Plan for a long life — and be prepared to work longer

The retirement age has increased over the past three decades, and Americans can expect to work even longer in the future.

The reported average retirement age has increased from 57 in 1991 to 61 today. According to Gallup’s latest Annual Economy, the retirement target date for those who haven’t yet retired has also risen to 66 currently, up from 60 in 1995. and personal finance surveys.

The findings come as retirees and pre-retirees are looking forward to longer life spans and trying to figure out how to pay for them, as medical and housing costs rise amid volatile financial markets.

Reading: Inflation preventing some employees from saving for retirement

“To a large extent, this reflects the financial demands of retirement and the reality of eligibility for Social Security,” said Gallup senior editor Jeff Jones.

Changes in Social Security payments implemented in the 1980s are affecting the decisions of workers nearing retirement age, and they provide incentives for people to stay employed longer to maximize their monthly benefits after retirement. We do. Those born after 1960 are not eligible for full Social Security benefits until age 67. Retirees are eligible for reduced benefits starting at age 62.

“With a longer lifespan, people retiring at age 65 may have to save to live 10 years. But now, people have to save to live the next 20 or 30 years,” Jones said.

“Right now, we have short-term inflation, but long-term inflation issues are also influencing decisions. Healthcare and housing are long-term inflationary costs that retirees have to deal with. Those items were priced lower in the past,” Jones said.

According to a recent report by Age Wave, the biggest financial concern in retirement in America was the cost of health care and long-term care. Only 22% of American retirees have budgeted for their health and long-term care expenses, and two-thirds of American pre-retirees say they have no idea what their health and long-term care might cost in retirement. Is.

Reading: Will you outlive your 401(k)? There are some loopholes in the new rules for computing lifetime income.

Additionally, a study by Allianz Life found that the majority of Americans say their income is not keeping pace with rising expenses.

Fewer Millennials say they have an effective financial plan in place to help them address the rising cost of living, while Generation X is concerned about their income keeping pace with rising expenses. Allianz found that most baby boomers worry that they may not be able to afford their lifestyle in retirement because of the rising cost of living.

Reading: 8 Big Things Older Employees Should Worry About

Even as both expected and actual retirement ages have increased more, Gallup said it has consistently found that the ages do not match: the retirement age of retirees exceeds the expected retirement age of non-retirees. About five years less.

This may largely reflect the reality that many current retirees were able to retire at a younger age and receive full Social Security benefits than today’s workers.

Depending on the nature of the study, Gallup’s findings could not explain the discrepancy between actual retirement age and expectations, Jones said.

“We’re taking a snapshot in time of two groups. This doesn’t really answer the question well because we’re not interviewing the same person at multiple points in their lives and finding out the reasons That’s why they did what they did,” Jones said.

Gallup found that among Americans near or past the traditional retirement age, or between the ages of 55 and 74, significantly fewer people retire now than people in the same age group at the beginning of the 21st century.

“I expect these trends to continue and hopefully age. I don’t know if the two lines will ever converge at the same point where people correctly predict the age they will actually retire, but We both look forward to aging,” Jones said.

Jessica Hall is a MarketWatch reporter who covers retirement,

Source