People are now retiring three to four years later than they did three decades ago. Now, why is this happening and how can this impact you? We're gonna unpack all that on today's episode of The Retire One Show.

Hello and welcome to The Retire Once Show Show designed to help you get to retirement. But what do we say? Most importantly, stay retired. That's right. I'm your host, Jonathan Rankin. I'm the founder and CEO of Theor and Wealth Management, and I'm joined by my lovely co-host. Hi, I'm Melissa Rankin. Thank you so much for joining us.

Thank you for being back here. It's very nice to be back again, and today we've got a great episode. But before we jump into all of. We don't just want you to subscribe to the channel, right Mel? Right. There's now a new exciting newsletter. That's right. Make sure you subscribe to our Retirement newsletter.

Comes out every single Friday. There's a link right there in the description below. Click the button, subscribe to the newsletter because we know you're already subscribed to the channel. Right? That's, that's why you're here. I'm light reading for the weekend. I mean, you know, we tried to provide a lot of good content here to help you get to retirement, and today we are talking about why people are delaying retirement.

Uh, honestly, when I saw these studies, I was a little shocked at some of the, some of the different numbers. I knew that people were retiring a little later. I just didn't realize. The impact and change the actual numbers tied to it is kind of crazy. That's right. So let's dive right into, you know, what's going on.

So the first one, I, I mean this for some reason is just, it stands out to me is so crazy. The average retirement age in the US has increased from 57 in 1991 to 61 today, I mean, 57. See, and that's the thing I am, I was actually shocked by both of these numbers. I was shocked that it was 50. In 1991, but I'm also shocked that it's 61 today.

Huh. I think there's something about it being in the fifties and the sixties that makes it so different. Yeah. But in 1991, who was retiring at 57, and I mean even today, a lot of the people that we talked to, You know, they usually benchmark their retirement around, you know, social security, either starting at 62 or 65, is a popular age because of Medicare, uh, in very, you know, I would, I don't wanna say rarely, but it's definitely not the average average.

It's, I mean, it's not the average of what we've seen, it's, uh, at 61 years old. But if that's what Gallup says, that's what Gallup says. Which actually brings us to the, the next kind of, I guess, Fascinating point. Um, non retirees target retirement age has also increased from 60 in 1995 to 66. See, that makes more sense that people are expecting that they're going to be retiring at 66.

That number to me makes sense. It didn't make sense. They were thinking they were gonna retire at 60 back in 19 90, 95. I mean, cuz that's not that long. I mean, no, but you know what, maybe because I mean, and that was even before the tech boom, but interesting that, uh, people were thinking they were gonna retire at 60.

And we're gonna jump into some of the reasons and factors why we think, uh, think these trends have existed and, and come about. But 66, to me, that seems normal. That does, that seems a little more average. Gallup has also found that retirees reported retirement age has been about five years younger than non retirees expected retirement.

This, this to me makes sense. We've seen this happen where, you know, people think they're going to retire at a certain agent for some reason they retire actually earlier than expected, you know, and a lot of that is whether that's health concerns. You know, you think I'm gonna retire at 65 or 66 and this case or later, and health causes you to step out of the workforce or.

You know, we've seen it happen in, I saw it happen in 2008. We've seen it happen in, you know, uh, 2018 and even in the, you know, pandemic where companies pull back, they start laying people off and unfortunately a lot of, you know, senior employees, they typically will get laid off and just kind of right off in early retirement.

That's right. Right off into the retirement sunset before they initially planned. So there are reasons why we see people retire earlier than expected. I didn't realize it was five years earlier, but you know, it's, and that's a big jump, a big five years. But I think it kind of goes to show this chart that, that you're gonna go into a little bit more, but it shows some trends.

I mean, since 2002 that are just also shocking. Yeah, I think it's interesting to see that in 2000. 41% of people between the ages of 60 and 64 were retired, and now that's only thir. That's only 32%. So we've seen a 9% drop in that category. I, I wasn't really shocked by the 55 to 59 year olds. You know, that is, that was at 19% of people in 2002 to 2007, and now it's 11%.

See, that seems normal for me. That makes sense to me. Yeah. That that, yeah. That tracks, and maybe, you know, and we'll get into this a little bit, but I wonder if a lot of this is just generational, you know, you think of things happen later in life for, for people, uh, nowadays. I mean, you think of, you know, our grandparents at the age that they got married or had kids, and our parents, you know, the age they had got married and had kids.

Us the age that we got married and had kids and everything seems to be happening later. I think you see that in, you know, different generations, I guess thinking about, you know, the baby boomer generation, I guess, you know, seeing that that is a shift that we've seen is, is kind of interesting to me. So let's get into some of the actual reasons why this is happening.

I mean, we've speculated a little bit about the numbers, but why do you think this is actually happening? I think there are really four factors that come into play when thinking about why there's this shift in later retirement. Now, there's any study that you find there's not gonna be, here's the one main cause here's this exact reason why this is happening.

