More than half of Americans now plan to retire before age 62, driven by a 'you only live once' attitude that emerged from the pandemic, according to research by the New York Federal Reserve. The study found that the expected retirement age has dropped significantly since March 2020, with only 46% of those under 62 now planning to work past that age.
In the six years before the pandemic, an average of 55% of Americans expected to work beyond 62. The Fed attributes this shift to a 'cultural shift characterized by a rethinking of the value of work' and a booming stock market that has boosted household confidence in their finances.
However, the Treasury warned last week that Social Security funding will run short by 2035, raising concerns about whether early retirees can afford to stop working. A separate survey by the Employee Benefit Research Institute found that the median retirement age for current retirees is 62, with less than a third working until 65 or later.
Financial planners caution that early retirement risks outliving one's 401(K) savings. Joel Schiffman of Schroder Investment Management emphasised the need for a solid retirement plan. Finance guru Dave Ramsey recommends creating a 'mock retirement budget' that excludes mortgage payments to ensure affordability.
