The dream of retiring early has been around for decades -- many of the ideas behind it come from the 1992 book Your Money or Your Life. In recent years, online communities have popularized what's now known as the FIRE movement, with FIRE being short for "financial independence, retire early." One financial independence subreddit currently has 2.2 million members.
It's understandable why the movement appeals to so many people. Being able to call it quits on a career at a young age gives you more time to enjoy life, without the daily grind of working for a living. But how many people actually make it happen? Here's the answer.
Only a small percentage of Americans retire early
Few Americans retire early, but the exact amount depends on your definition of early retirement. Here's the percentage of retired Americans in four age ranges, according to retirement data from 2016 to 2022 gathered by The Motley Fool:
- 40 to 44: 1%
- 45 to 49: 2%
- 50 to 54: 6%
- 55 to 59: 11%
So, if you count early retirement as retiring in your 30s or 40s, that's rare. Only 1% of Americans from 40 to 44 are retired, and only 2% of those from 45 to 49. We don't have data on how many people in their 30s are retired, but it's presumably far less than 1%.
If you want to retire in your 50s, that's more common, although still far from the norm. Even among Americans who are 55 to 59, only a few years away from claiming Social Security, about 9 out of 10 are still working.
Early retirement hasn't become more common, despite its increased popularity. In fact, it's less common than it used to be. From both 2002 to 2007 and 2008 to 2015, retirement rates were higher among people in their 40s and 50s.
What does it take to retire early?
Early retirement and traditional retirement have the same ultimate goal: Save enough money to last you the rest of your life. The difference is that early retirement involves doing it much sooner. For that reason, the FIRE movement is all about maximizing your savings rate -- the portion of your income you save and invest.
For most people, a savings rate of 15% to 20% is a smart goal. Early retirees typically save at least 25%, and often much more. Some manage to save 50% or more of what they make.
It's hard to reach and maintain these kinds of high savings rates. The people who do it usually either earn a large income, cut back heavily on spending, or both. You'll have a much easier time if you earn a high income. If not, you can still do it, but you'll need to be strict about how much you spend.
Save for retirement, but make sure to enjoy the present
Everyone needs to plan for retirement. If you'd like to retire earlier than most, then you'll need to save accordingly.
Be careful not to let goals of early retirement ruin your quality of life in the present. Some people practice extreme frugality, cutting practically everything they don't need to raise their savings rate. There are even those who live in vans so they can save on rent.
You don't need to cut spending relentlessly to save for retirement. There are other ways to speed up the process, including:
- Invest heavily in the stock market. Historically, the stock market has an average return of about 10% per year. Make sure to invest in stocks with most of your portfolio to maximize growth.
- Save through tax-advantaged retirement accounts. Anyone can open an individual retirement account (IRA), and you can deduct contributions from your taxable income. If you meet the income limits, you could also open a Roth IRA, which allows you to make tax-free withdrawals in retirement (but doesn't allow you to deduct contributions on your taxes).
- Make the most of your 401(k), if your employer offers one. Another popular way to save is a 401(k), a workplace retirement plan. Many employers will even match contributions up to a certain amount, so take full advantage if yours does.
- Increase your income every year. If you want to increase your savings rate, the best option is making more money. Negotiating a raise, finding a new job, and starting a side business are all options that can help you earn more.
There's nothing wrong with being careful about your spending, within reason. But it doesn't make sense to spend years suffering, just so you can retire as soon as possible. It's better to take a more balanced approach. Find a plan that works for your retirement timeline and allows you to enjoy life in the here and now.
FAQs
Between 2016 and 2022, only 11% of Americans retired between ages 55 and 59. This was a decrease from the prior period (2006-2015) when 15% retired between ages 55-59. While it's definitely possible to retire at age 55, it's not the norm, as the average age for retirement in the US was 61 in 2022.
