If you have socked away money in a 401(k) and your 60th birthday is behind you, chances are you are thinking about when to retire.
Chances are, too, that you are planning to retire sooner rather than later. The average retirement age seems to have stabilized at 62 for women and 64 for men, according to new research from Boston College’s Center for Retirement Research. But retiring too young can be very harmful to your financial health, the study found, and older workers would do well to hang in a bit longer.
Continuing to work reduces the amount of time when people need to live on their savings. It can also lead to more guaranteed retirement income. “An individual who delays claiming Social Security from age 62 to age 70 receives a monthly benefit that is 76 percent higher,” said Alicia Munnell, director of the center.
The retirement age is stabilizing largely because the forces pushing it higher have been played out. Consider the shift in retirement plans, for example. In 1979, 74 percent of workers participating in retirement plans had a defined benefit pension that would provide a fixed income stream, according to Labor Department data.
As more workers became responsible for generating their own retirement income through 401(k) accounts and the like, older workers started putting off retirement. The center found that workforce participation rates for men and women age 55 to 64 started gradually increasing in the mid-1980s.
“Studies show that workers covered by 401(k) plans retire a year or two later on average than similarly situated workers covered by a defined benefit plan,” the study found.
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