In a recent study conducted by the financial services company Empower, it was reported that the average American believes the retirement age should be 58 years old instead of 67. The study, which included responses from more 1,000 Americans 18 and up, also revealed that people think they should start saving for retirement at age 27 and be debt-free by the time they’re 41. But for millions of us, that’s not happening. Keep reading to discover why and to learn how you can get on track to save for retirement and be debt-free.
Why Americans say 58 is the ideal retirement age
So why is the retirement age 65 anyway? It goes back to the 1930s, what 65 was the standard retirement age for Americans. Over the years, though, the retirement age has risen, based on factors like cost of living, life expectancy and more. Currently, in the United States, the standard retirement age for people born in 1960 or later is 67. For those born before that, it’s 66 years old.
Many of us want to retire early, though—and some do — but according to experts, doing so can sometimes be worse for you in the long run.
Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners, told CNBC that if you do retire early, “You may end up coming up short [or] not having enough money” to live the life you want to live.
And according to the Empower study, “Close to half [or 45% of people] wish they had started saving earlier,” because they severely underestimated the cost of retirement. And even those who did save say they misjudged “the costs of major life events” and wish they could have had more saved in their emergency fund to help cover the costs.
A survey conducted by Northwestern Mutual found that Americans believe they need around $1.26 million to retire comfortably, and according to the Empower study, people believe they need to start saving for it by the time they’re 27 years old. Financial planners suggest doing so by enrolling in their company’s 401K plan or by creating a traditional Individual Retirement Arrangement (IRA) or a Roth IRA.
Expert advice on how to get out of debt and start saving for retirement
Many people don’t start saving for retirement early because they need that money to help pay for other everyday expenses like groceries, car payments, mortgages, credit cards and student loan debt—all of which do get more expensive over time, thanks to factors like tariffs and inflation.
To help fight this, and ensure that you can pay your bills and save for retirement, experts recommend creating a budget and sticking to it.
“Assuming someone has sufficient income…but consistently carries a credit card balance, that indicates there may be some mental blocks or emotionally driven behaviors behind that overspending habit,” Eric Roberge, a certified financial planner and Founder of Beyond Your Hammock, told Investopedia in July of this year.
“If a client has high-interest-rate debt of 10% or more, we typically create a plan that prioritizes paying that down as quickly as possible. [And] it’s rare that we’d advise stopping all contributions to retirement accounts.”
Another option to help you get out of debt and save for retirement is to meet with a financial expert at your bank and see what they recommend. They most likely will be able to offer you a plan that details how much you should put in your retirement fund and how much money you should put toward paying off your debts, allowing you to get back on track when it comes to your financial goals.
