As of 2022, the average retirement age in the U.S. was 61, according to a Gallup Poll. But you may be making plans to leave the workforce at a much later age than that.
Given an increase in life expectancies, it's not a bad idea to aim to retire at age 70 instead of planning to do in your mid- or even late 60s. In fact, retiring at age 70 offers a number of benefits.
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For one thing, it gives you an opportunity to add to your retirement savings , something that's important to do if you feel you're behind. It also allows you to stretch your existing savings further.
Plus, if you were born in 1960 or later, your full retirement age for Social Security purposes is 67. This means that 67 is when you can collect your complete monthly benefit based on your personal income history.
But for each year you delay your Social Security claim past full retirement age, up until age 70, your monthly benefit grows 8%. So retiring at 70 could mean making it possible to lock in a larger Social Security check each month for life.
But while it's a good idea to aim for a retirement at age 70 in theory, in practice, things may not work out as planned. And it's important to recognize that early on.
You need a backup plan
It's one thing to say you'll keep working until age 70. It's another thing to actually be able to do that.
Unfortunately, you never know when health issues might make it impossible to hold down a job. And those health issues don't even have to be yours. If your partner falls ill or ends up needing a full-time caregiver, you might have to step up.
You also can't assume that you won't be forced out of a job before age 70. It's completely illegal to discriminate against older workers because of their birth year or to push aging workers into retirement when it's not something they want. But it's also very hard to prove that age discrimination is taking place.
For these reasons, retiring at age 70 is not something you want to bank on. It's OK to have that goal, but you should make sure you're equipped to retire at a much earlier age just in case that ends up happening.
Set yourself up to retire earlier
Because you never know when you might be forced to retire, it's important to save for your senior years consistently throughout your career. Don't just wait until you're 50 or older to make catch-up contributions to your IRA or 401(k) plan. If you wait that long but end up having to retire at 60, that's not a lot of time to add to your savings.
At the same time, make sure to invest wisely to maximize your savings' growth while limiting your risk. Don't shy away from stocks when you're in the process of accumulating retirement wealth. But also, don't assume you'll be able to stay invested in stocks for much of your 60s.
If you're forced to retire at 62, at that point, you'll need to scale back on stock holdings. Actively research other assets that have the potential to produce decent returns but that don't come with the same risks that stocks do. Municipal bonds, or bonds in general, might fit the bill.
In an ideal world, you'd be able to retire exactly when you want to. But things can happen. So while it's certainly not a bad thing to plan to retire at 70, you should also make sure you're in a good position to retire much earlier if need be.
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