There was a time when retiring at age 65 was not only doable, but expected. Many current retirees no doubt managed to end their careers by 65 due to having access to a pension — something that’s unfortunately not nearly as common as it was even a few decades ago.
Because of this, many pre-retirees today are of the impression that ending their careers at 65 just isn’t possible. And it’s easy to see why.
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Workers today have largely been thrust into a situation where they need to fully take retirement savings matters into their own hands. Yet it’s not easy to carve out money for a 401(k) or IRA month to month when there are other near-term bills to tackle. This especially holds true in today’s age of stubbornly high inflation.
It’s not totally surprising, then, to learn that about 70% of Americans aged 55 to 65 today feel that the norm of retiring at 65 doesn’t apply to them, according to data from Nationwide. But the reality is that it is possible to retire at 65, even without an employer pension. You just have to set yourself on the right path.
A workforce exit at age 65 may be more than doable
It’s easy to see why today’s pre-retirees feel less than optimistic about ending their careers at 65. Many may be grappling with recent debt incurred during this lingering period of elevated living costs. In fact, according to Nationwide, a number of pre-retirees say their plans to end their careers have specifically changed over the past year, with 22% now expecting to retire later than planned.
But the truth is that if you know for a fact that you want to retire no later than age 65, you can set yourself up to make that happen by beginning to build a nest egg from a young age. It’s definitely not easy to find money for a 401(k) or IRA in your 20s or 30s. But if you start funding your long-term savings then, and you invest your savings wisely, you may end up with more than enough money to stop working smack in the middle of your 60s.
What does “investing wisely” mean? In the context of long-term savings, it should mean going heavy on stocks to benefit from the market’s potentially strong returns. And if you’re not exactly a stock-picking wiz, that’s OK, because you can always fall back on investments like S&P 500 index funds, which allow you to invest in the broad market.
Don’t write off retirement at age 65
If you’re going to first start saving for retirement in your 40s or 50s, then yes, you may end up in situation where you can’t retire by 65. But if you begin saving much earlier on, your picture changes for the better.
The following table shows what your nest egg might grow to by age 65 by saving $300 a month starting at various ages. It also assumes an average annual 8% return in your portfolio, which is a notch below the stock market’s average.
|
Start Saving at Age… |
You Could End Up Roughly With This Much Money by Age 65 |
|---|---|
|
25 |
$933,000 |
|
28 |
$731,000 |
|
30 |
$620,000 |
|
33 |
$483,000 |
|
35 |
$408,000 |
|
38 |
$314,000 |
Table by author. Figures are rounded to the nearest thousand.
As you can see, when it comes to pulling off your retirement plans, time is an extremely effective tool. So if you want to be done working at 65, commit to that goal early on. And when finding the money for your 401(k) or IRA gets tough, just remind yourself that you’re sticking to a plan — one that allows you to enjoy the freedom of not working at what could still be considered a reasonably young age.
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