Retirement at 65 was never based on biology or a scientific determination that people become “old” at that age. Instead, it gradually became institutionalized through government programs such as Social Security and Medicare. The median retirement age is currently 62, but a clearer picture of retirement emerges from dividing retirees into three cohorts:
- Early Retirees (20%-30% of retirees): Primarily in the 50-60 age group, but with an increasing number of very early retirees, many of whom are associated with the Financial Independence, Retire Early Movement (FIRE).
- Traditional Retirees (40%-50% of retirees): Retirees in the 61-67 age group represent the largest cohort, but it is no longer sufficiently dominant to define a “standard” retirement age.
- Longevity Workers (20%-30% of retirees): The 75+ workforce is the fastest growing of all demographics.
Early retirement Surveys show that the median retirement age of 62 compares to expected and/or desired retirement at 65. Many are forced into early retirement due to life circumstances such as health problems, caregiving responsibilities, layoffs or difficulty finding work, physical demands of certain occupations, or burnout. Definitive statistics are not available, but many of the people in this category have not accumulated sufficient assets to retire comfortably and will therefore struggle financially.
At the other end of the spectrum are, among others, entrepreneurs, beneficiaries of corporate buyouts, and successful investors. There are also participants in the FIRE Movement whose members save as much as 50%-75% of their income with a goal of making work optional as early as possible. There are four forms of FIRE:
- Lean FIRE: Retiring early with a modest savings target which translates into living on a minimalist budget.
- Fat FIRE: Retiring with a luxury lifestyle that requires a large portfolio.
- Barista FIRE: Leaving one’s main career but working part-time for social interaction or for extra income.
- Coast FIRE: Saving aggressively early in a career to build sufficient assets for retirement. Once this goal is achieved, an individual only needs to earn sufficient income to cover current expenses. This provides the freedom to make alternative future career choices such as working part time, joining a non-profit, starting a small business, consulting selectively, or taking a less stressful role.
From a behavioral perspective, the Coast option may be the best choice for many FIRE members because it preserves the benefits of work while providing considerable flexibility.
Post 65 retirement Some people postpone retirement due to financial pressures while others continue working because it contributes to life satisfaction and good mental health. Negative factors include healthcare costs, insufficient savings, and the decline of traditional pensions. On the other hand, work preserves purpose and identity, maintains social connections, keeps the mind and body engaged, and aligns later life with the reality of extended life expectancy.
Conclusion Retirement is becoming less age-driven and more circumstance-driven. The future of retirement is a personalized transition shaped by health, longevity, financial preparedness, and purpose. Therefore, retirement planning is shifting from a focus on a particular age to planning for multiple possible paths. A few of the implications of this shift are:
- Career paths become less linear
- Employers must face a multi-generational workforce
- Retirement success is about a great deal more than money
The challenge is no longer deciding when to retire, it is about building a life that works whenever retirement arrives.