Surprising Retirement Statistics

“There are three kinds of lies: lies, damn lies, and statistics.” The phrase was popularized in the U.S. by Mark Twain. The phrase is used to doubt the numbers put out by experts. 

But what about retirement? There are many surprising statistics about retirement and especially the lack of retirement savings or debt levels. Some of my readers are worried about their retirement years, and some of my readers are set. It is, however, a good idea to gain some perspective on where you stand on retirement compared to other people for retirement age, retirement savings, and debt.

Surprising Retirement Statistics

Best Retirement Age

I am in the middle of taking a survey on my Twitter channel. The results so far are ~76% said they would retire before 70, and ~24% said they would not out of 42 respondents. The U.S. Bureau of Labor states that 26.6% of those 65 to 74 were still working in 2020, and 8.9% of those 75 and over are still working, which is an interesting retirement statistic. Hence, opposite to conventional wisdom, many people are working past the social security retirement age of 67 if they were born after 1959. The best retirement age can vary depending on the source of your retirement income.

Not enough retirement savings or high debt levels late in life are probably two reasons people are working into their 70s well past the conventional retirement age. Sometimes people change careers, and there are alternative jobs for retirees. But people are also staying healthy longer, and there are many social and mental acuity reasons to work longer.

Actual Retirement Ages

The actual retirement age varies depending on where you live. Americans work longer on average than people from every other country. According to the site annuity.org, the United Arab Emirates has the lowest average and official retirement age of 49. At the other extreme, the average retirement age in Japan is nearly 70, and in South Korea, it is over 72. Japan has the world’s highest life expectancy, and South Korea has the highest elderly poverty rate.

In the US, the average retirement age is 62 in Alabama, Arkansas, Kentucky, Michigan, Missouri, South Carolina, and West Virginia. The average retirement age of 65 is the highest in Connecticut, Kansas, Massachusetts, Nebraska, New Hampshire, New Jersey, North Dakota, Utah, Vermont, and Wyoming.

Statistics About Retirement Income Sources

Future retirees’ expectations about income sources vary substantially from their expectations when retired. While they are still working, most people expect social security to be the top source of income. This is followed by a direct contribution retirement plan or a 401(k), personal savings, individual retirement account (IRA), and work for pay. You can look at the entire list in the chart below. But the top five sources that retirees expect to receive income from are social security, personal savings, pension plan, IRA, and then a 401(k). This is very different than expectations. 

Source: EBRI

The reality is that working during retirement is one of the 12 Retirement Myths, and that is confirmed by the data below.

The average American receives $1,514 monthly in social security retirement benefits, which is $18,170 annually, and this is an unexpected retirement statistic. This is much lower than the full benefit of $3,011 per month at age 70. Clearly, the average person does not wait to receive their social security retirement benefits. Can you live on that much? Most people cannot even if they are debt-free in retirement. Indeed, social security is supposed to replace only ~40% of earnings and will drop to 35% for younger workers. But for many retirees’ social security represents the majority of their income.

The number of retirees receiving pensions is declining. According to BLS, only 10% of companies now offer pension plans.

How Much Should I Have in My 401(k)?

This is a topic that I addressed roughly 1-year ago in an entitled How Much Should I Have in My 401(k). The dollar value for most age categories is much lower than you would think. Based on the data on retirement plans from Fidelity, the average 401(k) retirement plan in the United States has $95,600 and the average contribution rate is 9%, which is a worrisome retirement statistic. On average, the numbers go up as you get older. Average net worth numbers are higher.

Statistics About Debt In Retirement

Most retirees strive to have low debt or even be debt-free. I would love to have little to no debt once fully retired. Right now, my wife and I have one car payment and a house mortgage. We will pay off the car by next year. We are working on paying off the house mortgage early. But what about the average person near or in retirement. Reportedly, 51% of baby boomers are still paying their mortgage, and 4 in 10 are still paying credit card debt.

These numbers suggest that debt is a big problem for retirees. The data suggest that debt is a major or minor problem about 33% of retirees, which is a surprising statistic about retirement.

Source: EBRI

Final Thoughts on Surprising Retirement Statistics

The above data clearly shows some surprising retirement statistics. There are many more statistics about retirement, and I leave it up to you to check some of the references I cite. Many people are not financially ready to retire. Are you?