Deciding when to retire is one of the most important financial decisions a person will make in their lifetime. The ideal retirement age depends on many factors, including financial readiness, health, family considerations, and lifestyle goals. While there is no one-size-fits-all answer, understanding the key considerations around retirement timing can help identify the optimal age for you.
Key Factors That Influence Retirement Timing
Here are some of the main factors to weigh when choosing the best age to retire:
Financial Readiness
Achieving retirement readiness often ties closely to age. The key question is whether you’ve amassed enough savings and sources of retirement income to support your desired lifestyle. Most experts recommend saving 10-15 times your ending salary before retiring. Retiring too early without adequate savings increases risk of outliving your money.
Social Security Benefits
While you can start claiming Social Security retirement benefits as early as age 62, delaying until full retirement age (66-67) or age 70 results in higher monthly benefits. Your personalized Social Security statement helps you optimize when to file.
Health and Life Expectancy
Staying healthier and living longer impacts how long your retirement savings must last. The average life expectancy in the U.S. is around 79. Plan for a retirement spanning at least 20-30 years. If health is declining, an earlier retirement age may make sense.
Eligibility for Medicare and Pension Benefits
Most workers become eligible for Medicare at 65. Retiring before this age risks high premiums for individual health insurance. The age you can collect full pension benefits also factors into your options. Know the rules of your specific plans.
Employment Opportunities
How available jobs are in your field as you get older influences retirement timing flexibility. Opportunities to phase into retirement with consulting gigs or part-time work can bridge the gap to full retirement.
Caregiving Responsibilities
If you anticipate needing to care for parents, a spouse, or grandchildren, it impacts your ideal retirement age. Leaving the workforce early lets you focus on caregiving. But retiring later increases income and benefits.
Spousal Considerations
Coordinate retirement timing with your spouse based on factors like relative ages, joint savings, pensions, and Social Security strategies. Staggering retirement dates a few years apart preserves income while allowing leisure time together.
Lifestyle andBUCKET List Goals
Major retirement dreams impact your target age timeline. If extensive travel, relocating, or starting a business are goals, consider retiring earlier to pursue them. But make sure those plans align with your finances.
Financial Milestones by Age
Saving and planning enough money for 20-30 years of retirement takes diligent preparation. Here are some retirement savings benchmarks to aim for by age leading up to retirement:
| Age | Savings Benchmark |
|---|---|
| 30 | 1x your salary saved |
| 35 | 2x your salary saved |
| 40 | 3x your salary saved |
| 45 | 4x your salary saved |
| 50 | 6x your salary saved |
| 55 | 7x your salary saved |
| 60 | 8x your salary saved |
| 65 | 10x your salary saved |
Achieving these multiplying savings targets requires dedicating 15-20% of income to retirement accounts early and consistently.
Pros and Cons of Early Retirement Ages
While retiring early sounds idyllic, it involves trade-offs to weigh. Here are some potential advantages and disadvantages of retiring in your early 60s or younger:
Pros
- More healthy years to pursue passions
- Lower stress and improved mental health
- Opportunity to change pace and purpose
- Focus available on family, volunteering, hobbies
- Chance to explore encore career interests
Cons
- Less time for savings to accumulate
- May need to tap savings sooner resulting in depletion risk
- Higher healthcare costs before Medicare eligibility
- Smaller Social Security benefits due to early claiming
- Risk of boredom without structure
- Erased income source and employer benefits
Pros and Cons of Later Retirement Ages
Working longer into your 60s, 70s or beyond buffers your finances in retirement. But it has some tradeoffs too:
Pros
- Higher retirement contributions and investment earnings
- Larger Social Security benefits from delayed claiming
- Access to affordable healthcare through employer or Medicare
- Maintains structure, purpose, social connections
- Provides income past typical retirement ages
- Allows added years of savings catch-up
Cons
- Potential health issues make work difficult
- Less time for leisure, family, and bucket list goals
- Mental burnout from demanding career
- Risk of layoffs as an older worker
- Less energy to pursue new passions
- Missing out on early retirement lifestyle
Case Studies by Retirement Age
Looking at sample scenarios can illustrate how different retirement ages align with individual situations. Here are three examples:
Retiring at 62
Sam retires at 62 after 30 years working in manufacturing. He’s no longer able to perform his physically demanding job. Sam has $500,000 in retirement savings and will collect $1,800 per month from Social Security. He plans to take advantage of retiree healthcare from his employer and low-cost senior activities at the community center.
Retiring at 65
Maria retires at 65 after a fulfilling 40-year teaching career. She has a pension providing $3,000 monthly and $700,000 in her retirement accounts. Maria is excited to travel with her husband during her early retirement years and spoil her young grandchildren. She’ll enroll in Medicare for health coverage.
Retiring at 70
Bob works as an attorney and retires at 70, shifting to consultancy work. He wants to keep earning income and has high exit hurdles at his law firm. Bob has amassed over $2 million in savings and investments. When he fully retires, his $4,000 monthly Social Security benefit and passion for coaching youth sports will keep him busy.
Key Considerations by Decade
The pros, cons, and tradeoffs around retiring at different ages shift across each decade of life. Here’s an overview of key considerations by decade:
In Your 60s
- Target at least 10x salary saved by 65
- Review Medicare options as early as 62
- Account for early Social Security reductions
- Model projected costs and life expectancy
- Cut back work hours in phased retirement if possible
In Your 70s
- Maximize savings to offset increased healthcare costs
- Consider move to lower cost areas or downsizing home
- Focus on longevity strategies like staying active
- Review long-term care needs and insurance options
- Consult with a fee-only advisor for guidance
In Your 80s+
- Account for exponential rise in healthcare costs
- Adjust withdrawal rates for added years
- Consult with family on legacies and estate planning
- Review beneficiaries and account titling
- Plan for potential need for in-home care or nursing facility
The Ideal Retirement Age Is…
The precise age that you should target retiring depends completely on your unique situation. But in general, retiring anytime between 62 to 70 enables balancing enough savings with enough healthy years to enjoy life. Here are a few final tips for choosing your best retirement age:
- Crunch the numbers annually leading up to retirement
- Build in buffers for healthcare costs and longevity
- Test different Social Security claiming strategies
- Start with your ideal lifestyle vision, then work backwards
- Remain flexible to adjust plans as life shifts
Rather than picking an exact age, it’s better to decide on a target range. This allows reacting fluidly to changes in your health, family needs, and retirement readiness. With proper planning, you can make the most of your next chapter, whenever you choose to start it.