The prospect of retirement evokes a myriad of emotions, from excitement and anticipation to uncertainty and trepidation. One of the most critical decisions in the retirement planning process is determining the optimal age to hang up your hat and embark on this new chapter in life. While there’s no one-size-fits-all answer, a combination of factors, including financial considerations, personal preferences, and health status, should guide your decision.
Financial Considerations: The Bedrock of Retirement Planning
Financial preparedness is the cornerstone of a successful retirement. Before making any decisions, it’s crucial to assess your financial situation thoroughly. Consider the following factors:
- Retirement savings: A substantial nest egg is essential to support your lifestyle during retirement. Evaluate your current savings, including contributions to employer-sponsored retirement plans like 401(k)s and individual retirement accounts (IRAs).
- Social Security benefits: Social Security provides a safety net for many retirees. Determine your estimated Social Security benefits based on your earnings history. You can start receiving Social Security benefits as early as age 62, but delaying claiming until your full retirement age (typically 66 or 67) will result in a higher monthly benefit.
- Pension plans: If you’ve worked for an employer that offers a pension plan, factor in the estimated pension benefits you’ll receive in retirement.
- Investment income: Consider potential income from investments such as stocks, bonds, and real estate.
- Expenses: Estimate your anticipated expenses in retirement. This includes housing costs, healthcare, transportation, food, and leisure activities.
Personal Preferences: Shaping Your Retirement Lifestyle
Retirement presents an opportunity to pursue your passions and interests. Consider the following factors to shape your ideal retirement lifestyle:
- Health and well-being: Your health status can significantly impact your retirement plans. If you have any health concerns, factor in potential medical expenses and the need for ongoing care.
- Travel and leisure: Do you dream of traveling the world or pursuing hobbies you’ve always wanted to explore? Consider how much time and money you’d like to dedicate to these activities.
- Family and social connections: Retirement is a time to strengthen bonds with family and friends. Consider how you’d like to stay connected and involved in their lives.
- Volunteer work or part-time employment: Some retirees choose to volunteer or engage in part-time work to stay active and contribute to their communities.
Health Status: A Crucial Factor in Retirement Planning
Your health plays a vital role in determining the optimal retirement age. Consider the following factors:
- Life expectancy: Life expectancy has increased significantly in recent years. According to the Social Security Administration, a 65-year-old today can expect to live an average of 20 more years.
- Chronic health conditions: If you have any chronic health conditions, factor in potential medical expenses and the need for ongoing care.
- Physical and cognitive abilities: Your physical and cognitive abilities will influence your ability to enjoy your retirement years. Consider whether you’ll need any assistance with daily activities.
Determining the optimal age to retire is a complex decision that requires careful consideration of financial, personal, and health factors. By taking a holistic approach, you can make an informed decision that aligns with your individual circumstances and goals. Remember, there’s no right or wrong answer, and the best age to retire is the one that feels right for you.
Early Retirement
When workers get to their 50s and early 60s, they frequently start thinking about retiring. According to the U. S. Men retire at an average age of 65, while women work until they are 63, according to the Bureau of the Census.
Age 65 was designated as the retirement age in the original Social Security regulations, after which employees could begin receiving full retirement benefits. The Social Security full retirement age in 2023 is 67 for those born in 1960 or later, and 66 for those born between 1943 and 1959.
The optimal time to retire depends on a person’s health benefits, Social Security, and retirement savings, which vary depending on age.
Planning to Retire vs. Actually Retiring
According to Gallup, Americans are retiring later in life than they did thirty years ago. In 1991, U. S. retirees stated that they had reached retirement age of 57 in 2022; by 2022, it had risen to 61. Additionally, they have raised their goal retirement age from 60 in 1995 to 66 in 2022. Gallup conducted surveys on Americans’ retirement plans in 1991–1993, 1995, and since 2002, as part of its Economy and Personal Finance survey, every year. Below is a look at the expected vs. actual retirement age of workers in the U. S. over a 20-year span from 2003 to 2022, based on information from the Gallup survey
| Average U.S. Retirement Age, 2003–2023 | ||
|---|---|---|
| Year | Average expected retirement age | Average actual retirement age |
| 2003 | 63 | 59 |
| 2004 | 64 | 60 |
| 2005 | 64 | 60 |
| 2006 | 65 | 60 |
| 2007 | 64 | 60 |
| 2008 | 64 | 60 |
| 2009 | 65 | 60 |
| 2010 | 65 | 59 |
| 2011 | 66 | 60 |
| 2012 | 67 | 60 |
| 2013 | 66 | 61 |
| 2014 | 66 | 62 |
| 2015 | 65 | 60 |
| 2016 | 66 | 61 |
| 2017 | 66 | 61 |
| 2018 | 66 | 61 |
| 2019 | 65 | 61 |
| 2020 | 66 | 61 |
| 2021 | 64 | 62 |
| 2022 | 66 | 61 |
When to Retire? The Best Age to Retire (from 4 perspectives)
FAQ
What is a healthy age to retire?
What is the happiest age to retire?
Is it better to retire at 62 or 65?
How do you know when it’s time to retire?
What is a good age to retire?
Part of a sound retirement planning strategy involves choosing the right age to retire for you. The normal retirement age is typically 65 or 66 for most people; this is when you can begin drawing your full Social Security retirement benefit.
What is the average age of retirement?
For example, a recent Gallup poll reported age 61 as the average age of retirement. Yahoo Finance reports age 64 as the average retirement age across America, but the average age varies significantly by state. The 2023 Retirement Confidence Survey reports age 62 as the median age at retirement for current retirees.
Should you retire early?
At one time, retiring early meant quitting at age 62 when Social Security benefits can first be claimed by eligible workers. Now, the FIRE movement – Financial Independence, Retire Early – has moved the goalposts to the 50s or even earlier for some people. Quitting your job at this age can be a tantalizing prospect, but it comes with challenges.
Is retirement a good time to retire?
Retirement is the ultimate goal for many workers. It’s a time to check out of the daily grind and focus energy on what you want to do rather than what your boss tells you to do. Traditionally, 65 has been considered the retirement age, but when and how people retire seems to be changing.