Why The Average Retirement Age In 2024 Might Be A Little Too Early

Whether you are already planning on retirement, or still have a few decades to go, it can be important to do your research. Planning for retirement involves a lot of different factors that don't necessarily benefit from delay. From emotional to financial to logistical, deciding when, how, and even where to retire can be a complicated decision. While consumers have increasingly shifting notions of what exactly retirement entails, most agree that deciding when to retire can be one of the most significant decisions of their career and life. While the traditional age of retirement has usually been 65, you might be surprised to learn that neither Social Security nor the actual retirement average fit that tradition.

According to the 2024 MassMutual Retirement Happiness Study, the average actual retirement age in the U.S. is 62. Interestingly though, the study's respondents reported that 63 was the ideal age for retirement. If you currently find yourself planning on retiring later than that, it's important to realize that many retirees end up retiring before they originally planned. MassMutual's study found that a whopping 48% of retirees reported retiring sooner than planned, for a myriad of different reasons. The biggest reason was due to changes at work (33%) while 28% of retirees reported discovering they could afford to retire sooner than they had thought. While it might sound ideal to be done with work at a younger age, there are significant considerations to think about before making the retirement plunge.

While not having to go to the office anymore can be a plus, there are, unfortunately, other factors to consider when it comes to retiring early (we even spoke with a CFP who warned against early retirement). For starters, many early retirees actually end up reentering the workforce due to a mix of financial and social reasons. In fact, according to a report from T. Rowe Price, the concept of "unretiring" is becoming increasingly popular.

The motives behind this return to work were just about evenly split with 48% reporting returning to work for financial reasons and 45% reporting their return was motivated by social and emotional benefits. Without a solid social plan for life after retirement it can be easy for retirees to feel increased loneliness. A 2014 study published in The Journal of Human Resources found that 26% of retirees reversed their retirement while 35% of the youngest retirees did the same. With an even more expensive economy affected by inflation, the number of retirees to reverse their decision is sure to be even more in 2024.

There are also significant financial considerations to think about before deciding to retire early. Not only does the amount of money people think they need to retire comfortably increase every single year, but according to a GOBankingRates analysis of the Bureau of Labor Statistics' 2022 Consumer Expenditure Survey, there are 16 states that require over $1 million in order to retire there. This can make the reality of retiring early even more difficult, if not impossible for some workers.

While Social Security retirement benefits are more than likely just one part of your overall retirement planning, they can be a significant one. This is why it can be especially important to understand the consequences of early retirement on your overall benefits amounts. Depending on the year you were born, your full retirement age can either be 66 or 67. This means you're not eligible for your full monthly benefits until you reach that age (which, to go back to our earlier point, is a significant reason why the traditional retirement age of 65 doesn't apply for many people).

While early retirement is technically available as early as age 62, it can significantly decrease your benefits amount. According to Social Security, anyone turning 62 in 2024 would experience a roughly 30% reduction in their benefits amounts compared to the amount they would receive if they had waited until they were 67 (we broke down the average Social Security benefits for retired workers by age here).

Another potential financial bonus of delaying retirement is that Social Security will add an 8% bonus to retirees' benefits for every year they delay retirement up to age 70. While delaying that long might not be ideal or part of your overall retirement plan, it's worth knowing that the option is available. Making sure to consider the financial ramifications of your retirement plan, in addition to the emotional toll that plan can take, is extremely important when mapping out your retirement strategy.