How to Find the Best Age to Retire

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Editor's Note: This story originally appeared on SmartAsset.com.

Part of a sound retirement planning strategy involves choosing the best age to retire. 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. It could make sense to retire earlier or later, however, depending on your financial situation, needs and goals.

There’s no magic formula for finding the right retirement age, and the timing that works for you may not work for someone else. When considering the best ages to retire, it’s important to weigh the pros and cons.

A financial adviser can help you sort through all the factors that go into making a wise decision about when to retire.

Finding the Best Age to Retire

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Choosing when to retire can depend on a number of things. As you try to narrow down your ideal retirement age, consider:

  • What type of lifestyle you’d like to have in retirement
  • How much money you’ll need monthly and annually to sustain that lifestyle
  • Your current retirement savings rate and existing assets
  • The investment strategy and risk tolerance
  • How long you anticipate living in retirement
  • Which income sources you expect to have (i.e., Social Security, a 401(k) plan, pension, taxable accounts, etc.)
  • How much you anticipate spending on health care and whether long-term care may be necessary
  • What your tax situation will look like in retirement

One of the biggest concerns when planning for retirement is ensuring that you don’t outlive your money. In other words, you need to be saving enough during your working years to cover your expenses from the time you retire until the end of your life.

You’d also need to consider what the best age to retire is for your spouse if you’re married and you both work. This is important for planning withdrawals from tax-advantaged and taxable accounts as well as Social Security planning.

Thinking about the bigger picture can help identify any gaps in your plan so you can find solutions for filling them. For instance, after evaluating your anticipated income sources, you might decide that it makes sense to purchase an annuity for guaranteed income. Or if you’re concerned about health care being a drain on your finances you may purchase a long-term care insurance policy.

Pros and Cons of Early Retirement

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Early retirement generally means retiring before your normal or full retirement age. For Social Security purposes, full or normal retirement age typically means age 65, 66 or 67, depending on when you were born.

An early retirement for you could mean retiring at 62, but it could also mean retiring at 40 if you’re interested in the FIRE movement. Short for “Financial Independence, Retire Early,” this movement advocates saving and paying down debt aggressively so you can become financially independent at a significantly younger age. There’s also a variant of this called Coast FIRE.

On the pro side, early retirement could leave you free to pursue a different type of lifestyle if you no longer have to work. For instance, you may choose to travel, start a business, or devote more time to volunteer and charity work.

There are, however, some cons to consider. First, the earlier you retire, the longer your money has to last. If you retire at age 40 and expect to live to age 90, for example, you’ll need to save enough money to last a half-century. Waiting until you’re 65 to retire, on the other hand, can ease some of the pressure to save.

You also have to consider how early retirement affects Social Security and Medicare planning. The earliest age you can take Social Security is 62. When you take benefits before your normal retirement age, the amount you receive is reduced.

Meanwhile, you wouldn’t be eligible for Medicare until age 65. So, you’d have to consider where health insurance and health care costs fit in your early retirement budget and how you’ll pay for them.

Pros and Cons of Normal Retirement Age

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Again, for Social Security purposes, normal retirement age means anywhere from 65 to 67, depending on the year you were born. If you’re considering this as the best age to retire, there are some advantages. For instance, the longer you’re working, the more time you have to contribute to a 401(k) plan and receive a matching contribution if your employer offers one. You also have more time to earn income and contribute to a traditional IRA or Roth IRA to supplement your workplace plan.

Waiting until your normal retirement age means that your Social Security benefits aren’t reduced. You can stay covered by your employer’s health insurance as long as you’re working, then apply for Medicare at age 65.

The trade-off, of course, is that you might end up working longer than you want to or delaying your dream retirement lifestyle. And it’s always possible that you may be forced into retirement early anyway if you experience an illness or disability that keeps you from working or your company downsizes and eliminates your position.

Pros and Cons of Delayed Retirement

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Delaying retirement past the normal retirement age can be a matter of personal choice for some people. If you really love your job, for example, you might not be content with retiring at 66 or 67. Instead, you may want to work for as long as you’re healthy and able to do your job.

For other people, delayed retirement is a necessity. If you got a late start on retirement savings, for example, or you experienced a financial setback that wiped out a chunk of your assets, then working longer may be necessary to make up lost ground.

One advantage of delaying retirement, aside from being able to continue contributing to a 401(k) or IRA, is that you can increase your Social Security benefit. When you wait to take benefits past the normal retirement age, that can boost your benefit amount. So on both fronts, delayed retirement could benefit you if you want to accumulate as much money as possible.

Again, this strategy only works if you’re able to stay healthy and continue working, which is a drawback. Delaying retirement can also mean delaying plans for travel, making a move or spending more time with the people you care about most.

Finding the best age to retire isn’t always easy, and sometimes the jargon can be confusing. It can help to discuss the options with a financial adviser. An adviser can review things like your savings goals, income, retirement assets, expected Social Security benefit and longevity expectations and evaluate them objectively, in light of your goals. As you prepare your retirement plan, consider including contingencies for things like illness or disability that might require you to adjust your goals.

The Bottom Line

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Finding the best age to retire isn’t always easy, and sometimes the jargon can be confusing. It can help to discuss the options with a financial adviser. An adviser can review things like your savings goals, income, retirement assets, expected Social Security benefit and longevity expectations and evaluate them objectively, in light of your goals. As you prepare your retirement plan, consider including contingencies for things like illness or disability that might require you to adjust your goals.

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