20 States with Lowest Average Retirement Age in the US

Ghazal Ahmed

Sat, Dec 9, 2023, 1:33 AM10 min read

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This article takes a look at the 20 states with the lowest average retirement age in the US. If you wish to skip our detailed analysis on retiring early, you may go to 5 States with Lowest Average Retirement Age in the US.

On Retiring Early

Examining the March 2022 Current Population Survey by the U.S. Census Bureau reveals an important detail: Social Security is helping lift 15.4 million individuals aged 65 and above, out of poverty. However, given the shaky future of these funds, policymakers are adamant on pushing Social Security’s Full Retirement Age (FRA) to 70 and beyond. As per the proposal, individuals born in 1978 or later would experience a full retirement age of 70.

The retiring of the Baby Boomer generation is, in large part, to blame for this retirement crisis. With this generation leaving the workforce by the droves, both Social Security and Medicare are under immense stress. The simultaneous decrease in the workforce, coupled with an increased demand for healthcare and pension benefits, is further creating a precarious imbalance. As a result, policymakers face the daunting challenge of ensuring that these social safety nets remain sustainable, facing backlash in the process.

The US, however, isn't the only country that has been proposing to increase its retirement age. As of 2020, the average retirement age in the world was equal to 64.2 years for men and 63.4 years for women. According to the OECD, numerous developed countries with aging demographics are expected to witness a two-year rise in the average effective retirement age by the mid-2060s. Currently, the full retirement age in the USA is 67 for those born in 1960 and later. At this age, workers are entitled to receive 100% of the benefits that they have earned. However, provided the FRA is pushed to 70, new retirees will have their average lifetime benefits cut by nearly 20%.

Regardless, there are many people who choose to retire before the full retirement age. According to The Charles Schwab Corporation (NYSE:SCHW), the magic number needed to last a comfortable retirement is $1.8 million. However, Credit Karma notes that 27% of seniors aged 59 or older have no retirement savings at all. Having zero savings is a major reason many retirees don’t wait until the full retirement age. A Schroders study backs up this claim, stating that 36% of those surveyed said that they'd need the money way before they turn 70. Unsurprisingly, 44% are also of the view that the funds won't last so it's better to grab what's left.

As such, retirees are witnessing a new strategy to work for themselves post-retirement. According to a study by T. Rowe Price Group, Inc. (NASDAQ:TROW), many retirees are choosing to work part-time as part of their transition strategy. This is, in fact, a brilliant money move baby boomers are making in retirement. The study reveals that 57% of retirees wish to continue working in some form after retirement, as opposed to the 43% who wish to stop working once and for all.

"Many retirees either choose to work or need work to be included in their retirement lifestyle. The decision can have many powerful positive effects, not least of which is financial well-being.”
- Judith Ward, CFP?, a thought leadership director at T. Rowe Price Group, Inc. (NASDAQ:TROW).

Rowe Price Group, Inc. (NASDAQ:TROW) also notes in their survey that out of those individuals who consider themselves retired, 20% work either full-time or part-time, and 7% are reportedly looking for work. However, The Charles Schwab Corporation (NYSE:SCHW) informs retirees that returning to work after retirement can temporarily reduce social security benefits and Medicare. The benefits are recalculated and credit is provided for the months in which the benefit wasn't received.

With the average retirement age in the US being 64 years, those retirees who think they’ve made a mistake by retiring early and settling for a smaller social security check, there is another way out. In such a case, individuals who have taken their benefits early at a reduced rate can pay back to the government and start later with a higher payout, notes The Charles Schwab Corporation (NYSE:SCHW).

While discussions on proposals to raise the retirement age persist, many seniors are still opting for early retirement due to insufficient savings, health concerns, and various other factors. On that note, let’s check out where retirees, on average, are retiring the earliest.

20 States with Lowest Average Retirement Age in the US

Sean Pavone/Shutterstock.com

Methodology

To compile the list of states with the lowest average retirement age in the US, we began by listing out all the states along with their average retirement ages. These ages have been sourced from Madison Trust. For each state, we have also discussed the average social security check that a retired individual receives, as well as the estimated annual cost of retirement. The former has been sourced from our list of the highest average social security payments, while the figures for the annual cost of retirement have been taken from GoBankingRates.

States have been ranked in descending order from the highest to the lowest average retirement age. For states with the same average retirement age, tie-breaking has been done based on the annual cost of retirement required in each state, with lower expenses being ranked higher on our list.

Here are the states with the lowest average retirement age in the US: