The average age that Americans plan to retire is 62, down from 64, when MassMutual conducted its last State of the American Family Study. Forty percent of Americans plan to retire before the age of 60, up from 32% five years ago. Only 22% plan to retire after age 65, down from 30% in 2013.
However, only 56% of people have calculated how much income they need to retire. In 2013, that figure was 61%.
“There is greater optimism about retirement and people’s ability to retire sooner rather than later, which may be attributed to the growth in the financial markets and a spike in Americans’ retirement savings during the past five years,” says Tom Foster, national spokesperson for MassMutual’s Workplace Solutions unit. “However, many Americans may have a false sense of security when it comes to being ready to retire.”
Eighty-four percent of those surveyed own a retirement product, such as a 401(k), 403(b) or individual retirement account (IRA). Five years ago, only 82% owned such a product.
Forty-seven percent of those surveyed said they were confident about being able to retire, up from 45% in 2013. However, 35% worry about outliving their retirement savings, up from 33% five years ago.
Citing data from the Employee Benefit Research Institute, MassMutual says the average 401(k) balance in 2016 was $75,384, up from $72,383 in 2013. Among those who saved consistently during those years, the average balance was $167,330 in 2016, up from $121,152 in 2013.
“We urge pre-retirees to calculate their projected income and expenses in retirement before taking the plunge, to ensure they are financially prepared for retirement,” Foster says. “While 401(k) balances are healthier than they were five years ago, they may not necessarily be sufficient to support the income needed for so many early retirements. Look before you leap.”
Isobar conducted the online survey of 3,235 Americans with household incomes of more than $75,000 for MassMutual in January and February.