One thing that almost the entire workforce has in common is the desire to retire. While there are undoubtedly exceptions like Warren Buffett, who is finally retiring at the ripe old age of 95, many professionals eagerly await the day when they can relax 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 is aiming for an earlier retirement age, a Manulife John Hancock report released Tuesday shows.
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Generation Z believes the ideal retirement age is 59, much lower than other generational groups: millennials believe 61 is ideal, Generation X aims for 64, and baby boomers say their ideal retirement age is 67, according to the report.
The results are based on a survey of more than 2,500 Manulife John Hancock retirement plan participants and U.S. retirees conducted between May 9 and June 2. Even the company responsible for the study called this trend “surprising” in its report.
But just wanting to retire at a certain age doesn’t correspond to reality. The report also illustrates the mismatch between the expected retirement time and workers’ preparation. In other words, workers may want to retire early, but there’s a good chance they won’t be financially prepared to do so.
“Our surveys over the past decade show that Americans continue to feel the pressure of rising costs and competing financial priorities, which has impacted their confidence in retirement planning,” Wayne Park, CEO of pension company Manulife John Hancock, said in a statement.
That said, the study shows that although Gen Z wants to retire in their 50s, they understand that may not happen. The report shows that Gen Z expects to retire eight years later than they would like, at age 67, while millennials, Gen X and baby boomers expect to retire at 69.
Why Americans Can’t Afford to Retire Early
Americans struggle to close the gap between the retirement age they want and when they are actually able to retire for several reasons.
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The first is that they are not saving enough. An October report from retirement planning firm TIAA shows that nearly two-thirds of Americans say the dream of retiring between ages 65 and 70 is “unattainable,” with many planning to work until they physically can no longer.
“Americans clearly want peace of mind in retirement, but the reality is that many people are not saving enough or are not confident in their ability to plan,” Kourtney Gibson, CEO of Retirement Solutions at TIAA, said in a statement.
The TIAA study shows that 20% of Americans are not saving anything for retirement. And another recent report from TD Bank shows that a third of Americans are not setting aside money for retirement.
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Meanwhile, we are living in an economy marked by inflation, debt and increased expenses. House prices have risen by around 50% since 2020, food prices are expected to jump by 50% to 100%, and wages have not yet kept up with inflation. Even people with six-figure incomes are feeling the impact and cutting back on spending to offset rising costs.
People close to retirement also face challenges of their own, including premature Social Security claims: If you retire at the earliest possible age (62), it can result in up to 30% lower monthly benefits compared to waiting — ultimately reducing long-term financial security.
The TD Bank report also showed that more than half of Americans do not participate in retirement savings plans at work, causing them to fall further behind.
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The case for working longer
Some of the world’s most successful entrepreneurs have worked well beyond 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 only started feeling old recently, crediting “Lady Luck” for his long and prosperous career.
“I got old late — its onset varies a lot — but once it shows up, there’s no denying it,” he said. “To my surprise, I generally feel fine. Although I move slowly and read with more difficulty, I am in the office five days a week, where I work with wonderful people. Occasionally, I have a useful idea or receive a proposal that we might not have otherwise.”
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Media mogul Rupert Murdoch has also not officially resigned as chairman of Fox Corp. until he was 92, although he still remains influential in the industry at 94. Henry Ford, founder of Ford Motor Co., also worked until his 80s and Sam Walton, founder of Walmart, retired at 70.
“High expectations are the key to everything,” Walton said.
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