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Retirement has evolved over the years, this article hopes to serve as a helpful resource to understand the evolution of retirement. Where it has been, how it is today, and where it might be going.
Retirement is part of the American dream - to retire happily, treating every day like it’s a Saturday, knowing that your hard work and dedication got you to your golden years. There’s a lot of work that goes into reaching retirement, from both professional and financial standpoints. Sure it’s daunting, but on the other hand, the reward is exceptional, you just have to do your due diligence.
Good news! Through this article, you’ll be more in tune with retirement (thanks to helpful retirement statistics) and have a real view into how retirement used to be, how it currently stands, and what it could be in the future.
Key Retirement Stats:
- 2 out of 3 workers are confident they will have enough money to retire comfortably.
- Out of all of the non-retired people over the age of 60 in the U.S., 13% have no retirement savings.
- A 65-year-old couple retiring in 2019 can expect to spend $285,000 in health care and medical expenses throughout retirement.
- Women put retirement as #5 on their financial priority list, below meeting daily living costs, paying off debts, covering housing costs, and general-purpose savings, compared to men who put it first.
- The United Arab Emirates has the lowest average retirement age in the world at 49.
- Less than 1% of Americans retire before 50.
- The estimated average Social Security retirement benefit in 2021 is $1,543 a month.
- Only 58% of Americans are actively saving for retirement.
- 34% of Americans use a professional financial advisor.
Retirement numbers: A bird’s eye view on retirement
- 2 out of 3 workers are confident in having enough money to retire comfortably.
Source: EBRI
Imagine working decades and as you approach retirement, you start to second guess whether you have enough money to do so. Non-so-surprisingly, you wouldn’t be alone. A highly concerning retirement statistic is that two out of three workers are confident in having enough money to retire comfortably. That is roughly 66% of those employed feeling skeptical about their future, one that so many look forward to and plan for.
It also seems that people will start to feel even less confident as the cost of living increases, the economy fluctuates and the growing cost of healthcare. There is a path to retirement, one that may be rocky and uneven, but by surrounding yourself with the right financial plan, you can get on track for retirement.
- As many as 56% of retirees said they would rely on savings if the COVID-19 pandemic hits their finances.
Source: MedAlertHelp
The pandemic wreaked havoc on the healthcare system, families, the workforce, the economy, and investments. Current retirees have a plan in place that was likely created for them pre-pandemic and did not account for a global pandemic, as well as its repercussions. Investments were deeply affected, as were passive income streams, forcing retirees to find other means to their financial security during COVID-19. According to Med Alert Help’s retirement saving statistics, as many as 56% of retirees said they would rely on savings if the COVID-19 pandemic hits their finances. Now, retirement plans will likely have a subsequent plan in place to support retirees for unexpected economic downturns caused by a pandemic.
- Retirees may need their nest eggs to last as long as 38 years.
Source: Motley Fool
Nest eggs are the saving grace for retirees. People work to build a nest egg that will ultimately support them through retirement. When people start to build their nest egg it seems like a lifetime to fill it and, for some, it really does take that long, especially when you consider that retirees may need their nest eggs to last as many as 38 years. Based on statistics on retirement, 38 years is an estimate and some may need it for even longer. Longevity has been evolving for decades now, and the expected lifespan is more now than it was decades ago, especially for women, who tend to outlive men.
- U.S. adults ages 40-79 have, on average, at least $25,000 in investable assets.
Source: TD Ameritrade
Once people turn 40, retirement should already be on their minds, thinking about what they want it to be like, where they want to spend it and how they will achieve their financial goals to get there. While some entrust all their money and investments with financial advisors, others lean into their own expertise or experience with investing. According to U.S. retirement statistics adults ages 40-79 have at least $25,000 in investable assets. This could be the start of retirement planning for some or can just be one leg of their plan for retirement, either way, $25,000 is a good uptick in retirement planning efforts.
- In the third quarter of 2020, about 28.6 million Baby Boomers reported that they were out of the labor force due to retirement.
