on health care costs in retirement, reflecting a 5% increase from the previous year’s rate. Rising health and living costs can also affect how long seniors choose to stay in the workforce.

As these daily expenses add up, it becomes even more important to save for your own retirement. Your first priority should be to contribute enough to 401(k) to make sure you get the employer’s match 401(k) contributionsif it offers one.

A traditional individual retirement account (IRA) or a Roth IRA can be a good choice for those without a 401(k) or those who just want to set aside more money for retirement.

Both are tax-advantaged retirement accounts, although they are There are a few differences: A traditional IRA doesn’t have any income requirements, and the money you put in it won’t be taxed until you make distributions in retirement. In contrast, a Roth IRA is only open to single filers earning less than $144,000 a year or married couples filing jointly earning less than $204,000 annually. However, any contributions you make are based on taxed income, and when you withdraw, you won’t have to pay any taxes on your earnings.

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