What percent of Americans have enough to retire? ›
The median retirement savings for American households is $87,000. Median retirement savings for Americans younger than 35 is $18,800. 67% of Americans have a retirement account but only 34% feel on track for retirement.
How many Americans have $1,000,000 in retirement savings? ›
As of June, there were roughly 497,000 so-called retirement-created millionaires in the U.S., according to the wealth management firm, which analyzed balances across 26,000 of its customers' accounts. Nearly 399,000 Americans also have a least $1 million in an individual retirement account.
How much does the average 60 year old American have saved for retirement? ›
When the Federal Reserve looked at how much money Americans have saved for retirement, it found a mid-range of around $185,000. This is the most representative number for how much a mid-range U.S. household has saved by age 60.
What is the realistic age to retire? ›
When asked when they plan to retire, most people say between 65 and 67. But according to a Gallup survey the average age that people actually retire is 61.
Is it true the earlier you retire the longer you live? ›
Those retiring at age 65 or greater have an 11-percentage-point greater probability of surviving to age 80 than those retiring at exactly age 62.
How many Americans retire with no money? ›
20% of adults ages 50+ have no retirement savings, 61% worry they won't have enough at retirement, as per new AARP survey. Plus six tips to start saving now.
What does the average US citizen retire with? ›
What are the average and median retirement savings? The average retirement savings for all families is $333,940, according to the 2022 Survey of Consumer Finances. The median retirement savings for all families is $87,000.
How many people have $100,000 in retirement? ›
14% of Americans Have $100,000 Saved for Retirement
Most Americans are not saving enough for retirement. According to the survey, only 14% of Americans have $100,000 or more saved in their retirement accounts. In fact, about 78% of Americans have $50,000 or less saved for retirement.
How much do most people retire comfortably? ›
Average retirement savings by age
| Age | Average retirement savings (2022) | Median retirement savings (2022) |
|---|
| 45 to 55 | $313,220 | $115,000 |
| 55 to 64 | $537,560 | $185,000 |
| 65 to 74 | $609,230 | $200,000 |
| 75 or older | $462,410 | $130,000 |
2 more rows6 days ago
People in their 20s and 30s should target net worth of $100,000 to $300,000. A net worth of $1 million or more should be the goal in your 40s and beyond. A seven-figure net worth is usually necessary to ensure a comfortable retirement.
Are most retired people millionaires? ›
Only one in six Americans retire as millionaires. Achieving such savings is a gradual process that typically involves starting early and leveraging the benefits of compound interest.
What is considered a good monthly retirement income? ›
The ideal monthly retirement income for a couple differs for everyone. It depends on your personal preferences, past accomplishments, and retirement plans. Some valuable perspective can be found in the 2022 US Census Bureau's median income for couples 65 and over: $76,490 annually or about $6,374 monthly.
What is the average social security check? ›
Average Social Security payments
Social Security payments vary widely from person to person, but the average monthly payout as of September 2023 is just under $1,707, while the maximum payment—for someone whose annual career earnings average $160,200 or more and retires at full retirement age—is $3,627.
Is it realistic to retire early? ›
Retiring early sounds great to most people. But for many, it's not possible. If you're lucky enough to have control over when you retire, it's worth thinking through the pros and cons before you make any decisions. Even if you can afford to retire early, you might not want to.
What percentage of people wait until 70 to retire? ›
Research has found only about 8% of beneficiaries delay until age 70, the highest possible age to claim benefits, according to Ghilarducci. Because Social Security benefits are one of the few sources of guaranteed income for many retirees, having smaller monthly checks can make them more financially vulnerable.
What percent do you lose by retiring early? ›
A worker can choose to retire as early as age 62, but doing so may result in a reduction of as much as 30 percent. Starting to receive benefits after normal retirement age may result in larger benefits.
Is retiring at 60 too early? ›
Retiring at 60 is a goal within reach, but it requires careful planning and regular reassessment of your financial strategy. Start planning today to ensure you can enjoy your retirement comfortably.
