Trending
For decades, 65 years old was considered the standard retirement age. Of course, there are plenty of examples of folks retiring at a younger age for a variety reasons – positive and negative. Likewise, some people don’t want to retire in earnest. They simply scale back work hours or transition into less demanding pursuits, but they continue working.
However, 65 has long been the age which many people think they’re supposed to retire. That “rule,” which is now arguably a myth for many, stems from the origins of Social Security.
“The age 65 norm comes, in part, from old rules around Social Security benefits. Back when the Social Security program began, workers could receive unreduced retirement benefits beginning at 65. That number has ticked up to 66 or 67, depending on your birth year,” according to Principal.
These days, the youngest age at which maximum Social Security benefits become available is 70. That’s probably a good thing because many Americans view 65 as unrealistic retirement age.
65 Is a Bygone Retirement Goal
Whether it’s the result of a prolonged period of inflation and high interest rates, many Americans believe 65 isn’t a reasonable or reachable retirement age.
A recent survey by Equitable Holdings “revealed that nearly half of consumers (47%) believe it is unrealistic for them to retire before or at the traditional retirement age of 65. Instead, they expect to retire nearly a decade later at an average age of 74. The top three challenges/obstacles cited were increasing living expenses (68%), fear of not having enough money saved (66%), and a lack of guaranteed income for retirement (39%). This reality contrasts sharply with the 18% of respondents who want to continue working past the age of 65.”
While many Americans viewing 65 as not a reachable retirement age can be viewed as a negative trend, the silver lining is that it speaks to the need for advisors to be involved. That case is fortified by the notion that many of those queried by Equitable want consistency and reliability in retirement income. They’d prefer those traits over relying on withdrawals from investment and retirement accounts.
“Nearly two-thirds of consumers (64%) would prefer a consistent and guaranteed paycheck in retirement versus having to determine how much to withdraw from their retirement accounts to make their money last throughout their lifetime,” adds Equitable. “This sentiment was generally consistent across all age groups, with millennials expressing the most interest at 70%, followed by Gen X (65%), Gen Z (62%) and baby boomers (59%).”
Want Reliability? Talk to an Advisor.
With so many Americans viewing consistency as paramount in retirement – a valid view to hold – the case for working with advisors grows. Said another way, if you’re a prospect and nearing retirement reading this, think about your desire for steady retirement income. You might not know how to get there on your own, but an advisor can certainly help.
Automatic enrollment, automatic escalation and target-date funds have been game changers in helping more Americans accumulate retirement savings. However, what’s often overlooked is how to help workers convert their savings into a reliable stream of income in retirement,” said Equitable President Nick Lane. “With the disappearance of traditional pension plans, the burden has shifted to individuals — especially younger generations — to seek the education, guidance and solutions to ensure their savings last throughout retirement.”
Bottom line: 65 may be within reach and steady income is still on the retirement table. Advisors can help clients get there.
Related: It Could Be a Good Time To Consider This Cheap Bond ETF