Latest news with #CenterForRetirementResearch
Yahoo
26-05-2025
- Business
- Yahoo
Work till you drop? Here's why America's average retirement age keeps rising.
The average retirement age of American workers is creeping steadily up, according to a new report from a prominent economist. And that trend invites a question: When will America's retirement age stop rising? Over the past three decades, the average retirement age has risen by about three years, economist Alicia Munnell reports in an April research brief. The typical retirement age in 2024 was 64 for men, 62 for women. The upward trend is slow, but striking. In 1994, the average man worked to age 61, while the typical woman clocked out at 59. We're working longer for several reasons: ◾Americans are living longer, staying healthier, and working in less physically demanding jobs. ◾Workplace pensions have given way to 401(k) plans, which reward workers who delay retirement. ◾Social Security changes have pushed the 'full retirement' age from 65 to 67, penalizing those who claim the benefit earlier. ◾Fewer employers offer health insurance to workers who retire before 65, the year Medicare benefits begin. 'There were a lot of forces that encouraged people to work longer,' said Munnell, senior adviser at the Center for Retirement Research at Boston College, an organization she founded. Does the trend toward later retirement bode well or ill for American society? Among retirement researchers, opinion is divided. If Americans were working longer to stave off poverty, then a rising retirement age would be a bad thing, said Andrew Biggs, a senior fellow at the American Enterprise Institute. But he doesn't see that happening, at least not for most Americans. 'They're getting higher Social Security benefits, and the benefits they're getting from private retirement plans have increased,' he said. 'So, they don't need to work to stay out of poverty.' However, whether American retirees have enough savings and benefits to live comfortably in retirement is a matter of spirited debate. In a viral 2024 op-ed, Biggs made the case that most retirees are managing just fine, even with relatively modest savings. On the other hand, a 2024 AARP survey found that one-fifth of over-50 adults have no retirement savings, and that many worry they won't have enough funds to last through retirement. 'So, for a meaningful share of workers, postponing retirement is likely a necessity to keep their main income stream going,' said Nicola Bianchi, assistant professor of strategy at Northwestern University's Kellogg School of Management. American workers have decidedly mixed emotions about retirement. Millions of Americans dream of retiring early. As we age, dreams give way to reality, and many workers resolve to remain employed for as long as they can. The average over-50 worker expects to retire at 67, according to the Transamerica Center for Retirement Studies. 'Today's workers envision extending their working lives beyond traditional retirement age because they want and need to work,' said Catherine Collinson, CEO of the Transamerica Center. In the end, though, many of us retire earlier than we had planned, often because of corporate downsizing or declining health. Munnell's research sought to divine whether average retirement ages will rise further in years to come: One day, will most Americans work to age 70? Probably not. Munnell concluded that the upward trend has likely peaked. 'There are all these forces that pushed up the average retirement age, beginning in the mid-'90s,' she said. 'And the thing that struck me is that every one of them seems to have played itself out.' The gradual uptick in Social Security's full retirement age is done, with no more changes planned. The shift from pensions to the 401(k) is complete, and half of American workers now participate in the plans. Meanwhile, the trend toward longer and healthier lives has slowed. In the calculus of American retirement, two specific ages loom large. One is 62, the year most Americans become eligible for Social Security. The other is 65, the year Medicare kicks in. It's no surprise that the average retirement age for men and women falls between those years, said Craig Copeland, director of wealth benefits research at the Employee Benefit Research Institute, or EBRI. 'I think those two years are going to be key,' he said. 'Unless those are moved, I don't see that the average retirement age is going to move much.' The share of Americans who claim Social Security at 62 has dropped dramatically in recent decades. Based on expected longevity, most of us are better off financially if we wait until 70 to claim the benefit. Even so, 62 remains the most popular age for Americans to claim Social Security. Munnell predicts the average retirement age may actually decline in 2025, for a reason that she might not have predicted in 2024. The Trump administration's cost-cutting campaign across the federal government has triggered a torrent of new Social Security claims this year. New claims were up by more than 15% in March, compared with the same month in 2024. Munnell and others ascribe the surge to widespread fears about the stability of the retirement trust fund, amid staff cuts, rule changes, website outages and leadership shuffles. 'They're all racing in to claim benefits, which means they're likely to stop working earlier than they had planned,' she said. Future policy changes could determine whether America's retirement age continues to rise. Republicans in Congress have periodically proposed raising the full retirement age for Social Security, although President Trump has pledged not to touch it. If the age of eligibility for full Social Security benefits rose from 67 to, say, 70, America's average retirement age would probably resume its upward drift, Munnell said. If Congress were to raise the age of eligibility for Medicare, retirement ages could rise even more dramatically. But retirement experts say it's hard to imagine that scenario, given the high costs of health insurance. 'I don't see that happening,' said Copeland of EBRI. This article originally appeared on USA TODAY: America's retirement age is rising. Will the trend ever reverse?
