6 Factors To Help You Determine Your Ideal Retirement Age

Andrew Rosen, Contributor Oct. 24, 2024 Perhaps the biggest factor in choosing your retirement age is your financial readiness.

When you think about retirement, the first thing that might come to mind is that magic age when you'll kick back, relax, and enjoy the fruits of your labor. For some, it's 65, for others, maybe earlier or later. But how do you determine the right retirement age for you? It's not a one-size-fits-all decision. The ideal retirement age is deeply personal and depends on various factors like your finances, lifestyle goals, and even your health. There are a few factors that you can assess to help you determine what may be right for you.

1. Assess Your Financial Situation

The biggest factor in choosing your retirement age is your financial readiness. This boils down to two things: how much money you’ve saved and how much you’ll need to maintain your desired lifestyle.

Start by asking yourself:

  • How much have I saved? Look at your 401(k), IRA, pension, and other retirement savings accounts. How much have you built up over the years? This will give you a baseline.
  • What’s my budget? Think about your day-to-day expenses in retirement. Will your mortgage be paid off? How about healthcare costs? Do you want to travel more or pick up a new hobby?
  • Where will my income come from? Consider how Social Security fits into the picture. The longer you wait to claim it (up until age 70), the higher your monthly payments. You might also have a pension or other income sources to factor in.

Taking a closer look at these numbers will give you an idea of whether you’re financially ready to retire at a certain age, or if working a few more years would provide a bigger cushion.

2. Consider Your Health

Your health is another important factor when thinking about retirement. While we’d all love to have decades of good health, the reality is that health concerns often arise as we get older.

If your job is physically demanding, or you feel that your health is already declining, retiring earlier might give you a chance to enjoy your free time while you're still able to be active. On the other hand, if you’re in great shape and enjoy your work, continuing on for a few more years might make sense both mentally and financially.

Also, don’t forget about healthcare costs. Medicare kicks in at age 65, but if you plan to retire earlier, you’ll need to account for private health insurance to cover that gap.

3. Think About Your Lifestyle Goals

Retirement isn’t just about money—it’s about how you want to spend your time. What do you envision your days looking like? Some people can’t wait to stop working and dive into hobbies, travel, or spending more time with family. Others may enjoy their work so much that they don’t feel the itch to leave just yet.

A good exercise is to picture your ideal retirement. Are you jet-setting around the world? Volunteering in your community? Picking up a new hobby? Or maybe you’re happiest with a part-time job or consulting gig that keeps you busy. This vision can help you understand when you’d like to retire, based on your goals.

4. Factor In Social Security Timing

Social Security can play a significant role in your retirement income, so when you claim those benefits matters. You can start as early as age 62, but doing so will reduce your monthly payments. Full retirement age (depending on when you were born) typically falls between 66 and 67. Delaying Social Security until age 70 will result in the highest possible monthly benefit.

But bigger checks aren't always the best choice for everyone. If retiring earlier brings you joy, or if you need the income to stop working, it can make sense to start Social Security sooner. It all depends on your situation and how long you expect to live based on your health and family history.

5. Weigh Emotional Readiness

It's easy to focus on the financials, but don’t forget the emotional side of retirement. Work is often a big part of our identity, providing not just income but structure, purpose, and social connections. Ask yourself:

  • Are you emotionally ready to leave your job behind?
  • Do you have activities or passions lined up to keep you engaged?
  • What will your day-to-day routine look like without work?

For some, the transition is smooth. For others, it can be challenging. Finding the right balance between financial security and emotional fulfillment is key.

6. Evaluate Your Partner’s Plans

If you’re married or in a long-term relationship, it’s important to consider your partner’s retirement plans. Do you both want to retire at the same time, or does it make sense for one of you to keep working? Do your financial plans and lifestyle goals align? Open communication is crucial to making sure you're both on the same page.

Finding Your Perfect Retirement Age

At the end of the day, there’s no perfect answer to when you should retire. The ideal retirement age is personal and varies based on your financial security, health, lifestyle preferences, and emotional readiness. By carefully assessing these factors, you can make a decision that aligns with your goals and dreams for retirement.

If you’re feeling unsure or overwhelmed by the choices, consider speaking with a financial advisor who can help you review your options and develop a plan. After all, retirement should be about enjoying the fruits of your hard work, and you deserve to enter that phase with confidence and peace of mind.

By Andrew Rosen, Contributor

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