Nowadays, it is all too common to find news headlines on retirement. But not everything is as bright as one would expect.
The sad truth is, some people struggle to make ends meet after their career has ended. Others are shackled by mortgage debts they need to consider on top of their day-to-day expenses. The struggles of retirees are encapsulated in the latest retirement statistics.
Baby boomers, in particular, are facing tough times. Recent data shows the variety of challenges they need to overcome, ranging from insufficient savings and rising healthcare costs to unrealistic expectations of what lies ahead.
Also, the lack of preparation for their retirement years greatly contributes to the trying times people are going through. This has left many experts believe that a retirement crisis exists.
Here’s the deal:
We gathered the most important stats on retirement to give you a better understanding of the retirement state in the country. So without further ado, let’s dive in!
Fascinating Retirement Statistics (Editor’s Choice)
- 1 out of 12 Americans believe they’ll never get to retire at all.
- 23% of boomers are subscribed to a private pension plan.
- 45% of baby boomers have no retirement savings.
- 40% of Americans fail to save because they have too many other expenses.
- Millennials allocate 74% of their dollar contributions into Roths.
- 68% of workers across three generations feel positive about retirement.
General Retirement Stats
1. 66 is the current average retirement age.
Retirement statistics by age demonstrate how average retirement age has changed over the years. During the ‘90s, the projected retiring age for average Americans was 60. However, a recent Gallup study involving more than 1,000 currently employed individuals agree they would retire at age 66. This means that employed Americans at present tend to work longer years than those employed decades ago.
2. The average retirement length is 18 years.
Considering the average retirement age of 66, if we do the math, a retiree would typically enjoy his retirement until the age of 84. Now since this is only an average, it’s not always exactly true for everyone and even life expectancy after retirement statistics would attest to this. Some people die at an age younger than that, while others die older.
3. The required amount to retire early is at least $5 million.
If you think reaching the age of 66 is quite a long journey, that’s not a problem. You can retire earlier than that if you wish to spend more time with your loved ones, or you want to make more travels while you still can.
For example, you might be wondering:
How much should I have saved for retirement by age 55?
The answer is pretty straightforward. In order to retire early, you need to have at least $5 million in savings as what financial experts recommend.
4. On average, a retiree spends $4,300 out-of-pocket for health care expenses annually.
Healthcare costs seem to be the only expense that’s highly likely to rise during your retirement. Factoring in Medicare premiums, copays, and deductibles, we can easily conclude that healthcare would be your sole source of high monthly expenses. The Center for Retirement Research at Boston College suggests that out-of-pocket expenses for healthcare could reach as high as $4,300 each year. But if you plan carefully early on, you’ll have fewer chances of experiencing such stressful situations.
5. The number of retirees in America receiving Social Security benefits reached 45.1 million in 2019.
Reports show that the number of retirees by year that qualified for the Social Security benefits coming from the government grows continually. Between 2009 and 2019, the beneficiaries of the said program have increased from 33.5 million to 45.1 million. Social Security expenditures are projected to rise annually over the next decade. That said, it’s likely that the program’s beneficiaries will also continue to grow in number into the future.
6. Military retirement statistics forecast the number of U.S. military retirees to grow to 2.21 million by 2030.
In 2020, the projected number of military retirees is approximately 2.18 million. Ten years from now, this number is expected to increase to 2.21 million. Similarly, military retirees’ total payments and average benefits will continue to grow. However, there will be fluctuations in the total outlays for the military trust fund in the coming years.
7. One in four spouses over 50 years of age splits.
Couples who have been married until their golden years are usually expected to stay together until death separates them. However, divorce after retirement statistics are saying otherwise. Surprisingly, divorce rates in the U.S. have declined over the years, except among retirees.
Two decades ago, only one in 10 couples who split was aged 50 or older. But now, it’s one in four, according to a study on gray divorce revolution. One psychologist even described this late-life divorce as an epidemic.
With the changing societal norms and the growing employment opportunities for women, making them more financially independent, staying together becomes less significant. Plus, with the kids grown up and moved out, the bond that keeps many marriages together loosens.
