Retire at 65? It’s More Like 62.

The Wall Street Journal, Anne Tergesen

Americans stop working earlier than planned, but tend to enjoy retirement.

There is a big gap between how workers envision the timing of retirement and the reality for retirees, according to the Employee Benefit Research Institute’s latest installment of its 34-year survey of workers and retirees released Thursday. 

Some 28% of workers said they expected to retire at age 65, up from 23% a year ago. This was the median answer to the question for workers and remains the default age of retirement in the popular imagination. The median actual age of retirement has been 62 for several years, the survey found—which is the earliest retirees can claim Social Security benefits.

Workers are chronically overly optimistic about how long they can remain on the job, said Craig Copeland, director of wealth-benefits research at EBRI. That raises the stakes of how much they need to save.

People also imagine they will continue to work more after retirement than they actually do. While 75% expect to work for pay in some capacity in retirement, only 30% of retirees said they have actually done so, the survey found.

The gap between expectations and reality demonstrates the ways people aren’t great at imagining the years ahead, said Hal Hershfield, a psychologist at the University of California Los Angeles, who has studied the often distant relationship between our present and future selves. 

For example, a bias toward optimism leads many to play down the risk of medical problems and assume “work will be there for us while that may not be the case due to rampant ageism,” he said. Many leave their jobs sooner than expected due to reasons including health problems, layoffs and the need to care for family members, the survey said.

People years from retirement may also fixate on age 65 as a realistic retirement age simply because that is when people become eligible for Medicare, he said.

Despite worries about inflation and changes to retirement programs including Social Security, most retirees say they are at least as happy as they expected to be.

Nearly 70% say their lifestyle is the same or even better than what they envisioned.

Though retirees continue to worry about money, and over half of those surveyed said their overall spending is higher than anticipated, the vast majority still report they are free to spend what they want, within reason. Hershfield said studies indicate that as people age they tend to focus more on the pursuits and people who matter most to them, which can promote greater happiness.

Overall, 68% of workers and 74% of retirees reported being somewhat or very optimistic about their ability to live comfortably in retirement. That is up from 64% of workers and 73% of retirees who said the same last year, but lower than the 2022 results, which were conducted before much of the market’s decline that year.

Although the S&P 500 hit new highs this year, “inflation is still lingering and the uncertainty around that seems to be preventing people from having the optimism they did prior to 2023,” said Copeland.

Copeland said one big change in recent years is the higher optimism levels expressed by younger Americans, who are saving for retirement at earlier ages than prior generations, thanks to automatic enrollment in 401(k) plans.

This year’s survey polled 2,521 Americans ages 25 or older between Jan. 2 and Jan. 31. The margin of error was plus or minus 2.8 percentage points for both workers and retirees.

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