Retiring at 65? Many Americans Must Stop Working Sooner Than Expected.

According to recent findings from the Transamerica Center for Retirement Studies, many Americans end up retiring sooner than they anticipated, and this early retirement is frequently not voluntary.

In the U.S., the typical age for retiring stands at 62, where approximately sixty percent of retirees report having left their jobs sooner than intended. Around half cited health concerns—like bodily restrictions or impairments—as the primary factor behind this premature exit. Other causes included involuntary unemployment or significant shifts within their employing organization leading individuals to cease work unexpectedly prior to reaching their desired retirement age.

"Financially precarious"

The research highlights the vulnerability of retirement in the U.S., as older Americans frequently find themselves retiring when they aren’t economically prepared to do so. Additionally, since many individuals are living longer than previous generations—the average participant informed Transamerica that they expect to reach age 90—they must manage their finances over an extended period during retirement. This longevity increases the risk of depleting their savings prematurely.

"A lot of these individuals are in a fragile financial state — should they experience significant monetary setbacks or a decline in health requiring prolonged medical attention, they would struggle to cover such expenses," said Catherine Collinson, CEO and president of the Transamerica Center for Retirement Studies, during an interview with CBS MoneyWatch.

The study supports prior findings regarding the usual retirement age, as the nonprofit Employee Benefit Research Institute discovered earlier this year that the median retirement age For Americans, it is 62. This highlights a disparity between their retirement aspirations and actual circumstances, with business leaders And policy analysts frequently encourage Americans to extend their working years in order to accumulate additional savings for retirement—a strategy that commonly fails to go according to plan.

A "warning" for those still working, according to Collinson, is illustrated by retirees who had to exit their careers sooner than anticipated.

She emphasized that individuals ought to proactively take care of their health and continuously update their abilities. Additionally, they should educate themselves regarding retirement and financial planning, along with setting aside savings.

Why Americans claim Social Security early

Leaving work earlier than anticipated might account for why many Americans apply for Social Security benefits before reaching what is known as their "full retirement age," which is the age at which they can receive their complete benefit amount.

Retirement specialists typically advise Americans to hold off by delaying the claim until later due to the significant financial advantages of waiting. Individuals have the option to start receiving their retirement benefit at age 62, however, this choice comes with approximately a 30% reduction in benefits. reduction In comparison, receiving them through monthly payments versus delaying until reaching full retirement age—typically at 66 or 67 years old, based on when you were born—is another option.

However, according to Transamerica’s survey of over 2,400 retirees, the typical age at which Americans start claiming Social Security benefits is 63. This indicates that numerous senior citizens are committing themselves to consistently reduced monthly payments for the duration of their retirement years.

Conversely, choosing to delay claiming Social Security benefits until you reach age 70—the latest point at which you can start receiving them—results in an increase of over 30% in your monthly payments. Nonetheless, according to Transamerica’s findings, merely 4% of retirees opt to hold off filing for their benefits until they turn 70.

One key aspect is for them to thoroughly comprehend their benefits and explore whether there are ways to extend these advantages," Collinson stated. "In cases involving spouses, if there’s a need for additional income, one partner might claim benefits initially with the other following suit later, or perhaps one could return to work temporarily and suspend their Social Security benefits to increase overall earnings."

A key factor driving people to claim Social Security benefits prematurely could be the insufficient savings in their retirement funds. According to findings from Transamerica, roughly half of American retirees did not participate in a 401(k) or comparable plans during their employment years. Additionally, over a quarter reported that their employers never provided any form of retirement benefits while they were working.

Roughly six out of ten retirees identified Social Security as their principal source of income, highlighting the critical role this program plays for senior citizens. In contrast, merely one out of every ten respondents stated that retirement savings vehicles such as 401(k) plans or Individual Retirement Accounts (IRAs) were expected to serve as their chief financial resource during retirement.

Challenged but happy

Even though they face various difficulties, numerous retirees remain optimistic about retiring from their jobs, according to the study. Nearly nine out of ten reported feeling largely content and maintaining strong bonds with loved ones.

What sets apart is that retirees are truly relishing their retired life, which I believe is a positive sign for everyone," Collinson stated. "They have made certain adaptations, particularly concerning their finances, and generally speaking, they are thriving.

Americans dream of retirement, she mentioned. Retirement is primarily associated with liberty and the opportunity to use their time as desired, rather than being solely about financial independence.