12 Things You Didn't Know About Retirement

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It's nice to get out of the rat race.

However, once you hit retirement you have to learn to get along with way less "cheese." With less than half of Americans having ever thought about how much money they need for retirement, it is clear that several people are still clueless about retirement. (See also: This Is the Basic Intro to Having a Retirement Fund That Everyone Needs to Read)

If you consider yourself a know-it-all in retirement matters, here is a list of 12 things about retirement that may shock you.

1. Some May Not Retire At All

If you think that most people retire at age 65, think again. Back in 1991, only about 11% of workers expected to retire after age 65. Fast forward to 2014 and 33% of workers expect to retire after age 65 and 10% don't plan to retire at all. Attitudes are changing and more Americans are considering semi-retirement during their golden years.

2. $1 Million Is Not Enough

For several years, financial advisors have used $1 million as a rule of thumb for your target retirement fund. As life expectancy improves, this target may be too low. With men and women reaching ages 84 and 86 respectively, $1 million nest eggs may run out. Considering a 4% annual withdrawal, a $1 million retirement fund may last you only about 25 years. The Social Security Administration projects that about 10% of 65 year olds will even live beyond 95.

3. Gen Y Needs to Save $2 Million

Here is some bad news for those born in the early 1980's and later. Many registered investment advisors recommend members of Gen Y have a retirement savings goal of at least $2 million. Inflation, higher student debt, more expensive health care, and longer life expectancy are major causes for this radical increase. The key to saving $2 million for retirement is starting early. Assuming a 7% average annual return, you'll need to save $510 per month if you start at age 20. If you start age 40, you'll need to put away $2,270 every month. (See also: Retirement Planning If You're Under 30)

4. Full Retirement Age Is 67

When reading the fine print from your retirement accounts, an age that appears a lot is 59 ½. This is the age at which most retirement accounts allow you to start taking withdrawals without any penalty. This is not the case for social security benefits. The full retirement age for those born 1960 and later is 67.

This means that if you decide to retire before age 67, you are entitled to reduced social security retirement benefits. For example, if you retire at 65, you get about 13.3% less than you would at age 67. On the other hand, if you decide to retire past age 67 you are entitled to delayed retirement credits, which boost your benefits slightly. Delayed retirement credits reach a cap at age 70.

5. Almost Half of Americans Have Less Than $10,000 Saved for Retirement

46% of all American workers have less than $10,000 saved for retirement and 29% of all American workers have less than $1,000 saved for retirement. If you fall under either of these categories, get your retirement strategy together. (See also: 10 Easy Ways to Supercharge Your Retirement)

6. Employer-Sponsored Plans Increase the Likelihood You'll Save

Here is some good news: Those workers that participate in retirement plans at work are 45% more likely to save than those that don't. According to data from the Employee Benefit Research Institute, those saving for retirement at work are more likely to have saved at least $50,000.

7. Self-Employed Can Save for Retirement

Freelancers, independent contractors, and small business owners can save for retirement, too. The best options are one participant 401(k)'s and Simplified Employee Pensions (SEP's), which both have higher caps than Roth or Traditional IRAs. Under both retirement accounts, you can put away up to 20% of your net self-employment earnings with a cap at $51,000, as of 2013. Most financial firms can offer a SEP, but fewer can offer a one participant 401(k). Contact your financial institution for more details for eligibility requirements and rules.

8. Older Workers Can Save $5,500 Extra for Retirement

It is never too late to start saving for retirement. The IRS gives all workers age 50 or older the chance to make catch-up contributions of $5,500 every year to their retirement accounts. These catch-up contributions are the best way to give your nest egg a much needed boost.

9. Married Couples Save More

When it comes to retirement planning, married couples are doing better than singles. Unmarried men and women are just as likely to have ever saved for retirement and to be currently contributing to a retirement account. However, those probabilities double for married workers and their spouses. Nearly 75% of married of married couples are currently saving for retirement. These statistics prove that two heads think better than one.

10. Children Can Contribute to an IRA

That's not a typo. Little Jimmy can start putting away that lemonade stand money into a traditional IRA, even if he's just age 10. You can open a traditional IRA, a Roth IRA, or an Education IRA for your children and they can contribute up to $2,000 per year from their income. While you will have custodial control over your kid's account until she reaches legal age, you have to eventually turn over the rights to her. Make sure to discuss with her the implications of early withdrawals.

11. Non-Working Spouses Can Have Retirement Funds, Too

If you file taxes jointly with your spouse and have non-working spouse, you can fund your spouse's traditional or Roth IRA. The working spouse can contribute up to $5,500 per year to the non-working spouse's account, and up to $6,500 when over age 50.

12. IRAs Are Protected From Bankruptcy Proceedings

Under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005, the first $1 million of traditional IRAs and Roth IRAs are protected in case of bankruptcy. The amount protected is adjusted every 3 years to current cost of livings standards and, as of 2013, it stands at $1,245,475. There is no protection cap for employer-sponsored retirement plans, such as 401(k)s, 403(b) profit sharing plans, and 457(b) deferred compensation plans.

Did anything here surprise you? Please share in comments!