Are you wondering when to retire?
The best time to retire depends on your savings, income needs, health care costs, Social Security timing, lifestyle goals, and whether you want to keep working in some capacity. Many people begin evaluating retirement between ages 60 and 67, but the right age is personal. Before choosing a retirement date, it helps to compare your expected expenses, income sources, Medicare eligibility, and long-term goals.
Compare the pros and cons of retiring at different ages in this guide. Retirement is often a long-awaited dream. Unstructured days, the freedom to do what you please — these are just a couple of the perks of saying goodbye to your desk job.
While it’s alluring to leave the workforce, you may wonder when exactly that day should come. Generally speaking, there’s no “right” time to retire. But as you narrow down your ideal retirement window, it’s important to consider the type of lifestyle you’d like to have — our Retirement Lifestyle Quiz can help you get started. Are you thinking about traveling the world? Interested in purchasing a new home? Or maybe you’re looking to scale back and live more simply.
Financial Planning for Retirement: Pros and Cons by Age
You’ll need to determine how much money you’ll need to sustain your dream retirement lifestyle, and take a look at your current savings, investments, or potential income sources like Social Security. If you’re married, consider when your spouse will retire, since that will affect your Social Security benefits and earnings. All of these factors could affect your ability to leave your nine-to-five job.
If you’re fortunate enough to have control over when you want to retire, consider these factors before making a change.
Retiring Before Age 65
The Pros
Retiring early can have its perks. You’ll likely have more energy to get out and enjoy your hobbies, or even spend time traveling the world. Leaving behind your daily grind can also help you build healthy habits like exercising or spending more time outdoors.
Even if you’re not ready to completely leave the workforce, retirement doesn’t mean you can’t make a living in other ways. This could be the perfect time to start your own business, find a part-time gig, volunteer, or even jump into a new career path.
The Cons
While it sounds nice to get out and bask in your newfound free time, odds are you won’t have as much financial freedom if you retire early. Your retirement savings will have to last longer, which means you may not have the funds for those trips you’ve always wanted to take.
Social Security is another consideration. While you become eligible for social security starting at age 62, your benefit will be reduced. You also don’t qualify for Medicare until you’re 65, which means you’ll pay more in out-of-pocket costs for health insurance on your own.
It’s also important to consider your mental health. After working for so many years, many retirees have a hard time transitioning into a new routine and may feel lonely or without a sense of purpose. Making sure you plan things to do in retirement can help with that.
Retiring Between Ages 66 and 70
The Pros
Retiring between the ages of 66 and 70 seems to be the sweet spot for many. You’re old enough to have built up your finances but young enough to get out and enjoy well-deserved time off the clock. Plus, you’re eligible for Medicare and full Social Security benefits at this age. There’s certainly a reason this is the most popular age for retirement.
The Cons
Waiting to retire until you’re 66 can feel like a long time. If you’ve been delaying retirement already, you could be putting off the start of your dream lifestyle and working longer than you want.
On the other hand, if you wait just a few more years, your Social Security payment will actually increase at age 70.
Retiring at Age 70 and Older
The Pros
If you love what you do for work, there’s no rule that you have to stop at a typical retirement age. There are benefits of waiting until you’re 70 to retire, like feeling more fulfilled or having a sense of purpose. You’ll probably have more in retirement assets, which reduces the likelihood that you’ll be stressed about your finances.
Retiring at age 70 or older means you’ll also get the highest possible Social Security payout. Many individuals find this appealing since benefits increase on a prorated basis until you reach age 70.
The Cons
It sounds nice to live in a world where money isn’t necessarily a source of stress, but at what cost? As you grow older, you may not have as much energy — or the ability — to do the things you truly enjoy. Your time may be more valuable than money at this age.
Retirement Readiness Checklist: Questions to Ask Before You Retire
- Have I estimated my monthly retirement expenses?
- Do I know where my income will come from?
- Have I planned for health insurance before Medicare?
- Have I reviewed my Social Security claiming options?
- Do I have a withdrawal strategy?
- Have I considered how long my savings may need to last?
Not Sure How Ready You Are? Start With the Scorecard
Answering these questions is a great first step, but it can still be hard to know what your answers mean for your retirement timeline. The Emerj360 Retirement Readiness Scorecard can help you take a closer look at where you stand today. This free scorecard gives you a simple way to take an honest inventory of where you stand today and identify areas that may need more attention before you choose a retirement date.
The Bottom Line
Deciding when to retire can be daunting. There’s much to consider when it comes to your finances — like retirement assets, savings, your health, income, or Social Security benefits. It can be helpful to consult with a professional to see where you stand. It’s also never too early to calculate if you’re saving enough for retirement.
Still Need Help? Contact The Professionals At Emerj360
Even if you do know when you want to retire, it’s important to live within your means. Schedule a meeting with an Emerj360 team member to help you crunch the numbers and develop a plan to meet your retirement goals.
FAQ’s
What is the best age to retire?
The best age to retire depends on your savings, income needs, health care costs, Social Security timing, debt, and lifestyle goals. Some people are ready to retire before 65, while others may benefit from working longer to continue saving, delay Social Security, or maintain employer-sponsored health coverage. The right retirement age is personal, which is why it helps to look at your full financial picture before choosing a date.
How do I know if I have enough money to retire?
You may be closer to retirement readiness if you understand your monthly expenses, know where your income will come from, have a plan for health care, and feel comfortable with how long your savings may need to last. It also helps to review debt, Social Security timing, investment risk, and potential unexpected costs. A retirement readiness checklist or scorecard can help you organize these questions and identify areas that may need more attention.
What happens if I retire before Medicare starts?
If you retire before Medicare eligibility, you will need another way to cover health insurance until Medicare begins. Options may include a spouse’s employer plan, COBRA, private insurance, or coverage through the Health Insurance Marketplace. Health care can be one of the largest expenses in early retirement, so it is important to estimate premiums, deductibles, prescriptions, and out-of-pocket costs before choosing your retirement date.