Exactly. But I think the, the first reason is the, I would say the rise of the 401k. You know, this, uh, in 19 40, 50 8% of people had pensions, whereas in 1965 found a study that said less than 5% of people. Now, in all honesty, I, I think that 5% is probably a little low, but still, I think the trend shows that, um, you know, pensions aren't really a thing anymore.

But I think that even though pensions aren't really a thing, isn't that just because money's probably shifted in going to, I don't know, 401ks or other company sponsored plans? I mean, things like that where the money's still going to the individual, not necess. Via a pension, but still seems like it's getting there.

Yeah, I guess, you know, people are getting, you know, a lot of companies do, you know, they do match in 401k, so there is, you know, I think money going to participants, but the problem is the responsibility is on the participant. There is ah, yes. The, the ownership of it there is, and you know, you think of if.

You know, if your job is to start a company and the company's not saving for your retirement, you have to make that decision to put away your own money. And your own money has to go into this account. You have to then you have to actually invest it. You have to actively do it. Yeah, I mean, we've seen, we've seen statements of clients that range from a hundred percent in stocks to a hundred percent in cash at various ages all over the place, and it's because.

When starting out in a 401k that it's typically self-directed and so a lot can change. Whereas pensions, they were done by the company. They were invested by the company, they, they took care of that kinda like outta sight, outta mind savings. It was, and now you look at, I saw this report from the National Institute on Retirement Security.

They found that 40% of households that were headed by someone between the ages of 55 and 64 had no retirement savings. None. Nothing. No nothing. So whereas you would think that some of these people would've been covered by a pension before 401ks, that shift from pensions to 401ks, I think that's a very big contributor into why people are making that shift to retire later, because the whole responsibility is on them.

That's why you see all these headlines of. This retirement crisis that we're gonna face in the next, you know, 5, 10, 20 years. You know, it's interesting too that, um, kind of to piggyback off of that, when I was doing research for this episode, I came across a study that said, um, the guaranteed paychecks of pensions, kind of in that same mind, it.

Guaranteed. I mean, that in itself I think gives people some security and makes them a little bit more comfortable, which I think is interesting because it actually shows that people with 401ks or other plans like that, they're actually retiring one to two years later on average than people who had pensions.

I mean, you think about anytime we talk to someone who's thinking about. What is their number one concern that they're going to run? Money run outta money. Money. And a lot of that is especially prevalent right now with everything going on in the markets. As you go through bear markets in pensions, that was handled for you.

It was guaranteed you, you didn't have to worry about market risk then. I think that's the main takeaway right there. The guaranteed. Yeah. I think for people that you think retire, Who wouldn't wanna have something guaranteed? I, I wonder, and I, I have no clue on this, uh, statistic, but I wonder how many people back in the eighties, nineties, and even two thousands, you know, really even paid attention to the stock market.

It seems like because of the 401k, now everybody has to focus on what the market's doing because it's the biggest part of their retirement savings. Now, if they are saving for retirement, because they have to be the ones to put money into the plan and figure out how to invest it, it's at least in the back of their mind somewhere.

Yeah. Even if they're not actively watching it, it's there in some way or some capacity, I guess, whereas yeah, you're probably right with the pension. I mean, who cares? It's, it's guaranteed the marketing can do what's gotta do. That's true. So I do think that the 401k is, to me, the number one factor that's changed the trend of when people retire.

But you know, there are a couple others, and I think the number two that we wanna talk about is social security. You know, them changing the full retirement age from 65 to 67, and that by default incentivizes people to retire later. Absolutely. And then in the seventies, that's when the delayed credits came about.

So you are now even incentivized even more to delay until age 70. And then in the two thousands in in 2000, Congress got rid of the earnings test, which was always looked at as a penalty for working later in life. So you've gotta all these different factors that incentivize you to take social security later.

Pushing it back and back and back. Yeah. You wanna max out your social. What do they say? Delay till 70. So, okay. Well, why don't I just work till 70 if that's the case. It's interesting though, because despite all that, most beneficiaries still claim Social Security Before the full retirement age in 2021, for example, 57% of new beneficiaries were under 66, 50 7% over half.

I'm gonna refer to this as the, uh, the JG Wentworth. This is the, I, it's my money. I want it now. That's, oh, I do remember those commercial. That's the, you know, I, I think it was Monte Williams. It wasn't that him, it's my money I wanted. Now I feel like that's the, that's the, you know, that's, that's the driving force there.

Exactly. Everybody had that mentality. Yep. That is it. It's the JJ Wentworth syndrome. That happens with social security. It's my money, I want it now. But, uh, also you see all that fear mongering, and we've talked about this in previous episodes, social security's going away and all these things. So yeah, of course it makes people think, I want to take it while I've got it because I don't know if it's gonna be here and.

