Since starting this blog, I have written a couple of posts on becoming FIRE (Financially Independent / Retire Early):
FIRE is a popular movement in the personal finance community, with millennials expecting to retire from their full time jobs in their 30s or 40s. So one question I asked myself recently was, what is the average age that most people retire in the US? Well, Time Magazine recently published an article that shows the ages when people retire. The following graphic is supplied by LIMRA Secure Retirement Institute.
The results of the analysis makes sense based on what I have observed in real life. I don’t personally know any under age 40 retirees. I also don’t personally know anybody who is over 85 and working. Here are some stats that I found interesting:
- The majority of people (51%) retire between the ages of 61 and 65.
- 91% retire by age 75
- 2% retire after age 85
- Less than 1% of people retire before age 50.
I don’t believe there will be a dramatic change in these numbers even with the FIRE movement. The personal finance community is relatively small and unlikely to move the needle. I’m also not sure if it is a good idea to retire so early since you would be losing out on decades of income and benefits.
The surprising conclusion of the Time article however suggested that people should work even longer than they do now!
To get a picture of how severe the retirement income crisis is—and why more Americans should consider working longer and delaying Social Security—LIMRA looked at total savings. U.S. households own $31 trillion of investable assets. That’s an average of $253,200 per household. But most of that is owned by the wealthy. The median holding is just $17,500 and three in four American households have saved less than $100,000.
I think this is really bad advice. Instead of encouraging good money habits from a young age, Time is basically giving up and suggesting that people work until they are in a nursing home. Here is some better advice to be able to retire before the average ages of 61- 65:
- Max out your 401k. Your balance will be over $100k in 6 years without accounting for an employer match or investment returns.
- Minimize housing costs
- Live close to work
- Pay down all high interest rate debt
- Cook your own meals
- Find an employer that will pay for an advanced degree
- Buy quality stuff on sale
- Invest in the S&P 500
- Workout and eat healthy
Readers, what age do you plan on retiring? What advice do you have for people to be able to retire before 61?