Yahoo
22-05-2025
- Business
- Yahoo
Work till you drop? Here's why America's average retirement age keeps rising.
The average retirement age of American workers is creeping steadily up, according to a new report from a prominent economist. And that trend invites a question: When will America's retirement age stop rising? Over the past three decades, the average retirement age has risen by about three years, economist Alicia Munnell reports in an April research brief. The typical retirement age in 2024 was 64 for men, 62 for women. The upward trend is slow, but striking. In 1994, the average man worked to age 61, while the typical woman clocked out at 59. We're working longer for several reasons: Americans are living longer, staying healthier, and working in less physically demanding jobs. Workplace pensions have given way to 401(k) plans, which reward workers who delay retirement. Social Security changes have pushed the 'full retirement' age from 65 to 67, penalizing those who claim the benefit earlier. Fewer employers offer health insurance to workers who retire before 65, the year Medicare benefits begin. 'There were a lot of forces that encouraged people to work longer,' said Munnell, senior adviser at the Center for Retirement Research at Boston College, an organization she founded. Does the trend toward later retirement bode well or ill for American society? Among retirement researchers, opinion is divided. If Americans were working longer to stave off poverty, then a rising retirement age would be a bad thing, said Andrew Biggs, a senior fellow at the American Enterprise Institute. But he doesn't see that happening, at least not for most Americans. 'They're getting higher Social Security benefits, and the benefits they're getting from private retirement plans have increased,' he said. 'So, they don't need to work to stay out of poverty.' Whether American retirees have enough savings and benefits to live comfortably in retirement is, however, a matter of spirited debate. In a viral 2024 op-ed, Biggs made the case that most retirees are managing just fine, even with relatively modest savings. On the other hand, a 2024 AARP survey found that one-fifth of over-50 adults have no retirement savings, and that many worry they won't have enough funds to last through retirement. 'So, for a meaningful share of workers, postponing retirement is likely a necessity to keep their main income stream going,' said Nicola Bianchi, assistant professor of strategy at Northwestern University's Kellogg School of Management. American workers have decidedly mixed emotions about retirement. Millions of Americans dream of retiring early. As we age, dreams give way to reality, and many workers resolve to remain employed for as long as they can. The average over-50 worker expects to retire at 67, according to the Transamerica Center for Retirement Studies. 'Today's workers envision extending their working lives beyond traditional retirement age because they want and need to work,' said Catherine Collinson, CEO of the Transamerica Center. In the end, though, many of us retire earlier than we had planned, often because of corporate downsizing or declining health. Munnell's research sought to divine whether average retirement ages will rise further in years to come: One day, will most Americans work to age 70? Probably not. Munnell concluded that the upward trend has likely peaked. 'There are all these forces that pushed up the average retirement age, beginning in the mid-'90s,' she said. 'And the thing that struck me is that every one of them seems to have played itself out.' The gradual uptick in Social Security's full retirement age is done, with no more changes planned. The shift from pensions to the 401(k) is complete, and half of American workers now participate in the plans. Meanwhile, the trend toward longer and healthier lives has slowed. In the calculus of American retirement, two specific ages loom large. One is 62, the year most Americans become eligible for Social Security. The other is 65, the year Medicare kicks in. It's no surprise that the average retirement age for men and women falls between those years, said Craig Copeland, director of wealth benefits research at the Employee Benefit Research Institute, or EBRI. 'I think those two years are going to be key,' he said. 'Unless those are moved, I don't see that the average retirement age is going to move much.' The share of Americans who claim Social Security at 62 has dropped dramatically in recent decades. Based on expected longevity, most of us are better off financially if we wait until 70 to claim the benefit. Even so, 62 remains the most popular age for Americans to claim Social Security. Munnell predicts the average retirement age may actually decline in 2025, for a reason that she might not have predicted in 2024. The Trump administration's cost-cutting campaign across federal government has triggered a torrent of new Social Security claims this year. New claims were up by more than 15% in March, compared with the same month in 2024. Munnell and others ascribe the surge to widespread fears about the stability of the retirement trust fund, amid staff cuts, rule changes, website outages and leadership shuffles. 'They're all racing in to claim benefits, which means they're likely to stop working earlier than they had planned,' she said. Future policy changes could determine whether America's retirement age continues to rise. Republicans in Congress have periodically proposed raising the full retirement age for Social Security, although President Trump has pledged not to touch it. If the age of eligibility for full Social Security benefits rose from 67 to, say, 70, America's average retirement age would probably resume its upward drift, Munnell said. If Congress were to raise the age of eligibility for Medicare, retirement ages could rise even more dramatically. But retirement experts say it's hard to imagine that scenario, given the high costs of health insurance. 'I don't see that happening,' said Copeland of EBRI. This article originally appeared on USA TODAY: America's retirement age is rising. Will the trend ever reverse?
