One thing nearly the entire workforce has in common is the desire to retire. While there are undoubtedly outliers like Warren Buffett, who is finally retiring at the ripe age of 95, many professionals look forward to the day they can kick back and enjoy the fruits of their labor.
The average retirement age in the U.S. Is 65 for men and 63 for women, according to the Center for Retirement Research at Boston College. But Gen Z has their sights set on an earlier retirement age, a Manulife John Hancock report released Tuesday shows.
Gen Z believes the ideal retirement age is 59, far lower than other generational cohorts: Millennials believe 61 is ideal, Gen X targets age 64 for retirement, and baby boomers say their ideal retirement age is 67, according to the report.
Results are based on a survey of more than 2,500 Manulife John Hancock Retirement plan participants and American retirees, run from May 9 through June 2. Even the retirement planning firm called this trend “eye-opening” in its report.
But just wanting to retire by a certain age doesn’t match reality. The report also illustrates the disconnect between the expected length of retirement and worker readiness. In other words, workers may want to retire earlier, but there’s a good chance they’re not financially prepared to do so.
“Our research over the past decade shows that Americans continue to feel the pressure of rising costs and competing financial priorities, which has impacted their confidence in their retirement planning,” Wayne Park, CEO of Manulife John Hancock, said in a statement.
That said, the study shows while Gen Z may want to retire in their 50s, they understand that may not happen. The report shows Gen Z expects to retire eight years later than they’d hope, at age 67, while millennials, Gen X, and baby boomers all expect 69 as their retirement age.
Why Americans can’t afford to retire early
Americans struggle to close the gap between the retirement age they want and when they actually do for several reasons.
The first is Americans aren’t saving enough. An October report from retirement planning firm TIAA shows nearly two-thirds of Americans say the dream of retiring between the typical ages of 65 and 70 is “unattainable,” with many planning to work until they physically can’t anymore.
“Americans clearly want peace of mind in retirement, but the reality is that too many people either aren’t saving enough or aren’t confident in their ability to plan,” Kourtney Gibson, CEO of Retirement Solutions at TIAA, said in a statement.
TIAA’s study shows 20% of Americans aren’t saving enough for retirement at all. And another recent TD Bankreport shows one-third of Americans aren’t setting aside money aside for retirement.
Meanwhile, we’re living through an economy marked by inflation, debt, and increased expenses. Home prices are up about 50% just from 2020, grocery prices are set to jump 50% to 100%, and wages are still failing to keep up with inflation. Even six-figure earners are feeling the pinch and are cutting back on expenses to make up for rising costs elsewhere.
People nearing retirement age also face their own set of challenges, including premature Social Security claims: If you retire at the earliest possible age (62), this could result in up to 30% lower monthly benefits compared to waiting—ultimately reducing long-term income security. The TD Bank report also showed more than half of Americans don’t participate in retirement savings plans at work, making them fall further behind.
The case for working longer
Some of the world’s most successful businesspeople have worked well past the average retirement age. The most prominent example, of course, is Buffett, who will retire at the end of this year at age 95.
In his recent letter to shareholders, Buffett said he didn’t really start feeling old until recently, crediting “Lady Luck” for his long and prosperous career.
“I was late in becoming old—its onset materially varies—but once it appears, it is not to be denied,” he said. “To my surprise, I generally feel good. Though I move slowly and read with increasing difficulty, I am at the office five days a week where I work with wonderful people. Occasionally, I get a useful idea or am approached with an offer we might not otherwise have received.”
Media mogul Rupert Murdoch also didn’t officially step down as chairman of Fox Corp. Until he was 92, although he still remains influential in the industry at age 94. Henry Ford, the founder of Ford Motor Co. Also worked until his 80s, and Sam Walton, founder of Walmart, retired at age 70.
“High expectations are the key to everything,” Walton said.