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Dream Again

When do you plan to retire?

You probably have a pretty good idea of when you want to retire. And judging from the results of our survey of those age 50 and older[1], it's likely between the ages of 65 and 67.

Age Participants Plan to Retire
Before age 57 Age 57-59 Age 60-64 Age 65-67 After age 67 Don't plan to retire Don't know
1% 3% 23% 33% 20% 4% 17%

In general, that's a good range to target. Age 65 has long been considered a typical retirement age, in part because of rules around Social Security benefits. In 1940, when the Social Security program began, workers could receive unreduced retirement benefits beginning at age 65. In 1983, the rules changed to increase the Social Security full retirement age gradually from age 65 to age 67, beginning in 2000. Currently, the Social Security full retirement age is 66 for those born between 1943 and 1959 and 67 for anyone born 1960 or later.

Many retirement plans still define normal retirement age as 65 — meaning the plan must allow you to begin receiving benefits at age 65. Often, however, you can receive benefits earlier from a defined contribution plan like a 401(k) or 403(b), while you have to wait until the plan's normal retirement date to receive benefits from a defined benefit pension plan.

That said, there are reasons you may want to retire later. In fact, later retirement may be a new trend. In 2011, 14 percent of our survey respondents indicated they'd retire after age 67. That number jumped to 20 percent in 2012. The percentage of people retiring in the 60 to 64 age range dropped from 12 percent in 1998-1999 to just 7 percent in 2009-2010.[2]

If you need to keep working because you won't have enough saved, take steps now to increase your savings. Contribute the maximum to your employer's retirement plan and to any individual retirement accounts (IRAs).

Should you decide to keep working beyond your Social Security full retirement age, consider the potential impact on your benefits. For instance, while Social Security benefits increase by a certain percentage if you delay your retirement beyond full retirement age, that increase no longer applies once you reach age 70.

In addition, your Social Security benefits could be taxed if you claim them while still working. The tax rate is based on your provisional income, figured by adding your total taxable income (from wages, pension payments, dividend interest and other sources) with tax-exempt interest income (such as from municipal bonds) with 50 percent of your Social Security benefits. If your provisional income amount is between $32,000 and $44,000 (if you're married) or between $25,000 and $34,000 (if you're single), up to 50 percent of your Social Security benefit is subject to tax. Up to 85 percent of your benefit is subject to tax if the amount is over $44,000 (if you're married) or $34,000 (if you're single).

Create a strategy

Regardless of the age at which you plan to retire, it's important to create a strategy today.

Our retirement tool lets you enter your expected retirement date and other information to generate a personalized action plan. And don't forget — by reviewing your personal situation, a financial professional can help you set and work toward a target retirement age.


Pre-Retiree Participant Survey conducted by the Principal Financial Group, March 2012.

Action plan generated from online tool is a general self-help tool and is not intended to be a financial plan or investment advice from any company of the Principal Financial Group.

Insurance products from the Principal Financial Group® are issued by Principal National Life Insurance Company (except in New York) and Principal Life Insurance Company. Plan administrative services are provided by Principal Life. Securities are offered through Princor Financial Services Corporation, 1-800-247-1737, Member SIPC. Princor®, Principal National and Principal Life are members of the Principal Financial Group® (The Principal®), Des Moines, IA 50392.


Have a question? Call us at 1.800.986.3343

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