Our latest Wells Fargo/Gallup Investor and Retirement Optimism Index results were at a 16-year high, climbing 30 points to an index score of +126. It’s great to see that renewed optimism. On the topic of retirement age, though, there’s room for improvement. We found that only 28% of those not yet retired had given a lot of thought to the best age they should retire. On the other end of the spectrum, 42% of investors had given it little thought or no thought. 

Retirement may be decades away for some or just a few months from today for others. For most, retirement is this vague event that happens sometime in the future, not really an item for today’s agenda. 

Just as a specific age is important for other milestones in life—driving, voting, joining the military—it’s also important for retirement. As the saying goes, if you aim at nothing, you’ll hit it every time.

We also asked retirees when they started giving their future retirement age serious thought and the average age was 44. Just under a third, 28%, started to think about their best retirement age before they hit their 40s and then another 20% focused on it in their 40s. To our surprise, 25% waited until they were in their 50s and 16% even waited until in their 60s before thinking about the best retirement age for their situation. It’s likely there could have been other pressing financial matters—unsettled economic environment or paying down debt—but we advocate for longer lead times in preparing for retirement, whenever possible. The earlier you start planning your retirement age, the more time you have to shape a retirement age on your terms.

Planning with a retirement age in mind can help influence today’s money decisions. A small majority of investors (54%) agreed that knowing the age they were going to retire would influence their financial behaviors, with 45% thinking retirement age wouldn’t make a big difference in their financial choices.

 Investment decisions—building a portfolio that combines more or less growth and stability—flow from setting a target retirement age. Big purchases or home projects should be factored into a retirement goal. Even budgeting and daily spending decisions can be affected by a target retirement age. Some trim back their budget a few years prior to retirement to boost long-term savings or to perhaps test the waters for how doable it is to live on less income.    

Getting to ‘the number’

We were curious how people arrived at their best retirement age, knowing there are many tools and resources available. In our recent survey, we gave investors seven different steps to choose from, asking them to indicate which steps they had taken in the process. 

Here are the results:

·       63% discussed it with friends and family

·       59% estimated their retirement income using different retirement age scenarios 

·       51%  manually crunched the numbers

·       50% used online tools to estimate their retirement income

·       47% talked with a professional financial advisor about it 

·       44% read up on retirement-age considerations in financial publications 

·       30% reviewed their options for retirement age on the Social Security Administration website

It’s great to see people are both including those closest to them and taking advantage of technology tools to arrive at their retirement age. Education is another component that showed up strong. This kind of information can take many forms, from messages that come as part of your 401(k) plan to online financial publications or commentary.

We encourage everyone to include mapping out your target retirement age as part of your long-range financial planning journey. The earlier you can zero in on that age, the better opportunity you will have to customize and later adjust your retirement planning approach to reach your goal.