As the average retirement age continues to climb, it can feel like the economy has really put the ‘tire’ in ‘retirement.’ Although it isn’t always by choice, working later in life provides tangible benefits for a comfortable retirement that help to explain why the average retirement age has increased to 70.
There’s more to increased savings for retirement than just adding paychecks from extra years in the workforce. It also happens that your mid to late sixties are prime years for padding your finances. This is a period of life in which children are financially independent, mortgages are paid off, and saving for college is a thing of the past. Without the extra financial burdens, the bulk of your residual income is free for saving.
Tax-advantaged accounts like 401ks and IRAs also allow catch-up contributions past the age of 50, and many late workers take advantage of these opportunities to max out their retirement accounts.
The minimum age requirement for claiming social security is 62, but cashing out early entails benefit reduction. Waiting until your full retirement age at 66-67 allows you to max out your benefits. Every year that benefits are not collected increases payments you receive by an additional 8 percent.
The wonders of modern medicine and our understanding of human health continually push our life expectancies higher than before. At the moment, the CDC reports an average US life expectancy of 78.8 years. In other words, retiring later than past generations still gives you plenty of time to enjoy a comfortable retirement.
Each financial situation is different, and you may find yourself on the early or later end of a retirement spectrum, but the times show that you’re neither alone nor without good reason.
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