Source: Pew Research
Baby boomers used to make up the majority of the workforce. There are many who continue to work for one reason or another (perhaps they want additional income or they are bored or even lonely). However, according to baby boomers retirement statistics, in the third quarter of 2020, about 28.6 million Baby Boomers reported that they were out of the labor force due to retirement. COVID-19 demolished the economy, and may have forced some boomers into early retirement, which will be later discussed.
Retirement Facts: Looking back at retirement
- In 2018, 68 million people received benefits from programs administered by the Social Security Administration.
Source: Social Security Administration
Retirement continues to change, including the benefits that support those 65 and older. As the pattern shows, the numbers of people in retirement or leveraging programs are increasing but the benefit totals are dwindling. For example, retirement stats show that in 2018, 68 million people received benefits from programs administered by the Social Security Administration, and that number has since grown, especially with the push to retirement brought on by the pandemic. There’s always speculation that in decades to come, social security benefits will decrease to be almost non-existent. We will see as time goes on how that pans out.
- In 1985, retirees relied on Social Security for 65% of their income. People could almost live on their Social Security benefits alone. Not so today, when Social Security accounts for just 27% of retirement income.
Source: Marketwatch
Speaking of social security (see above), and how it has been a crutch of income during retirement, we can dig deeper into its history. In 1985, retirees relied on Social Security for 65% of their income. That’s right - more than half of their income came from social security and they could almost live on their Social Security benefits alone. Sadly, that is not the case for retirees today. Based on today’s retirement numbers, Social Security accounts for just 27% of retirement income. It poses the question - just how many people, if any at all, could live off their social security today?
- Out of all of the non-retired people over the age of 60 in the U.S., 13% have no retirement savings.
Approaching the decade before retirement, there should be a strong financial plan in place. Not the case for some non-retired people over the age of 60 in the U.S.. 13% of them have no retirement savings. Talk about a “yikes” spurring retirement statistic. What can someone in their sixties do when they have no savings at all? The best bet is to consult a financial advisor to get back on the right track. Though it may seem a bit late - there is always room for improvement.
- In 1985, men were expected to live 14 years past retirement age (65 years). Women were expected to live until 84—19 years after retirement
History tells an interesting story about retirement and the intertwining of finances with aging. Resources dwindle, costs increase, and life expectancy grows. Examining the average retirement age over the years, it seems to have stuck - 65 is the magic number, however people always hope for an earlier retirement. It’s life expectancy and longevity that have changed over time. In 1985, men were expected to live 14 years past retirement age and women were expected to live until 84—19 years after retirement. Today, women still outlive men, but the expectancy is slightly longer.
- The environment around interest rates is different now than it was 10 years ago. Rates were almost double - the 10-year Treasury was around 4%. Now it's 2%.
The economy and finances have a direct correlation to retirement planning. When numbers fluctuate, people tend to have to reassess their financial plans (which people should be doing occasionally) and take into account the changes. One massive change in retirement numbers over the last decade is surrounding interest rates. The interest rate environment 10 years ago was different. Rates were almost double - the 10-year Treasury was around 4%. Now it's 2%. These low-interest rates cause retirees to earn less money on savings in conservative investments (CDs and bonds), making them have to consider alternative investments.
Scary Retirement Statistics: Not exactly a rosy outlook!
- More than 22% of Americans had less than $5,000 saved for retirement and 15% had no retirement savings in 2019 One year prior, 31% had less than $5,000 saved and 21% had no retirement savings at all.
Think of retirement planning as a three-legged stool. Without one leg, there would be no support and it would topple over. Savings are one of the most important legs of retirement planning but are often one of the weakest areas. After reviewing shocking American retirement savings statistics, one that stood out is more than 22% of Americans had less than $5,000 saved for retirement and 15% had no retirement savings in 2019. And only one year prior, 31% had less than $5,000 saved and 21% had no retirement savings at all. America needs to have better resources in place to help educate and support Americans for their future.