Yahoo
16-05-2025
- Business
- Yahoo
Remote workers are delaying retirement. Is that a good thing?
Are your clients ready to retire? The answer likely depends in part on where — and how — they work. Among American workers age 55 and up, those who worked remotely at least one day a week were 14.4% less likely to retire by the following year compared to in-person employees, according to new research from the Center for Retirement Research. Even after controlling for demographic, familial and job characteristics, that difference between the two groups holds. "Remote work remains elevated relative to pre-pandemic levels and, for at least some workers, appears to be here to stay. Given the lack of savings of many Americans, so too is the need to work longer," Geoffrey Sanzenbacher, a research fellow at the Center for Retirement Research, wrote in the report. "The good news from this brief then is that remote work seems to facilitate, not impede, longer careers." Although the scale of remote work has fallen from its pandemic-era high, remote and hybrid jobs still compose a much larger share of the job market than before the pandemic. READ MORE: Should clients in the 'retirement red zone' reconsider withdrawal strategies? In 2019, just 6% to 8% of workdays were completed remotely. That figure surged more than threefold in early 2020 as the pandemic began. While it dropped significantly by late 2021, the proportion of remote workdays has stabilized at more than double the pre-pandemic rate, research shows. Previous research has found that the rise of remote work has helped late-career workers with disabilities work later in life. New research suggests those same effects extend to older workers as a whole. Financial advisors say they've seen the impact of remote work on their clients who decide to delay their retirement. "For several clients where their employer wanted to keep them, the employer offered either a hybrid schedule or a pure 'work from home' model," said Ryan Perry, a financial advisor at Falcon Wealth Planning in Ontario, California. "In both cases, clients really liked the option, and they did end up working longer than they otherwise would." For advisors looking to strengthen their clients' retirement plans, the benefits of delaying retirement through remote work are clear. "Obviously, each additional year a client works is going to be an additional year of income, so their overall financial situation becomes even stronger and is less taxing on the financial plan, plus clients can continue to contribute to their work retirement plans," Perry said. READ MORE: For 25% of retirees going back to work, there's a tax pitfall to avoid Leyla Morgillo, a financial advisor at Madison Financial Planning Group in Syracuse, New York, said that many of her clients have adopted remote work as a means of easing the financial transition into retirement. "It's scary to just stop getting a paycheck, right? So, the recurring theme tends to be that the clients are very reluctant to have that paycheck go completely away," Morgillo said. "And so they like that idea of working at least somewhat, because it gives them that level of comfort." Still, financial advisors need to be clear with clients considering a transition to remote or hybrid work about whether they need to continue working at all, Perry said. "I would not want a client thinking they have to keep showing up to work when in fact they have the funds to retire right now, so that needs to be communicated clearly," he said. "If clients want to keep working, that's fine, but they should be made aware it is not financially necessary." Earning additional income from remote or hybrid work never hurts a client's retirement plan, but Morgillo said the benefit to their overall financial picture is often relatively small, especially after reaching the age to receive their maximum Social Security benefits. Still, other incentives, like maintaining a workplace health plan and staying mentally engaged, can draw retirees to continue working even when their finances no longer necessitate it. "The biggest benefit for some clients is being able to stay on their health insurance for the employer, depending on their medical situation," Morgillo said. "Sometimes that coverage can be much better than what they would have on Medicare." READ MORE: How to plan ahead for diminished capacity and prevent elder abuse For older workers who have been in an industry for decades, retiring can also undermine their sense of self, Morgillo said. "I think for a lot of people, their identity oftentimes is really tied pretty closely to their work. So, it can be really hard to just give that up altogether," Morgillo said. "Some people just don't want to let go, right? They love it. It's what they're used to. It brings them joy, or, you know, they're just very passionate about it. They want to keep their mind engaged," she added. Lauren Lindsay, a Houston-based financial advisor at Paragon Private Wealth Management, said that continuing to work can have clear mental benefits for retirees, who remain sharper and more engaged through their jobs. Researchers have found that retiring is associated with an increased risk of cognitive decline. While postponing retirement through remote work can help delay that possibility, advisors say it's important to talk to clients about other activities — like volunteering or mentoring — that can help them stay engaged beyond work. An overemphasis on work can lead to financially secure clients unnecessarily putting off their retirement goals, Lindsay said. "The thing we are all limited with is time," she said. "Don't delay your life goals to keep working longer unless there is a need to."
