What Retirement Looks Like in America in Six Charts
Introduction
Retirement is a major milestone in one’s life, marking the end of a long and fulfilling career. But what does retirement look like in America? Let’s dive into the data and explore this topic through six charts that highlight key aspects of retirement in America.
The Retirement Age is Increasing
One of the significant changes in retirement patterns has been the increase in the retirement age. In the past, most Americans retired at the age of 65. However, with the gradual changes in Social Security and pension policies, coupled with the rising life expectancy, the average retirement age has increased to 66. This trend is expected to continue, and by 2024, the average retirement age is projected to reach 67.
Retirement Savings are Not Enough
According to a report by the Economic Policy Institute, the median retirement savings for Americans nearing retirement (age 55-64) is only $88,000. This amount is significantly lower than the recommended savings amount of $1 million, which is necessary to maintain a comfortable lifestyle in retirement. The low savings can be attributed to the fact that most Americans rely solely on Social Security as their primary source of retirement income.
Gender Disparity in Retirement Savings
Not only do Americans struggle to save enough for retirement, but there is also a gender disparity in retirement savings. According to a study by Vanguard, women’s median retirement account balance is only 71% of men’s median balance. This disparity can be attributed to the gender wage gap, as women typically earn less than men and therefore have less disposable income to save for retirement.
401(k) Plans are the Most Common Retirement Savings Tool
When it comes to retirement savings, the most common tool used by Americans is the 401(k) plan. This employer-sponsored retirement plan allows employees to save a portion of their salary for retirement, with the added benefit of employer matching contributions. According to the Investment Company Institute, as of the first quarter of 2020, there were 29.8 million active 401(k) plan participants in the United States.
Rise of Aging Workforce
As retirement savings become more challenging to access, and the retirement age keeps increasing, we can expect to see a rise in the aging workforce. According to the Bureau of Labor Statistics, the number of Americans aged 65 and older in the workforce is projected to grow by 44% from 2020 to 2030, compared to a 5% growth rate for the overall workforce.
Retiring Abroad is a Popular Option
Due to a combination of factors such as high healthcare costs, low retirement savings, and increasing cost of living, many Americans are opting to retire abroad. According to the Social Security Administration, in 2018, over 415,000 Social Security recipients lived outside of the country. Retiring abroad allows retirees to stretch their savings and live comfortably in affordable locations while exploring new cultures and lifestyles.
Frequently Asked Questions About Retirement in America
1. What is the ideal age to retire in America?
The ideal age to retire depends on individual circumstances, but it is commonly recommended to retire between the ages of 62 to 70 when most retirement benefits are available.
2. Do all Americans have access to retirement benefits?
No, not all Americans have access to retirement benefits, particularly those who work in the gig economy or are self-employed. Also, Social Security benefits are not enough to cover living expenses in retirement, making it crucial for individuals to have additional retirement savings.
3. Are there any changes expected in retirement policies in the future?
It is likely that retirement policies will continue to evolve, with changes in eligibility age and benefits. The COVID-19 pandemic has also highlighted the need for better retirement savings options and policies to protect individuals from unforeseen circumstances.