- One in 10 Americans are saving 15% or more of their monthly income toward retirement
There are a variety of best practices people can put into place to prepare for retirement. For starters, a fiduciary advisor is a great asset, and can help with investments, long-term care, annuities, and more. But before an advisor is acquired, people can take things into their own hands as they relate to small investments or savings. It’s encouraged to sack away a portion of income each month to save for retirement. However, retirement income statistics identify only one in 10 Americans are saving 15% or more of their monthly income toward retirement.
- A 65-year-old couple retiring in 2019 can expect to spend $285,000 in healthcare and medical expenses throughout retirement.
Healthcare and medical are some of the most expensive items in retirement. For decades, the cost has increased year over year. This growth makes healthcare costs one of the more daunting retirement statistics. Want proof? Well, as of 2019, a 65-year-old couple retiring could have expected to spend $285,000 in healthcare and medical expenses throughout retirement. Since then, the number has increased. People can prepare for general medical costs, but there is a level of uncertainty about what will actually be needed when the time comes.
- Most Americans close to retirement have saved only 12% of what they need.
Imagine being in your mid to late fifties, and looking at the light at the end of the tunnel that is retirement. Seemingly unprepared people are in for a reality check when they realize just how unprepared they really are for retirement. Average retirement savings statistics showcase that most Americans who are close to retirement have saved only 12% of what they need. Playing catch-up is not impossible, but will require some heavy planning and saving.
- 44% believe that income from Social Security, pensions, and annuities will cover their basic living expenses while they are retired.
Speaking of being prepared, Retirement in America requires essentially a majority of a person’s income (70-90% to be exact). With the right plans in place, this is a feasible success. That said, 44% believe that income from Social Security, pensions and annuities will cover their basic living expenses while they are retired. Retirement plans that incorporate all three of these resources, in addition to other traditional investments, are well-oiled machines for retirement.
Retirement Demographics: How people’s preparedness differs
- The average debt load for Millennials is $30,580, and the average household income is $55,200.
A common question when preparing for retirement is - should debt be taken care of before retirement? The answer could vary and is different on a case-by-case basis. In order to get a good read on a person’s retirement numbers, a few things need to be examined and assessed, including, but not limited to debt. For example, the average debt load for Millennials is $30,580, and the average household income is $55,200, so what would be the magic timeline and number for an average millennial for retirement?
- 52 percent of those the survey called people of color (POC) said they “believe they have plenty of time to save for retirement
As you’ll see later in this article that men and women have different retirement experiences from planning to execution. The same goes for other demographics such as people of color (POC).
Workforce retirement statistics shine a spotlight on how retirement differs but also how it’s the same for various groups of people. For example, 52 percent of POC said they “believe they have plenty of time to save for retirement,” which is common among other groups. There is not always a sense of urgency to save for retirement until the sudden realization that time is running out and retirement will arrive before they know it.
- By ages 51 to 56, a Black worker has saved only 46 cents for retirement for every $1 a white worker has put away.
Similarly to men and women, when comparing retirement saving habits for black and white workers, there are concerning variances. Preparations for retirement could look different, with alternative priorities or what makes up the majority of their plan, and saving habits also play a huge role in a potentially successful retirement. According to retirement saving statistics by ages 51 to 56, a Black worker has saved only 46 cents for retirement for every $1 a white worker has put away.
Gender differences in retirement: The variance between men's and women’s retirement
- Men are more likely than women to say they’re saving more than 15 percent of their income. About 1 in 5 males and 13 percent of females fall into that category.
Retirement differs among countries, which we will uncover later on. Examining retirement demographics there are grave differences between a man's and a woman’s retirement. For example, when looking at savings, men are more likely than women to say they’re saving more than 15 percent of their income and about 1 in 5 males and 13 percent of females fall into that category. There are a number of reasons why a woman would not be putting retirement savings as a top priority.
- Women put retirement as number 5 on their financial priority list, below meeting daily living costs, paying off debts, covering housing costs, and general-purpose savings, compared to men who put it first.
