The Facts about Retirement Ages

In the blog post below, Richard Kraus compares Tier 1 and Tier 2 Retirement Ages with National Data on Social Security Retirement Ages:

Rather than opinions or rhetoric, let’s stick with the facts about retirement ages, examining Tier 1, Tier 2, Social Security statistics, and, finally, Employee Benefit Research Institute (EBRI) studies showing the percentage of people actually retiring at various ages and comparing actual vs. anticipated retirement ages.

In essence, though Social Security participants can earn full or normal retirement benefits at age 65 to 67, depending on their date of birth, a large percentage of Social Security participants retire before this time. But to see these statistics, you need to jump ahead to Section IV.

I. Tier 1:

Normal Retirement:

– Age 55 and 30 years of Service

– Age 60 and 10 years of Continuous Service

– Age 70

Early Retirement:

– Age 55 and 10 years of Continuous Service

– Any age with 30 or more years of Service

Reduction Factor will be applied based on age.

II. Tier 2:

Normal Retirement:

– Age 65 and 10 years of Continuous Service

– Age 70

Early Retirement:

– Age 55 and 10 years of Continuous Service

Early Retirement Factor will be applied based on age.

III. Social Security:

Benefits can start as early as age 62 but they are significantly reduced till you reach the age for full benefits (see chart next).

Age To Receive Full Social Security Benefits

(Called “full retirement age” or “normal retirement age.”)

Year of Birth*

Full Retirement Age

1937 or earlier

65

1938

65 and 2 months

1939

65 and 4 months

1940

65 and 6 months

1941

65 and 8 months

1942

65 and 10 months

1943–1954

66

1955

66 and 2 months

1956

66 and 4 months

1957

66 and 6 months

1958

66 and 8 months

1959

66 and 10 months

1960 and later

67

IV. Actual Retirement Ages (for Social Security):

A Retirement Confidence Survey from the Employee Benefit Research Institute (EBRI) shows trends in actual retirement ages as reported in surveys between 1991 and 2014 (Look for figure 33 on page 27). To access full report, go to: http://www.ebri.org/pdf/briefspdf/EBRI_IB_397_Mar14.RCS.pdf

Essentially, the report shows:

before age 60 ranges from 26% to 38% of retirees

ages 60-64: ranges from 32% to 41% of retirees

age 65: ranges from 11% to 16% of retirees

age 66-69 ranges from 1% to 8%

age 70 or older 5% to 10%

What is interesting is to compare these actual retirement ages with what people predict will be their retirement age (figure 32, page 26) with more pessimistic estimates in recent years showing people expecting they will have to postpone retirement.

before 60: 9% to 19%

60-64: 14% to 31%

65: 23% to 34%

66-69: 2% to 11%

70 or older: 9% to 26%

never retire: 5% to 10%

“One reason for the gap between workers’ expectations and retirees’ experience is many Americans find themselves  retiring unexpectedly. The RCS has consistently found that a large percentage of retirees leave the work force earlier than planned (49 percent in 2014) (Figure 34 on page 28). Many retirees who retired earlier than planned cite negative reasons for leaving the work force when they did, including health problems or disability (61 percent); changes at their company, such as downsizing or closure (18 percent); and having to care for a spouse or another family member (18 percent). Others say changes in the skills required for their job (7 percent) or other work-related reasons (22 percent) played a role. Of course, some retirees mention positive reasons for retiring early, such as being able to afford an earlier retirement (26 percent) or wanting to do something else (19 percent).”

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