8. The average American retiree receives $1,413 in Social Security benefits a month.
Social security isn’t really that secure, so it’s important to have other sources of income for retirement.
Some even receive below a thousand dollars. That’s likely not enough for most retirees to live comfortably in their golden years. Most retirement savings statistics estimate that people should prepare for a thirty-year retirement period, and the savings figure usually suggested is $1 million dollars or roughly $2,800 a month.
9. Many retirees have misconceptions about the 4% rule.
Almost everyone has heard about the 4% rule. Also called the Bengen Rule, it was originally calculated using a 30-year retirement time-frame on how much one can withdraw from their portfolio when they retire. However, inflation, the rising cost of living, investment returns, length of retirement, and many other factors should also be considered when looking at retirement planning statistics.
10. The best way to plan for retirement savings is to follow the Rule of 25, which means multiplying your total annual expenses by 25 to calculate your needed savings.
Those planning for retirement can also consider the Rule of 25, which encourages many Americans to calculate their needed retirement savings by multiplying their total annual expenses by 25.
This rule often crops up when looking at the ideal income in retirement statistics. The total amount will determine how much they need to save by the time they retire. Those planning to spend $60,000 a year must set aside $1.5 million.
11. Around 79% of union workers are entitled to defined benefit retirement plans or pensions.
Union workers were more likely to avail of retirement benefits in 2019 than their nonunion counterparts. For many, these act as a cushion against the challenges of ending their career and losing their income source.
The thing is:
While savings are a must, retirement benefits can help alleviate some of the retiree’s fears. The United States retirement statistics state that union workers have better chances at retirement benefits than nonunion workers.
This gives them guaranteed retirement benefits. In contrast, only 17% of nonunion workers can avail of the same defined benefit plans.
12. 31.25% of realtors aim to keep their client base at retirement.
30% of real estate agents are in the 60-plus age bracket, as underlined by most realtor retirement statistics. However, most of them do not have substantial plans for retirement. This is a concerning stat since many of them are getting closer to retirement age.
Retirement Readiness Statistics
13. 76% of men have prepared a back-up plan for themselves in the event that their savings run out while in retirement.
Only 62% of women can say the same for themselves, so they are clearly less prepared for retirement than men. According to statistics on retirement, women also spend more years as retirees due to their longer lifespans, which means they require higher savings. As a result, women have to seriously reconsider their retirement planning strategies.
14. 1 out of 12 Americans believes they’ll never retire at all.
One of the more depressing facts about retirement is that there is a sizable number of currently employed people out there – 8% of working Americans to be precise – who think they’ll never get to experience it.
Of that percentage, over half of them point to not having enough savings to retire. Meanwhile, 35% don’t plan to retire at all simply because they think not having to work might bore them.
15. Those planning for retirement are advised by experts to calculate enough savings to last for 30 years.
Since most retirees are now expected to live for another 30 years, their retirement savings should be able to sustain their living expenses and other needs like healthcare. If translated into dollars, the ideal nest egg for retirees should be approximately $1 million. Reality, however, paints another story. This becomes a primary concern for many who have come across some troubling retirement crisis statistics in the past few years.
16. 38% of Americans fail to save because they have too many other expenses.
Many Americans do not have savings and the reasons differ. However, retirement planning statistics revealed that about four out of ten Americans are too caught up with too many other expenses, contributing to their failure to save.
It is, in fact, the number one reason why many of them do not have savings. Others, 16% to be exact, simply said they have not gotten around to saving yet, while another 16% blame their low-quality jobs. These retirement facts underline the sheer difficulty many Americans have to save for the future.
17. Millennials have ramped up their IRA contributions, allocating 74% of their dollar contributions into Roths.
According to the recent Roth IRA statistics, Millennials opened 41% of new Roth IRA accounts in 2018. Income stats suggest 74% of their total contribution is going to Roths. Roth IRA is a retirement savings account that lets your money grow without paying for taxes since the contributions come from after-tax dollars.
18. Despite the fears posed by the many concerning retirement facts in 2019, 68% of workers across three generations feel positive about retirement.
