The Average American Plans to Retire at 66 or Older; This Is When They Really Call It Quits

By Brian

When do you plan to retire? Put some thought into the question. Photo: Sukanto Debnath, via Flickr.

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If you aren't already, when do you plan to retire?

To be honest, that alone is a loaded question. There are many ways to define "retirement." Many believe it means stopping any form of labor that one gets paid for. For others, it means being financially independent -- able to set one's own schedule and follow one's own passions. It can even mean leaving a job you loathe for one that pays less but is very satisfying.

Go ahead and use whatever definition makes sense to you.

According to a 2015 study by the Employee Benefit Research Institute, almost half of those age 55 or older -- who are not yet retired -- say that they plan to wait to retire until after the age of 66.

Source: EBRI, via the Government Accountability Office. Figures are in percent of respondants.

There are probably lots of reasons that folks think they'll be working that long. The most obvious explanation is that people are worried they won't have enough saved up for retirement, and want to add as much extra cash to their nest eggs as they possibly can.

But there are other, less talked about -- though I would argue, more important -- factors in play. At the age of 55, "retirement" is more of an idea than a reality. After working for up to 35 years, many people may have a tough time figuring out how they'll spent their days after they stop. Even more have their personal identity and sense of purpose and meaning tied up in what they do professionally. And especially among those who have just turned 55, they may not have many like-aged friends who have stopped working yet.

But the EBRI also looked at the actual age that today's retirees decided to retire. The differences are stark.

Source: EBRI, via the Government Accountability Office

While there's one flaw with this data -- those who have yet to retire and are well above 66 still fall in the group on the left -- the data represents a key disconnect between our plans for retirement, and the reality of retirement.

What does this mean? I'll offer two takes.

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The optimistic explanationI like the sunny view, so let's start here. As you get closer and closer to retirement, things change. You start to become more aware of your own mortality, and limited time on Earth. You now have more friends who have retired, and the thought of calling it quits no longer seems like such a lonely endeavor.

Beyond that, when many people reach their late 50s and early 60s, grandchildren start to come onto the scene. These factors, combined with the realization that you probably don't require nearly as much money as you thought you would to sustain your lifestyle, make retirement much more appealing.

And in the end, retirees of all stripes and incomes report that they are much happier (89% of all retirees, according to a 2014 study) after retiring.

The pessimistic explanationOf course, it's not always so rosy. When you're older, you could lose your job and have difficulty finding a new one. Health problems may surface making it nearly impossible to work. Or maybe, instead of you getting sick, it's a loved one who falls ill, and you have to stay home to help out.

We don't like thinking about these possibilities, but that's exactly what makes preparing for them so important. Once they crop up, there's little we can do about them.

At the end of the day, it really shouldn't matter to you when and why the "average" American decides to retire. Think about when you want to retire, and why. And remember that if there are financial factors playing into your plans to work longer, it's possible you'll still have to call it quits earlier than you think. Start preparing now to mitigate the effects of such an outcome.

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