Home Finance Choice of when to retire not tied to amount of retirement savings: report

Choice of when to retire not tied to amount of retirement savings: report

by CoinNews

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Americans often worry about hitting specific money goals for retirement, but a new report finds that the decision to retire often happens independently of reaching that “magic number.”

U.S. households over the age of 55 control 74% of investable assets, but their retirement status has little to do with their asset levels, according to a new report from Hearts & Wallets.

The research firm analyzed U.S. Census Bureau and Federal Reserve data, and conducted a survey of 5,993 people in August and September 2022.

The report found that more than a third, 36%, of households ages 55 to 64 are already retired. In that age group, 27% are within five years of stopping full-time work and 37% expect to continue working full-time for more than five years.

About a third, 35%, of people in that age group who have less than $50,000 in investable assets described themselves as retired. Among those with $2 million to just under $5 million set aside, 52% are retired.

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There are also some older workers who haven’t retired despite significant savings. Among survey respondents with $2 million to just under $5 million in investable assets, 82% of those ages 65 to 74 and about 94% of those 75 and older are retired.

“Recognize not all older households are retired. Retirement is more about having the financial house in order by paying off debt and scaling back lifestyle than reaching an asset target,” CEO and founder Laura Varas wrote in the report.

Retirement choices not always driven by assets

A second group “lives out of fear,” she said, and are unsure whether they have enough to retire.

That may be especially true of those in the 55-plus age group, who may believe they have enough, but cannot predict whether they will live another four decades.  

“They fear that, ‘If I quit and I lose my ability to work, and then the work falls apart, what am I going to do?’ They live out of fear, and it keeps them from quitting work, even though they may want to,” McClanahan said.

How to earn $60,000, $70,000 and $80,000 in interest alone every year in retirement

If you’re forced to quit when you are not ready, it is crucial to connect with a financial planner to identify the sources of your cash flow, including assessing a strategy for collecting Social Security or making withdrawals from retirement plans.

“If they’re taking care of a loved one, that’s where it’s really important to look [for] any resources that the loved one who they’re taking care of can provide for them to soften the blow,” McClanahan said.

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