Why Many Americans Are Retiring at Age 62, and Not Later
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Access to affordable credit helps me pay my employees, but I don't really need it. Inflation is killing me. But who cares? Big retailers are making record profits. That's why we support the Durbin Marshall credit card bill. See? Banks and credit unions help small businesses make payroll. This bill would cut the vital resources they need. While increasing megastore profits. They deserve it, don't they? Tell Congress, stop the Durbin Marshall money grab for corporate megastores. Paid for by the Electronic Payments Coalition.
Here's your Money Briefing for Friday, May 3rd. I'm J.R. Whelan for The Wall Street Journal. After decades of working, many Americans imagine they'll keep working after hitting retirement age. That is, until they reach retirement age.
There is this noted kind of psychological thing that happens where people tend to be fairly optimistic about prospects for the future. Workers say they're going to retire at 65. Retirees say they, on average, retire at 62.
We'll talk to Wall Street Journal reporter Ann Tergesen after the break.
Access to affordable credit helps me pay my employees, but I don't really need it. Inflation is killing me. But who cares? Big retailers are making record profits. That's why we support the Durbin Marshall credit card bill. See? Banks and credit unions help small businesses make payroll. This bill would cut the vital resources they need. While increasing megastore profits. They deserve it, don't they? Tell Congress, stop the Durbin Marshall money grab for corporate megastores. Paid for by the Electronic Payments Coalition.
Why do workers say they’ll retire at 65 but retirees report leaving at 62?
People often envision retiring at age 65, but that seems unlikely when reality sets in. Wall Street Journal retirement reporter Ann Tergesen joins me. Ann, why does age 65 come to mind for so many people when they think about retirement?
For a lot of people when they're in their 20s, 30s, 40s, even 50s, 65 seems like a good default number. For example, it's the age of eligibility for Medicare. It used to be the age at which people qualified for full Social Security benefits. Now that's a little bit older. 65, 66, those are sort of the full retirement ages that are often used for government programs.
What's the reality as to when people actually do retire?
So according to a longstanding survey that I write about, it's pretty consistently found that while workers say they're going to retire at 65, retirees actually on average retire at 62.
Is there a sense of optimism that people feel they could work well beyond 62 or 65 just based on what their mindset is at earlier ages?
There is this sort of noted kind of psychological thing that happens where people tend to be fairly optimistic about prospects for the future. So there's a bias towards optimism. People pretty consistently, year after year, I see it in this survey, the workers say they're going to retire at 65. The retirees say they, on average, retire at 62.
For a lot of people, their 401k is held up as the stock market has trended higher. But what's their financial mindset about retirement?
The survey that this article looked at, again, very longstanding survey, 34 years running. The big issue that survey tries to address every year is how confident are people about their retirement prospects and their ability to live comfortably in retirement. According to the survey, actually, retirement confidence has rebounded. So in 2022, we saw both the stock and the bond markets rebound. fall, we also saw very high inflation. So I think that both workers and retirees that year, in the survey that reflected the experience from that year, their confidence and their ability to live comfortably in retirement declined significantly, as you might expect. The markets have since recovered. Inflation is lower.
It's trending lower. So we did see a rebound in the confidence levels. It's not back at the peak that they experienced a couple years ago, but it's nonetheless rebounding.
What psychological biases make people overestimate how long they’ll keep working?
So people are generally feeling pretty good about their prospects.
We've talked on the show before, we aired a special series about this last year, about how the current younger generation of workers could be facing a 60-year career that might last well into their 70s.
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