For Retirement, Think “Spirit of 76”

I’m all fired up by a Forbesarticle I just read, For Retirement Planning, Get the Spirit of 76 by Charles D. Ellis. It challenges thewidely-held notion that retirement must begin at age 65 and posits some verycompelling solutions to the retirement crisis looming in front of so manyAmericans.

Admittedly, my firstreaction was: really, retire at age 76 – isn’t that a bit old? But followEllis’ logic through to its conclusion, and I must say he convinced me. Hestarts by recapping the fascinating backstory of how 65 came to be the magicalretirement age in the Western world. (I won’t spoil it for you, but it involvesthe German Chancellor Bismarck, a railroad boom in Europe, and some older trainworkers napping on the job.) America adopted 65 as our retirement age whileborrowing from the best practices of Europe at the turn of the last century.But in fact, the “official” retirement age has been slowly creeping upward.

Then Ellis reveals aremarkable fact: if you can wait until you’re 70 to start drawing SocialSecurity benefits, instead of jumping on the benefit at age 62, you’ll earn 8%more for every year you defer. Ellis estimates that, with compounding factoredin, this amounts to 76% more in Social Security benefits if you can wait until70.

Where does age 76 comein? For someone who already has sufficient discipline to wait on SocialSecurity until age 70, that same person could use the 14 extra years of working(between 62 and 76) to sock away a ton of additional money into their 401(k)retirement account. Many Americans are significantly behind in their retirementsavings goals, so this is a worthy target – and not a particularly unreasonableone. Problem (almost) solved!

Do you have a “magic”number in mind for your retirement age?


Don Montanaro

CEO, TradeKing Group

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[image: 76 by Stephan Mosel on Flickr]

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