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Americans Hope to Stop Working at Age 62

Gone are the days when someone worked for the same company for 35 years and then retired with a gold watch and a pension. The work world is vastly different in the 21st century, but most people still look forward to the day they no longer have to work.

In a recent survey from Natixis Investment Managers, the average age Americans said they hope to stop working is 62 years old. Younger respondents hoped to retire earlier while older respondents said they planned to work longer. The age someone wants to retire is an important aspect of estate planning. According to the survey, the age people plan to retire breaks down as follows:

  • Generation Y (ages 25 to 40) plan to retire at an average age of 59.
  • Generation X (ages 41 to 56) expect to retire at age 60.
  • Baby Boomers (ages 57 to 75) said they’ll work until 68.

Plans and hopes aside, when someone can retire is determined by their financial and health situations, among other factors. One thing is certain: You should prepare for retirement long before you plan to stop earning an income.

Prepare Financially for Retirement

How confident someone is that they will be financially secure for retirement varies. In this same Natixis survey of nonretired U.S. investors, 88% of Generation Y believe they will have the money to retire. The confidence level decreases with age. About 82% of Generation X believe they will be financially secure while 79% of Baby Boomers feel that way. Three retirement questions remain on most people’s minds:

  • When am I going to retire?
  • How much money am I going to need?
  • How long will the money need to last?

How much money you will need to comfortably retire depends on your definition of comfortable. Will you want to travel? What type of home do you want? What hobbies do you want to continue or start? If you want to have the same lifestyle you enjoyed while in the workforce, some experts say you will need 80% of your pre-retirement annual income.

An estate planning tool that can provide income in your retirement is a living trust. You can place stocks, real estate, life insurance, securities, retirement accounts, bank accounts, and more into a living trust. With the help of an attorney, you can name yourself as the grantor and trustee, enabling you to maintain decision-making control over the assets in the trust. You can take distributions to help fund your retirement lifestyle.

Maximizing your contributions to 401(k)s, IRAs, and other pre-tax accounts will create a stronger foundation for your future retirement. Saving in post-tax accounts is important, too.

If Social Security will be an important component of your retirement income, waiting until you are older to claim the benefit means a fatter monthly check. Those who take the benefit as early as 62 will have their monthly benefit permanently reduced. Those waiting until 70 will have the biggest monthly Social Security benefit.

Prepare for Potential Health Challenges

Not only can estate planning better set you up for retirement, but it will also be beneficial if you should need long-term care or become incapacitated. Your estate plan should consider all possibilities. According to the National Council on Aging, 80% of older Americans are living with at least one chronic illness. Other health statistics include the following:

  • 26% of seniors have diabetes
  • 14.2% of seniors have COPD
  • 11.3% of seniors have Alzheimer’s

No one relishes the thought of being physically or mentally incapacitated but preparing for that potentiality is important. A comprehensive estate plan can include elements to protect you should your health decline:

  • Revocable Trust: Revocable trusts allow you to make changes until your death. A trust can help your heirs avoid probate and eliminate will contests. Importantly, the trust can protect your assets while you are still living. Technically the trust, not you, owns its contents. Your assets are then minimized to help you qualify for government benefits. Homes, cars, bank accounts, investments, and other valuables can be placed in the trust.
  • Durable Power of Attorney: When you name a power of attorney, you are giving another person the authority to make decisions on your behalf. You can identify circumstances in which power of attorney goes into effect. Without a named power of attorney that you approve, the court could name a conservator or guardian if you become incapacitated.
  • Health Care Proxy: The powers of a health care proxy are limited to only making decisions regarding your health should you be unable to do so. Like the power of attorney, you should choose someone you trust to be your health care proxy. Fully discuss with them your care preferences.
  • Long-Term Care/Medicaid Planning: A goal of long-term care planning is to provide you with the best services available. The plan should also preserve your assets while removing the burden of caregiving from relatives. Strategies include converting non-exempt assets to exempt assets, purchasing annuities and long-term care insurance, and gifting.

Taking steps now can put you in the driver’s seat of what happens should the day come when you are unable to make decisions for yourself or need more comprehensive daily care.

Use Estate Planning to Prepare for Retirement

Whether you are newly married and in your 20s or in your 60s and eyeing retirement, any time is right to create an estate plan. Without legal documents stating your wishes, the courts can determine who makes decisions for you and who inherits your assets. Estate planning gives you control in both life and after you are gone.

The attorneys at Percy Law Group, PC, can create an estate plan that is personalized to your needs and concerns. We’ll use our vast experience to draft effective estate planning documents and recommend cost-saving strategies for even the most complex estates.

Begin your estate plan with a free consultation. You can schedule by calling (508) 206-9900 or submitting our online form. We can meet with you in our office or at your home. We can also meet you at a nursing home or hospital.