You might end up retiring earlier than you think, as studies show that the average retirement age is lower than many Americans expect.
The average American retires at age 62, according to the Employee Benefit Research Institute (EBRI).
In Ohio, the average was just a year higher than the national average at 63, according to Madison Trust Company.
Those averages have remained despite several reports noting that older workers’ participation in the workforce has increased over the past several years.
Most retirees, 56%, retired before they had previously planned to, according to a September 2023 report from the Transamerica Center for Retirement Studies.
That average age is before Medicare coverage kicks in at 65, which is when many people plan to retire. About 18% of Ohio’s population is over 65, according to the Population Reference Bureau.
Still, nationwide there are about 11 million workers ages 65 and over, a number that has nearly quadrupled in size since the mid-1980s, according to Pew Research Center. That’s partly because there’s more older people, thanks to the Baby Boom generation reaching retirement-age. About 19% of adults ages 65 and older are in the workforce, according to Pew.
Most people aren’t retiring earlier by choice, research shows.
When do Americans expect to retire?
Workers older than 50 expect that their future will include working past age 62, according to the Transamerica report.
Most expect to retire at age 67, with two in three workers expecting to retire after 65 and 19% of those surveyed not planning to retire at all, the report found.
When it comes to how workers over age 50 plan to retire, their visions vary from what generations before them have done, according to the report. Nearly half (44%) of workers over 50 years old think they’ll slowly transition into retirement by cutting their work hours or working in a less demanding way. Around 23% of workers 50 and older plan to immediately stop working at a certain age.
Current retirees were more likely to immediately stop working when they retired, with 41% of them going that route, according to the study. In contrast, 26% worked until they could not and 13% transitioned into retirement the way workers over 50 currently envision.
But, with the current landscape of layoffs; factors like lowering life expectancy in some states; and health-related concerns, many people are forced to retire earlier than they’d like, experts say.
“Today’s workers’ vision of when and how they will retire is a radical departure from how retirees retired,” according to the Transamerica report.
Health was a big reason for why people retired, the report found, with 58% of people retiring before age 65 and 45% of people who retired sooner than they planned citing health as the reason. The majority (73%) of workers over 50 are concerned about their health in older age.
More than 40% of retirees retired sooner than planned because of employment reasons, including buyouts and job losses, according to the report.
How much money do Ohioans need to retire?
The annual cost of a comfortable retirement in Ohio was estimated at $51,817 with an estimated $880,889 needed between age 63 and 80.
Ohio ranked 38th in cost of retirement, with Hawaii topping the list, where residents needed a whopping $120,909 per year to be comfortable. At the bottom was Mississippi with a cost per year of $46,993.
Ohioans don’t live as long as people in most other states, as their average life expectancy at birth was 75.3 years in 2020, according to the Centers for Disease Control and Prevention (CDC).
How much do Americans, Ohioans have saved for retirement?
Though Ohioans need upwards of $800,000 for a comfortable retirement, an analysis by Empower retirement plan found that on average, Ohioans had only saved $427,462.
Connecticut residents had the best savings, with $545,754. They are in good company with other East Coast states, the region of the country with the most top-ranking states, according to Empower. New Jersey, New Hampshire and Vermont were also in the top five when it comes to retirement savings.
Another Empower report showed average 401(k), the employer-sponsored retirement plan, balances by age.
On average, workers in their 50s had saved $558,740. See more numbers on average plan balances at.empower.com/the-currency/life/average-401k-balance-age.
But some people may have saved even less because they don’t have access to an employer-sponsored retirement plan. Offering the plans isn’t required for private companies and that means there are gaps when it comes to workers’ ability to save.
More than 1.5 million people in Ohio don’t have access to an employer-sponsored plan, according to the Georgetown University Center for Retirement Initiatives. That represents a 34% gap.
@DanaeKing