Perhaps somewhat surprisingly, the majority of workers across three generations have positive associations with retirement. They cite words such as “freedom,” “enjoyment,” and “stress-free.” Their retirement plans involve traveling, pursuing hobbies, and spending more time with family and friends.
Retirement Stats 2020
19. 58% of Americans rated their retirement savings’ adequacy C or lower.
Even if many Americans have a retirement plan, 58% of them believe their savings are not enough for retirement based on a 2020 TD Ameritrade survey. The results further suggest that a significant number of Americans don’t ramp-up their savings until they reach their 60s. So, if they have a few pieces of advice to their younger selves, these would include saving and investing early on.
20. 401(k) plans average balance plummeted by 19% in Q1 of 2020.
According to Fidelity Investments, the largest provider of 401(k) plans in the country, the first quarter of 2020 saw a sharp decline in the average balance of the said retirement plan. From an average balance of $112,300 in the fourth quarter of 2019, the amount plunged to $91,400. Similarly, the average balance for an individual retirement account (IRA) fell to $98,900 from $115, 400, accounting for 14%.
Since this happened during the coronavirus outbreak where there was an unusual market volatility, the drops in the account balances did not come as a surprise.
Yet, most retirement savers continue to pay their contributions, keeping the average contribution rate for 401(k) at 8.9%. Employers’ contribution, on the other hand, has remained at 4.7%.
21. An individual retiring at full retirement age in 2020 receives a maximum of $3,011 Social Security benefit.
The maximum amount of Social Security benefit a retiree can get will depend on the age they started collecting payments. For example, retirees who started collecting their payments will get a maximum possible amount of $2,265. If the collection starts at full retirement age, the amount will be higher at $3,011. At age 70, the amount could reach to as high as $3,790.
But in order to get the benefit amount of $3,000 and more, a retiree needs to plan for their career seriously throughout their life. Obviously, part of that plan is to delay claiming their benefit each month until reaching the full retirement age or age 70.
22. A man turning 65 in 2020 has an average life expectancy of age 84, while 87 for a woman.
Life expectancy after retirement statistics show that the average number of years for people turning 65 in 2020 slightly differs according to their gender. Apparently, men have a relatively lower life expectancy of 84 compared to women which is 87.
But how are these figures computed? Using Social Security’s Life Expectancy Calculator, the additional number of years men and women will live upon reaching the age of 65 in 2020 can be easily computed. All you need to do is put in the gender and birthday details.
Take note though that these are only estimates and do not take into consideration several factors, such as lifestyle, current health condition, family history, etc. that could lessen or lengthen a person’s average life expectancy.
Baby Boomers Retirement Statistics
Growing up in an era when employment was readily available, baby boomers are perhaps better off than the generations that followed. Their income rate, according to a senior fellow at the Center for American Progress, was growing at the rate of 2% a year. This is quite impressive, especially when compared to the present times.
So, this is one of the answers when this very common question pops up:
What is the baby boomer generation known for?
They grew up at the time when everything looked peachy and bright, something that the younger generation did not get to enjoy. They might have done a fairly good job of ensuring that Social Security and Medicare are protected at retirement, but they failed to make sure it is fully funded for future generations.
That is why it is quite interesting to see how baby boomers fare when it comes to the question of retirement. Here are some stats to help you understand:
23. On average, 10,000 baby boomers turn 65 every day.
People who were born in the baby boomer generation are now either in retirement or fast approaching these golden years. In fact, there are some 10,000 baby boomers who are turning 65 every day. This brings the baby boomer retirees’ number to 34 million as of 2019.
24. Baby boomers need to retire if employers are to provide career growth for younger employees.
If workplaces want their high-performing Gen X and millennial employees to stick around and receive opportunities to move up the career ladder, they need to take action sooner rather than later. Younger employees are alarmed by baby boomer retirement trends like putting off retirement to their later years.
As a result, up to 41% of working millennials have said it’s becoming much more difficult to get promoted at the workplace because baby boomers aren’t giving up the higher positions. This leads to a tendency for younger employees to hop from one job to another in search of better opportunities.
And no, Millennials and Gen Xers aren’t simply overreacting:
Recent retirement age statistics back up these concerns. These days, 1 in 4 Americans are still working even after the age of 65 – much higher than the ratio back in the 1990s.
