9 surprising retirement facts

Chances are, you’ve done some thinking about your retirement. Maybe you’re planning much-anticipated travel or meeting with professionals who can help you think ahead to live the way you want in retirement. While you’re exploring new opportunities for this next phase of life, consider these facts to help you prepare.

1. The retiring population is bigger than ever before

As baby boomers near retirement, it’s no secret that the sheer size of this generation will have a compound effect on Social Security and health care programs. In 2020, adults aged 65+ represented 17% of the population, according to the US Department of Health and Human Services Administration on Aging, and that number is expected to grow to 22% by 2040.¹

The vast size of this population and the uncertainty of government programs make it that much more important to build your own strong and independent financial position as you near your golden years.

2. Retirement can be challenging for older Americans

According to the US Department of Health and Human Services Administration, 9% of people age 65 and older lived below the poverty level and another 4.6% were classified as “near-poor” in 2020.² The primary driver for poverty among older Americans is out-of-pocket medical expenses and this burden is unfortunately often passed down to their families. No matter how far off retirement is for you, it’s never too early to start saving.

3. More than 10% of retirees rely on Social Security almost exclusively for income

As reported by the Social Security Administration, Social Security constitutes 90% or more of income for 12% of men and 15% of women who receive the benefits.³ Yet, benefits paid out have exceeded incoming funds since 2021, and it’s estimated that the Social Security trust fund will be depleted by 2033.⁴ If you have multiple sources of income, whether Social Security, retirement accounts, or others, take the time to understand your withdrawal choices. Tapping into those sources early gives you more money now but often means a decrease in the overall value of your payments. Conversely, delaying the start of Social Security past your Full Retirement Age (FRA) will earn you Delayed Retirement Credits for each month you delay up until age 70 when the benefit increase stops.

4. Your retirement portfolio may not sustain your retirement

The average retiree can expect to spend nearly two decades in retirement. The Administration on Aging reports that adults aged 65 have an average life expectancy of an additional 18.5 years: 19.8 years for females and 17.0 years for males.⁵ During this time, health care costs are one of the largest expenses for most people. According to the Fidelity Retiree Health Care Cost estimate, depending on health and location, a 65-year-old retiree in 2023 may need to have approximately $157,500 saved to cover health care expenses alone.⁶ So it makes sense that our study shows 51% of Americans’ top financial concern was having their retirement savings last as long as they need to.⁷

5. Your standard of living will likely change

Retirees are often prepared for a change in income level but may not be prepared to scale their lifestyle and living arrangements accordingly. As reported by The Administration on Aging, housing alone was a burden to 45% of older Americans in 2019 as they spent more than one-third of their income on housing costs.⁸

6. Retirement may impact your health

Retirement offers the promise of relaxation, but in reality, it delivers challenges to both physical and mental health. When you part ways with the working identity you knew for 40 or more years, you may not recognize your new personality in retirement. Completing routine household chores or working on new hobbies may only take up a portion of your time, so filling the rest of your days can be challenging. This takes a toll both mentally and physically. Your career likely required some degree of daily physical and mental activity, and it’s critical to maintain that level of activity, or even add to it, throughout retirement.

7. There are tradeoffs with retirement age and health care benefits

Retiring early in good health gives you more time and energy for new hobbies and it may help you budget your retirement savings for medical expenses. But Medicare eligibility doesn’t begin until age 65, and not many companies pay for retiree health insurance coverage. So some retirees seek out alternate employment. It’s worth considering that if you retire before your full retirement age but earn employment income, the Social Security Administration deducts $1 for every $2 you earn above the 2023 limit of $21,240.⁹ However, it may be worthwhile to work simply for the health care benefits. And no matter what, maintaining good health is the foundation of a fulfilling retirement.

8. More people are working during retirement

The Administration on Aging also reports that in 2021, 18.9% of Americans aged 65 and older were in the labor force, meaning about 10.6 million Americans aged 65 and over are working or actively seeking work.¹⁰ And the majority of these Americans are working for financial reasons. Our study shows that only 1 in 10 of the least financially confident Americans save between 11-20% of their income (recommended amount is 10-15%) compared to 26% of the most confident.¹¹

9. Everyone has different living situations in retirement

The Administration on Aging reports that only 49% of women and 72% of men aged 65 years or older live with a spouse or partner.¹² On the other hand, many retirees still have significant family responsibilities. In 2020, the Administration on Aging also reported that more than a million grandparents aged 60 or more were responsible for the basic needs of their grandchildren who lived with them.¹³ So as you plan for retirement, make sure you have the resources, both physically and financially, to take care of yourself and others.

Retirement is a goal for many but, preparing for it takes some work. Everyone’s situation is different, so a good first step is to reach out to a financial professional who can help create a retirement plan that works for you.