A graphic showing both the official and average retirement age in countries around the world. Sneak Peek: The US compares poorly. You may want to find a different group to use for comparison.
I came across an intriguing graphic which compiles both the official retirement ages as supported by government programs as well as the actual average retirement age (greater than 50% of the age cohort is retired) in different countries. Compiled by Aperion Care, it makes for a fascinating afternoon study.
Click on the image and you will be taken to the interactive version of their map, which will provide more detail by country.
(Note: The image’s legend says “Average Age of Retirement” but it’s clear from clicking through the map it is actually intended to be “Official Age of Retirement”)
You will probably have noticed that North America is one giant swatch of dark orange. That means we lag most of the world, even many developing countries in terms of both official and average retirement age. Here’s a quick play by play:
|Country||Official Retirement Age||Average Retirement Age|
- People in countries like China and Australia are retiring almost a full decade earlier than the average American
- In the case of Australians, they seem to be doing it without depending heavily on government programs (i.e. they are retiring years ahead of full government payments and supporting themselves on their own)
- Even countries squarely defined as developing countries are able to have to their average citizen retire 3-5+ years ahead of their American counterparts
I look at this data and several things come to mind.
What’s Australia’s Secret Sauce?
I want to know what secret the Australians have, because an average retirement age which outpaces the the official retirement age by almost a decade suggests some pretty insane saving or financial management skills or programs. No huge insight as of yet to share, but I highlight it as an example of exactly the kind of data that piques my interest and leads to further inquiry in case it could yield some new gem or tactic I think I can apply in my own life.
The “Average” Comparison Is Powerful…And Sneaky
More importantly, this information is a stark reminder that we live in a bubble that encourages us to be complacent about our financial lives.
The US is not a leader in the world when it comes to early retirement success outcomes. If you are listening to average advice about what’s “reasonable” to do each year in preparation for retirement, you’re going to get an average outcome. That outcome is retirement at age 63.
In order to have an above average outcome compared to your peers, you need to put in an above average effort. So if you’re not happy with the idea of an average retirement at 63, you’d better be doing better than the podunk advice to have a 3 month emergency fund and put away 5-10% of your income.
One of the biggest roadblocks to going the extra mile is that it seems so freaking hard. You look at your colleagues at work, or your friends with their brand new Suburban and weekly meals out, and you think, “they’re not sacrificing, why should I?”
But what’s “reasonable” is relative. The average Chinese household saves 30% of its income. And it shows in the fact they retire almost a decade earlier than their American counterparts. Meanwhile, the average family likely feels less “deprivation” as they look around and seeing everyone around them doing the exact same thing.
Change Your Average – Find A New Comparison Group
You can create this environment for yourself by supplementing your environment with more folks who think and act the way you want to perceive as normal. Perhaps your current friend group doesn’t really save or talk about finances. That’s cool. Find a few friends that are interested in the subject. Go online and join forums and blogs if there is no one locally that wants to talk shop with you. Make it easier for yourself to build good habits by changing your comparison group and thus your definition of what’s “average” and reasonable.
What Can I Do Today?
If you’re not happy with the status quo and want to do something today to pull ahead, there are a ton of possible places to start.
- Spend a few minutes doing an inventory of how your pay compares to your field and evaluate how you can get a 30%+ pay raise.
- Evaluate whether you can save thousands by revisiting your mortgage strategy.
- Audit your spending with this quick test and start practicing this one strategy before purchases.
- Start a side hustle, either my favorite: blogging, or various on-demand side gigs that have low activation energy.
- Make sure you’re tracking the things you care about by getting your finances in a single, free dashboard like this one.
Are your financial habits “average” compared to your current friend group? Are you happy with that level? Any other takeaways from the chart that you would call out?