Understanding the Full Retirement Age vs. Actual Retirement Age
For those born in 1960 or later, 67 is the official full retirement age (FRA) according to the Social Security Administration. This is the age at which you can claim 100% of your Social Security retirement benefits. However, this doesn't mean it's the age most people stop working. The average retirement age in the United States has been a subject of much study, with data from various reports consistently showing a lower average. A 2024 MassMutual survey placed the average at 62.
This discrepancy is significant. For many, retiring at 62—the earliest age to claim Social Security—is an attractive option, even though it means a permanently reduced benefit. The allure of an earlier retirement can outweigh the financial penalty for a variety of personal and non-financial reasons. For others, the decision is not a choice at all, with unexpected events forcing them into retirement ahead of schedule.
The Allure of Early Retirement
For a segment of the population, retiring before the FRA is a goal achieved through diligent saving and investing. Reasons for early retirement include:
- Lifestyle: A desire to travel, pursue hobbies, or spend more time with family drives many to leave the workforce earlier.
- Health: Physical and psychological strain from demanding jobs can lead to an earlier exit.
- Opportunity: Some people leave the workforce after receiving an early retirement offer from their employer, deciding to take advantage of the opportunity.
The Reality of Later Retirement
Conversely, a growing number of Americans are working later into their 60s and even 70s. For individuals born in 1960 or later, the full retirement age is 67, and delaying beyond this can increase monthly Social Security benefits even further. Factors contributing to delayed retirement include:
- Financial Need: Many find they need more time to save enough to comfortably cover a longer retirement, especially with increased life expectancy.
- Enjoyment of Work: Some individuals genuinely enjoy their careers and the sense of purpose and engagement it provides.
- Inflation and Economic Factors: Periods of high inflation or market volatility, such as the Great Recession or the COVID-19 pandemic, can delay retirement plans by impacting savings.
Factors Influencing the Decision to Retire
Deciding when to retire is a complex personal choice. Beyond the Social Security benchmark, several key factors come into play:
- Financial Preparedness: This is arguably the most significant factor. It encompasses not only the size of your retirement nest egg but also your sources of income, such as 401(k)s, IRAs, pensions, and Social Security. A secure financial foundation allows for greater flexibility in timing. Conversely, financial shortfalls are a primary reason people delay retirement.
- Health and Longevity: Your personal health status is critical. Physical limitations can force an early retirement, while good health may allow you to continue working and increase your savings. With longer life expectancies, many people must plan for a retirement that could last 20, 30, or even more years.
- Lifestyle Goals: What you envision for your retirement years—whether it's traveling, pursuing new hobbies, or relaxing—greatly influences your timeline. Some may be ready to stop working and embrace leisure, while others prefer the structure and purpose work provides.
- Spousal and Family Considerations: A partner's retirement plans, health, and financial situation play a major role in a joint retirement decision. Additionally, caregiving responsibilities for a loved one can impact retirement timing.
- Emotional Readiness: For many, work is a source of identity and social connection. Being emotionally prepared to leave that behind and find new purpose is a crucial, often-overlooked aspect of retirement planning.
Comparison: Retiring at 62 vs. 67
Here is a simple table comparing the common implications of retiring at two of the most significant ages.
| Feature | Retiring at 62 | Retiring at 67 (FRA for those born 1960+) |
|---|---|---|
| Social Security Benefits | Permanently reduced monthly benefit (approx. 30% lower for someone turning 62 in 2025) | Full monthly benefit, with potential for further increases if delayed past 67 |
| Benefit Period | Payments received over a longer period. | Higher monthly payments received over a shorter period. |
| Healthcare Coverage | Requires finding private health insurance to bridge the gap until Medicare eligibility at age 65. | Medicare coverage is available at 65, well before or near retirement. |
| Retirement Savings | Less time to save and invest, but less time for savings to be depleted. | More years to accumulate savings and take advantage of catch-up contributions (age 50+). |
| Workplace Benefits | May lose employer-sponsored benefits, such as health insurance. | Can retain employer benefits longer, providing a smoother transition to Medicare. |
| Financial Risks | Higher risk of outliving savings due to fewer accumulated assets and a smaller Social Security benefit. | Lower risk of outliving savings due to a larger nest egg and higher Social Security income. |
The Evolution of Retirement
Trends indicate that the average retirement age has been gradually increasing over the past few decades, rising from 57 in 1991 to 62 in 2024. The factors behind this shift include longer life expectancy, changes to Social Security's FRA, and the disappearance of traditional pension plans for many workers. The COVID-19 pandemic also created complex shifts, with some retiring early due to job loss while others delayed plans due to economic uncertainty.
Looking ahead, it's clear that the one-size-fits-all retirement model is a thing of the past. The decision to retire is now a highly individualized process that requires a holistic look at financial readiness, personal health, and lifestyle goals. Comprehensive planning is essential to ensure a smooth transition into your later years. For more information on creating a solid financial plan, resources like those from Fidelity can be a helpful starting point: How to plan for retirement | Fidelity.
The Bottom Line
While 67 is the full retirement age for many, the vast majority do not actually retire at this age. Some are forced into earlier retirement due to health or circumstance, while others have the financial freedom to leave the workforce as early as 62. The upward trend in average life expectancy and changing financial landscapes mean that retirement planning is more complex than ever before. Careful consideration of personal finances, health, and lifestyle goals is necessary to determine the optimal retirement age for your unique situation.
Ultimately, the 'best' time to retire is not a fixed age but a personal timeline that is defined by preparation and your individual circumstances. Whether that timeline leads to retirement at 62, 67, or even later, a proactive approach to planning can help ensure your golden years are financially secure and fulfilling.
Conclusion
In conclusion, the simple question of whether most people retire at 67 reveals a more complex reality. While 67 serves as the full retirement age for Social Security for those born in 1960 or later, recent data shows the actual average retirement age is closer to 62. This difference is driven by a range of factors, from financial readiness and health status to personal preferences and unexpected life events. As Americans navigate longer life expectancies and evolving economic conditions, a personalized and well-informed approach to retirement planning is more important than ever. The key is not to fixate on a single number but to build a robust plan that aligns with your financial needs, health, and lifestyle goals for a secure and satisfying retirement.
