Senior Spotlight: What Is The Optimal Age To Retire?

The retirement age is changing, and something we have talked about on our blog over the years. While older adults are living longer and that sometimes means working longer, there are other considerations that impact retirement age: lifestyle, physical and mental health, financial position, a spouse or partner’s retirement plans, relocation of adult children & grandchildren and more! 

Boston College reports that the average retirement age is 64.7 for men and 62.1 for women. From a practical perspective, Social Security benefits can be taken in full at age 66 or 67 (depending on the year you were born according to Investopedia) and claimed as early as 62 but with a 25-30% benefit reduction. Medicare eligibility begins at age 65. Gallup reports that from 2003-2022, the actual retirement age was 2-5 years less than the expected retirement age. 

In general, the strategy is that the earlier you retire, the more savings and retirement assets you will need. US News recently published an article talking about the pros and cons of different ages to retire and suggested that “Retiring in your mid-60s still makes sense for many people. At this point, you are old enough to have hopefully amassed sizable savings, but you are still young enough to enjoy active pursuits such as travel.”

Smart Asset recommends considering the following factors when deciding what age to retire: 

• 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 do you anticipate living in retirement

• Which income sources do you expect to have (i.e. Social Security, a 401(k) plan, pension, taxable accounts, etc.)

• How much do you anticipate spending on healthcare and whether long-term care may be necessary

• What your tax situation will look like in retirement

The FIRE Movement (financial independence, retire early) has been highlighted in recent years, and advocates intentional planning to retire before age 65 though some combination of actively saving, aggressively investing and creating a portfolio of passive income. Learn more here. 

On the other hand, retiring in your 70s allows more time to accumulate wealth, and can foster an increased sense of purpose and enhanced social interaction for those who have a positive work environment. 

An approach that is becoming more common is a phased retirement approach, in which older adults choose to stop full-time work at a certain age, and then pursue consulting, part-time work or a more beneficial employment change that slowly leads them into retirement. 

If you are already retired, did you choose an immediate or passed approach? Do you wish you had retired earlier or later? What advice would you give to someone retiring today? We’d love to hear!

All my best,

Bobbi 

Bobbi Decker
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Broker Associate
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www.bobbidecker.com

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