25. 45% of baby boomers have no retirement savings.
As more and more of their ranks enter the retirement age, the retirement problems of baby boomers are also becoming more apparent. A report by the Wall Street Journal concluded that baby boomers are reaching retirement in worse financial shape compared to the previous generation.
One study reports that close to half of them have failed to save for retirement. Of the 55% who did have savings, 28% have less than $10,000. This would mean half of the retirees will have to rely on their Social Security benefits.
26. 40% of baby boomers struggle to pay off their credit card debt.
Credit card debt is one of the problems that trouble most baby boomers later in life, recent retirement facts and statistics reveal. A survey conducted by Clever, a real estate company, found that four out of ten baby boomers are still in the process of settling their credit card debt.
Having a pre-retirement debt hinders most of them from saving enough for the future, jeopardizing their chances of a financially secure retirement. Those who are in the process of ending their career and retiring would not be able to add to their nest egg because most of the income will have to go to their monthly debt payment. Add in the day-to-day expenses, and you’ll see why baby boomers have a real problem on their hands.
27. 51% of baby boomers are still paying their mortgage in retirement.
The US retirement statistics are a bit dire for many baby boomers, with just over half of them having to make monthly mortgage payments in their retirement. The average monthly homeownership can cost $1,200, which can chip away at their savings and affect their budget every month, posing concerning problems for many retirees.
28. 29% of baby boomers are still part of the labor force.
There are concerns about how baby boomers retiring will affect the workforce in the coming years. Baby boomers are said to have outpaced the labor engagement market of the Silent Generation and the Greatest Generation when they were the same age, according to the data compiled by Pew Research.
Based on recent retirement statistics, around 29% of baby boomers aged between 65 and 72 were still part of the workforce. So, companies are worried about the cost of older workers and the challenge of finding replacement for skilled and knowledgeable older workers.
29. There could be a 75% increase in the number of older Americans requiring nursing home care.
Aging baby boomers are facing more challenges, as evidenced in baby boomers retiring stats. From 1.3 million Americans in nursing homes, the number will go up to 2.3 million in 2030, projecting an increase of 75%. The baby boomer generation is expected to reshape America’s older population.
30. Obesity rates have increased by 40% among retirees aged 65-74.
While baby boomers are expected to live longer lives, there are potential concerns about chronic diseases. Alarmingly, obesity rates are found to be increasing among older adults. This is another retirement statistic that needs to factor when planning for their old age.
31. Healthcare costs are rising faster than expected, requiring baby boomers to save more money for retirement.
Since life expectancy has surpassed that of the 1990s, the problem now lies in being better prepared for retirement. There is an increasing trend in rising healthcare costs, which means baby boomers need to stretch out their savings. In fact, $140,000 can only cover four years of medical expenses, as stated by some baby boomer retirement statistics in 2018.
Here’s the scoop:
In order to alleviate worry and be better prepared for the unexpected, baby boomers must adjust their retirement savings. They must exhaust every option available at their disposal, creating viable retirement plans that will not only secure their future but also ensure that they get to enjoy the kind of lifestyle they have in the present once they retire.
These baby boomers retirement statistics are a good yardstick and guide for those who are nearing the retirement age or have already started their golden years. It does not hurt to be prepared by looking at the facts and trends on retirement in the past several years. As new challenges appear, people will be able to take on any difficulty that may arise due to the changing times.
Knowing what lies ahead and the various obstacles retirees face can be a huge boost when you get ready for the future. After all, sufficient preparation can minimize mistakes and help you enjoy your retirement years properly.
Scary Retirement Statistics
31. Social Security benefits will be cut by 23% in 2033.
As reserves continue to deplete over time, Social Security benefits are highly likely to suffer. The Social Security Administration recently reported an aggregate cut of 23% in the benefits in 2033. This means a reduction in the amount of Social Security benefits for those retiring more than a decade from now.
Retirement in the US is getting more and more challenging as time goes by. These retirement statistics attest to that, providing ample insight into the problems and obstacles millions of retirees have to face. Knowing all of these can help you plan for the future, ensuring that you will have secure and peaceful golden years.