There’s no secret that women and men approach retirement differently. Each has their specific habits, the amount they contribute, and factors to take into consideration. As retirement facts show - men are more likely to put retirement as a top priority. On the other hand, women put retirement as number 5 on their financial priority list, below meeting daily living costs, paying off debts, covering housing costs, and general-purpose savings. As time goes on, more disparities between the two types of retirement planning grow.
- Women 65+ will spend an average of $1,369 more than men 65+ on annual spending on healthcare expenses.
Source: Center for Medicare & Medicaid Services
Retirement in America means every day is a Saturday, it has the ticket price to match, and there are unexpected expenses, like healthcare. And as we’ve exposed - women and men have differing retirement factors. Not only do women tend to outlive men, but women over the age of 65 will spend an average of $1,369 more than men the same age on annual spending on healthcare expenses. Healthcare costs can build up a hefty bill. It’s never been more important than while preparing for retirement to take into account how expensive healthcare can be, and all the unexpected happenings.
- Women receive significantly lower retirement benefits than men. In 2017, median income for women 65+ was $19,180, versus men’s median income of $32,654.
Source: Administration for Community Living
Unfortunately, some women see lower income than men, but also experience other lesser resources including retirement benefits. Retirement income statistics identify that women receive significantly lower retirement benefits than men. For example, In 2017, the median income for women 65+ was $19,180, versus men’s median income of $32,654. Figures this far apart could be a detriment to a female’s retirement plans.
- 54% of men are confident they’ll have enough resources to last 25 years into retirement, versus the 39% of women.
With higher retirement benefits, more savings, and the desire to make retirement planning a priority, men have a very different projection of their golden years. And it goes even deeper into how men feel about retirement. Retirement stats show that 54% of men are confident they’ll have enough resources to last 25 years into retirement, versus the 39% of women. Women would be in a better position if they had the same benefits, outlook, and expectations with retirement planning.
Worldwide Retirement: How retirement looks around in the world
- 80% of respondents across Singapore anticipate a gap in retirement funds when they turn age 60, and only 20% expect to have more than 81% of the funds they need to lead a comfortable retired life.
Retirement across the world looks different, but no system is without flaws or fragments. Dissecting data, specifically retirement statistics in Singapore, we’ve learned that following a study, 80% of respondents across Singapore anticipate a gap in retirement funds when they turn age 60, and only 20% expect to have more than 81% of the funds they need to lead a comfortable retired life. It seems that similarly to America, Singapore has some work to do on their retirement resources and efforts to help the country’s retirees feel confident in their retirement.
- Norway has the highest average retirement age in the world at 67 for both men and women.
Americans are trained to recognize 65 as the magic number for retirement. People see it as four-to-five decades in the workforce and then leave people to enjoy about three decades in retirement. However, the average retirement age around the world is different than in America- some higher, some lower. For example, Norway has the highest average retirement age in the world at 67 for both men and women. Some would say, “ What is two more years?” But others would want those two years to enjoy their retirement.
- The United Arab Emirates has the lowest average retirement age in the world at 49, which is both the official retirement age and the average actual retirement age for both men and women.
If you had to guess what country had the highest retirement age, would you have guessed Norway (67 years old)? What about the lowest retirement age? Retirement numbers show that the United Arab Emirates has the lowest average retirement age in the world. In fact, that age is a mere 49 years old. Digging deeper into this age, it’s not only the official retirement age but it is the average retirement age for men and women. How different of a country would America be if we retired 16 years earlier? Would it affect people’s finances and lifestyles as we would assume?
Early Retirement: When is it a reality?
- The average age at which people retire these days is 63.
Source: Center for Retirement Research at Boston College
65 years old is the magic number for people looking to retire. Once they hit 55 or so, they start the ten-year countdown, each year getting closer to their golden years. Though some work later in their life, or even during retirement, there are retirement facts surrounding when people actually retire. According to the Center for Retirement Research at Boston College, the average age at which people retire these days is 63, earlier than the traditional 65, but also later than those who are set on an even earlier retirement.
