This Is the Average Retirement Age in the U.S. — and Why It’s a Problem

Many people aim to retire in their mid- to late 60s. But the average retirement age in the U.S. is considerably younger than that.

According to recent Gallup data, the average reported retirement age is 61. Now on the one hand, that’s up from age 57 back in 1991. But it’s also a pretty young age to retire at. And those who go that route could end up struggling financially because of it.

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The problem with retiring at age 61

Those who save for retirement in an IRA or 401(k) plan can access their money penalty-free beginning at age 59 ½, and so come age 61, taking distributions becomes perfectly feasible. But just because that’s an option doesn’t mean age 61 is a good time to start taking withdrawals.

These days, Americans are living longer, so it’s conceivable that some might need their savings to last for 30 years or more. And tapping a nest egg at the relatively young age of 61 could lead to a situation where those funds are depleted prematurely.

Furthermore, retiring at age 61 means leaving the workforce at a time when claiming Social Security isn’t yet on the table. The earliest age seniors can sign up for Social Security is age 62, and filing at that age generally results in reduced benefits for life.

Those who exit the workforce at 61 may have to rely on their savings to sustain themselves until the option to claim Social Security becomes available. And then, they may be tempted to file for benefits early because they’re already retired and don’t have an income from a job.

Then there’s healthcare to consider. Medicare eligibility does not begin until age 65. Those who leave the workforce at age 61 need to secure their own health coverage, and the costs there can be astronomical.

Should you plan to retire at age 61?

While the average retirement age among current U.S. retirees is 61, non-retirees say they want to leave the workforce at an average age of 66. And that sounds like a safer bet for the typical worker.

Retiring at age 66 means giving an IRA or 401(k) plan many more years to grow. It also means not having to claim Social Security many years early, thereby shrinking those benefits substantially.

To be clear, workers born in 1960 or later can’t access their full monthly Social Security benefit until age 67. But filing at age 66 means taking a small hit on benefits. Plus, it’s not necessarily the case that retiring at age 66 will mean claiming benefits right away.

Finally, from a healthcare perspective, leaving the labor force at age 66 means doing so at a time when Medicare coverage is available. And the cost savings there could be huge compared to having to pay for health coverage out of pocket.

All told, retiring at age 61 means taking on certain risks. That may be the average retirement age right now, but current workers may want to stretch their careers out a bit longer to avoid financial woes down the line.

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