You know, I, I wish that people didn't think like that. Talk about that last time. If you didn't see that episode, make sure you go back and check that one out. But I, I do think social security's gonna be there, but I do think that is a factor in why people are retiring a little bit later. That makes sense.

Um, but that leads us into number three, which health insurance. Ah, yes. Another big one like pensions. You know, employer sponsored retiree health benefits are pretty much gone. I mean, I think very few employers offer health benefits after you retire now. Have to pay for that yourself and 'em on your own.

Go on Medicare. And so the thought is, well, if I wanna stay covered, I've gotta stay working. Which we've actually pointed out before. We, um, I know we've talked about this in episodes past, but Fidelity did a study that showed a 65 year old retired couple would need over $300,000 just for healthcare costs.

Yeah. And I mean, that's $300,000. So that's the thing. You see a study like. $300,000 to provide just health insurance or healthcare costs for you and your wife or or husband in retirement. Your spouse, that's your spouse. We'll say spouse, that's a lot of money. And then you tack on market risk. The concern of running outta money, the loss of guaranteed income in the form of pensions.

Of course people want to stay working because there's this thought of, can I actually retire comfortably? And I see why when you start adding up all the negative news out there, that it makes sense why people are, it gets scary. It does, you know, it, it does get scary. But we've seen it happen. We know people are retiring.

I mean, the average age is 61. That's according to Gallo still. Yeah. Um, but the last reason why I believe, you know, people are retiring a little bit later. I think people are generally healthier today than they were before. Despite all of the, which is a good sign, you know, the Fast food nation and you know, supersize me type things.

Remember that movie Supersize me, that dog? I don't think I saw that the guy ate like McDonald's for, I don't know, I think it was a month or a couple months or I don't even know how long he ate it for, but every day it was very interesting. Um, Yeah, might have to check that out. Might have to check that out.

This episode is not sponsored by McDonald's. Um, but the, uh, life expectancy has increased. I found a study that showed that life expectancy for men age 65 and older has actually increased 3.7 years since 1985. So that's good. I have good news. No clue on the statistics for women. It didn't provide it in the study I found.

That's okay. Hey, we know you're gonna live longer hopefully. Here you go. Uh, so people. You know, they are living longer and I think that's going to create that thought of, you know, let's just delay retirement longer as well. Because they're healthier. Yeah. They're like, yeah, I feel good. I guess I could keep working.

Why not? Why not? I think that also, There's a lot less physicality in work these days. I mean, not just actual physical labor, but I mean, you have people who are still working from home. I mean, you don't even have to leave your house. Look, I don't care what you say, this is a physical job for this. This is as physical as it gets, you know, sitting in an office.

I, I see what you're saying. You do have to physically walk to the office, though, I guess That's true. That's different. You're not doing it from like, you know, the couch. I didn't, I didn't have to build the office though, so, yeah. Oh, true, true. But I, I agree with that. I think now that we are more of a service industry, service society, that it is easier for people just to continue working without there being a strain on their body.

I mean, you think. How long are you really going to be paving roads or building buildings if your knees going out? Yeah, I mean, it's probably gonna push into retirement, whereas you can roll into an office and, or just work from home, like you said. So, um, kick back on the couch. You know, one thing I'm gonna throw in there though, this is, I won't say this is number five, but I'm gonna say it's like 4.1 or four a.

Okay. Uh, I think some people actually like their. Oh, right. Yes. Yeah, I guess that's, I mean, no study ever talks about that, but we talk to people all the time that say, well, I don't know if I ever wanna retire. And you ask 'em why? Cause I love what I do. It's, I actually enjoy what I do. There are people out there.

This is shocking. I know this is news. Yeah. You never hear this part of it. No. People actually do like what they do. They enjoy it. It's stimulating. We've talked about it before of, you know, people who keep working, you know, they are more mentally stimulated because of their surroundings, their, you know, Coworkers, all that stuff, their brains actively working.

I mean, that makes sense. So those, those four factors, I think are the reasons why, you know, we've seen this generational shift of people retiring a little bit later, but all of those are personal. They're all based on each individual person. So there's not really one way that if you're watching this, you can think of, well, how can I avoid retiring?

Number two? We're number three. You're, yeah, it's, I mean, it really ultimately is going to come down to save early, save as much as you can. Uh, In a diversified and disciplined portfolio Now don't, and maybe find something you like to do. Yeah. I mean, just, you know, it's true. But also, uh, plan, you know, uh, yes.

I mean, we found that one study that, uh, only 42% of workers have actually tried to calculate how much they need to retire it. Less than half the people out there aren't even thinking about it. 58% of people have no clue how much they need to retire. So, uh, do those things and hopefully you'll have a better understanding of, you know, when retirement's possible for.

And our hope is that you're delaying retirement because you want to and not because you have to. So with that, absolutely. I'm Jonathan Rankin. And I'm Melissa Rankin. Thank you so much for joining us.

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