- Younger generations hope to retire in their early 60s, like millennials who claim 61 is the ideal retirement age.
We’ve seen the average retirement age, that magic number to kick off the golden years, but like everything else, new expectations of their future come with new generations. Different generations approach investments and retirement differently. Some boomers may opt to work in retirement, and some millennials will work their hardest in their early years to retire as early as 45, which may seem impossible for many. Being more realistic about retirement, the younger generations hope to retire in their early 60s, like millennials who claim 61 is the ideal retirement age. This seems more reasonable than gunning for 45 and retired!
- Less than 1% of Americans retire before 50.
Did you know that less than 1% of Americans retire before 50? Early retirement statistics have shown the average desired age of early retirement, how long retirement would last for early retirees, but now we examine just how many people manage to do it. 50 years old is 12-15 years before the traditional retirement age, a significant amount of time, when you look at it. Now, the finances that have to coincide with the extra set of golden years. Could you imagine a world where everyone retired before 50? Would it even be possible?
- Half of baby boomers think it’s best to retire at age 65 or older and 17% of those 73 and older say you should wait until you’re at least 70 to retire.
People are living longer, working longer and therefore spending less time in retirement. There’s so secret sauce in terms of age for retirement and it really depends on the person. However, Retirement statistics illustrate that collectively, half of baby boomers think it’s best to retire at age 65 or older and 17% of those 73 and older say you should wait until you’re at least 70 to retire. This can work for some, maybe not for all, but as time goes on, it’s safe to say these numbers will continue to change with each passing generation.
Retirement in America: How retirement looks today
- The estimated average Social Security retirement benefit in 2021 is $1,543 a month.
Social security is one of the most common retirement resources. It’s a form of supplemental income that can only make up a portion of a retirement fund. It’s very rare that people can survive off just social security and should have other investments and passive income in place. Retirement stats show the estimated average Social Security retirement benefit in 2021 is $1,543 a month. When the cost of living and healthcare costs are so high, it makes you wonder- does this even make a dent in what people need to survive in retirement?
- Only 58% of Americans are actively saving for retirement.
There’s never a point too early to start saving for retirement. However, if you start too late, there is a lot of catch-up that needs to be done, making people worried about the stability of their future retirement. Examining retirement saving statistics, Bankrate brings to light that only 58% of Americans are actively saving for retirement; that is more than half of Americans who are unprepared for retirement. The solution could be a series of educational initiatives that begin in the early ages at school and proceed as they hit milestones ages.
- The median annual pension ranges from $9,262 to $22,172.
Retirement in America is made up of multiple avenues for retirement funds - social security, annuities, and employer-sponsored resources such as pensions. The median annual pension ranges from $9,262 to $22,172. Retirees with pensions are encouraged to ensure they are getting the right pension plan before retirement because pension payments cannot be increased. Pension funds should be calculated into the overall retirement plan and begin to save accordingly.
- 48% of workers retire before their original planned date.
Retirement is on the minds of every person. As retirement approaches, the idea of retiring early grows more appealing. Early retirement isn’t in the cards for all retirees, however, some employees end up retiring before their planned date. Early retirement statistics show that nearly half (48%) of workers retire before their original planned date. Early retirement can happen for a number of reasons, like those who were pushed to retire during the pandemic to avoid more volatility or faced an end to their career.
The Future of Retirement: How will retirement change?
- Social security benefits may have to be reduced by 23%, according to the 2020 annual report from the trust funds’ board of trustees.
Source: Social Security Administration
What would make retirement more difficult? Well, for starters, fewer resources and less funds in said resources. For example, statistics on retirement explain that social security benefits may have to be reduced by 23%, which can be found in the 2020 annual report from the trust funds’ board of trustees. Social security already only accounts for a fraction of what people need to live during retirement, and by reducing it, it’s putting people in peril.
- By 2026, the number of workers over 55 will grow to comprise 23.3% of the labor force, making working in retirement more common.
