Should you work until you reach your full retirement age (FRA) and can collect your full Social Security benefits, or take a pay cut and retire early? It's a question that weighs on many people’s minds.
The dilemma is understandable, as there are pros and cons to both options.
Retire early and get more years of freedom to pursue your dreams and enjoy life. But early retirement also means lower Social Security (SS) payments and needing to stretch savings for a greater number of years.
Retire later, and you’ll have bigger Social Security checks and potentially more retirement savings, but fewer years to enjoy the money. If you get sick, you might regret the time spent working.
If your finances are in order and you aren’t sure if you should stick it out or call it quits early, here are some surprising statistics that could help you decide.
Most people don’t make it to full retirement age
If you were born in 1960 or later, your full retirement age is 67, the age at which you can get full SS benefits. At 65, Medicare kicks in, but at 67, you aren’t leaving any money on the table.
Retiring before your full retirement age means you'll see an up to 30% reduction in your SS benefits. Despite this, the average age of retirement in America is 62 (PDF). That’s the age you can first collect Social Security benefits, and three years before you can start receiving Medicare.
For many, early retirement isn't a choice: Their health, a layoff, or a sick family member forces them out of the workforce.
For others, they're simply ready to start their next chapter earlier than planned. If you're likely to retire earlier than 67, you might want to plan for it now.
Our healthy life expectancy is in our mid-60s
As of 2021, the U.S. health life expectancy or HALE is 63.9 years, according to the World Health Organization, the average age a person is expected to live in good health without having chronic diseases or significant disabilities.
After that, the chances of getting a sickness or injury that could impact your lifestyle increase exponentially, even if the average life expectancy in the U.S. hovers around 78 years old.
If you're healthy now, have the means, and are thinking of retiring, that stat could push you over the edge. That’s not to say you'll get sick as you age, but if your family has a history of chronic illness or if you have pre-existing health issues, you might want to consider HALE when mulling the decision.
You run the risk of getting laid off
Everyone wants to go out on their own terms, whether it's an aging quarterback or the star of a long-running show, and the same is true when you retire. Unfortunately, many older Americans don’t have a say.
For people age 50 and older in America, a little more than half will experience a layoff or job reduction in their lifetime, according to this study. A layoff on the face of it isn’t a big deal, but when you’re older, it can be.
Older adults face age discrimination and other challenges, which can make finding employment difficult. An early retirement on your own terms can prevent that from happening.
Your job could be making you sick
When it comes to working, people are stressed. One study found that 46% of employees said most of their stress comes from work, and 77% said stress from work negatively impacted their mental health.
Stress is bad for anyone, but among older workers, it can speed the aging process, increase the risk of chronic illnesses, ruin sleep and weaken the immune system.
It can lead to sick days, visits to the doctor, and out-of-pocket expenses. You won’t have any of that in retirement.
We spend 90,000 hours working
Work/life balance is an admirable goal, but when it comes to reality, it's hard for Americans to achieve. It's been said that we spend one-third of our lives working, or 90,000 hours.
That’s not taking into account the people who work more than 40 hours a week or work multiple jobs.
Work can be rewarding. For many, the absence of work leaves a void when they retire. But for others, work is a shackle that holds them back.
It's pretty staggering when you think of all the things you could be doing during the hours you are working. Retiring early seems a lot easier.
You're more likely to suffer a fatal accident
The longer you work, the more you can amass for your retirement, but depending on your job and your age, you're also putting your life at risk, especially if you are 65 or older.
That's because workers 65+ are 2.3 times more likely to die from an on-the-job injury than average workers. That amounts to a job fatality rate of 8.4 per 100,000 workers, according to the AFL-CIO.
While it's more likely in physically demanding jobs, those fatalities can also be triggered by minor falls due to slow reaction times or physical decline. But if you retire early, you can avoid that danger zone altogether.
Everyone is different
When you choose to retire depends on your unique situation. Some people love their jobs, find fulfillment and purpose from them, and never want to leave. Others can’t wait to retire and start their next chapters.
If you're on the fence, there are factors to consider beyond your finances, such as your health and longevity.
Remember that statistics are just that: statistics. Your experience might deviate a great deal.
Ultimately, your retirement timing shouldn't be determined by the average age or life expectancy tables. The right time to retire is when you're financially and emotionally ready.
