• Jacob Patterson

Retiring later

According to the U.S. Census Bureau’s Annual retirement survey, Americans are retiring later than in previous years. The average age of retirement in 2021 was 65 for men, and 62 for women, up from 62 and 59 respectively in 1992. The state with the earliest average retirement age is Alaska (61), and the latest states are Massachusetts, South Dakota, and Hawaii (all 66).

This is a very important financial/demographic trend. According to Newsweek, three main reasons for later retirement, are changes to social security payouts, longer life expectancy, and working in flexible jobs.

Longer Life Expectancy

As Americans live longer, they may delay their retirement because they know that they will need to have more money saved so that they don’t run out of funds down the line.

Changes to Social Security Payouts

Depending on their year of birth, current seniors may only be eligible for partial retirement benefits until the age of 67, up from the former full-benefit age of 62.

Working Flexible Jobs

With the current labor market, and rising wages for both hourly jobs and salaried, white-collar roles, it is more lucrative for seniors to work longer. Some older Americans could also work a gig job, such as Uber, Doordash, or Shipt, which offers flexibility and isn’t physically demanding.

Two other factors that must be considered are inflation and the desire to work. With inflation eroding the value of the dollar, seniors may need to work longer to ensure that their money will last through retirement. They may also consider locking some of their assets into investments that aren’t risky, and that counter inflation, such as I-Bonds (with a current 6-month yield of 9.62%). Some older Americans may also wish to continue working later in their lives because they enjoy their jobs or lose a sense of purpose without a job.

In conclusion, Americans will have to consider inflation, life expectancy, their desire to work and work flexibility when choosing when to retire.

Written by Jacob Patterson