Source: Bureau of Labor Statistics
Many people make the decision to work in retirement for one reason or another. One person may want to fill their days with something productive and others may take up a part-time job to make ends meet. Working in retirement has become more common and seems as though it’ll continue to be on the uptick according to retirement stats. By 2026, the number of workers over 55 will grow to comprise 23.3% of the labor force.
- By 2031, the number of military retirees in the United States is expected to reach 2.28 million.
People of all walks of life are set to retire once they hit that magic age. Among those are the people who served the country, and each year the number continues to grow. When examining retirement in America it’s projected that the number of military retirees in the United States is expected to reach 2.28 million by 2031, which is up from the expected 2.19 million for 2021.
Preparing for Retirement: What it takes to reach the golden years
- 41% of millennials, 35% of Gen Xers, and 30% of baby boomers have no access to an employer-sponsored retirement plan.
How can employees be set up for retirement success? It is a long process to prepare for retirement, especially when it comes to finances. But what happens when people are left to fend for their own? Let’s examine the retirement facts of it all. How are people supposed to retire with confidence when not everyone has access to the resources they need? For example, 41% of millennials, 35% of Gen Xers, and 30% of baby boomers have no access to an employer-sponsored retirement plan.
- One-third of retirees use a professional financial advisor.
Investments, annuities, life insurance - Oh my! All of these are pieces to the retirement planning puzzle, helping people prepare for life after work and being financially secure during retirement. The common factor that can pull all these puzzle pieces together for one cohesive plan is fiduciary financial advisors. Advisors are meant to help sort through all things retirement and make sense of retirement numbers for the retiree, however, only one-third of retirees use a professional financial advisor.
- 44% of retirees found that healthcare expenses in retirement were somewhat higher (27%) or much higher (17%) than they expected.
When asked about the most unexpected costs during retirement, oftentimes the answer is healthcare which can reach close to $300,000. No one wants to be blindsided by healthcare costs, especially that much. Even with the right preparations in place, retirees can expect some surprises. As retirement statistics show - 44% of retirees found that healthcare expenses in retirement were somewhat higher (27%) or much higher (17%) than they expected. What are the tools people can put in place to avoid the sticker shock of healthcare during retirement?
- Retirees will need 70-90% of pre-retirement income to maintain their standard of living when they stop working.
Have you heard the phrase that every day in retirement is a Saturday? Saturdays are the days that people spend doing outside activities, traveling, shopping, etc. and that is a costly day of the week. Now when you take work out of the equation, you are able to treat every day like it’s Saturday, including the price tag of those days. Retirement stats show that retirees will need 70-90% of pre-retirement income to maintain their standard of living when they stop working. This is a good point when looking at retirement planning and considering how you want your retirement to look.
- There is a 70% chance that an American age 65 or older will need long-term care at some point.
Healthcare is one of the most expensive ticket items for retirees and can rack up a price tag in the six figures range. Long-term care is among the most common needs and one that people aren’t always prepared for. When looking at some of the scariest retirement statistics, one that was especially shocking is that there is a 70% chance that an American age 65 or older will need long-term care at some point. There is a greater chance that someone will need long-term care than not; that is why it’s so important to plan for it.
- The average American spends roughly 20 years in retirement.
Retirement is the end goal for many and looks very different from person to person. Retirement may come early for a select few, or later for those who aren’t ready for retirement. Others may even work through retirement as a means of supplementing retirement income or avoiding loneliness. Previous numbers state that retirement can last almost four decades long, but according to retirement numbers, the average American spends roughly 20 years in retirement. Even though the average retirement length is only 20 years, it’s important for retirees to plan as though it’ll last double as people may outlive their retirement funds.
Conclusion
Retirement is what everyone dreams of - decades of golden years, filled with family, friends, and happiness. As we know, there’s a price tag that comes with it, however, it is achievable when taking the right factors into consideration and the best steps for you.
Your retirement will look different from your neighbor, or from your family members. There are tools, information, and preparation you can put in place, including the shared retirement statistics above, that can help you navigate the road to retirement.
