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For some people, reaching age 65 is the triggering event. For others, it’s becoming eligible for Social Security. Still others make the decision to retire based on changes at work or a health concern. Many people are eager to retire so they can focus more energy on their families or other pursuits, while their peers and friends are still satisfied with their familiar routines at work.


Whatever your reasons for retiring (or not retiring), it’s important to think through your timing options beforehand. For example:

  • If you’re thinking of retiring early (before you’re eligible for Social Security at age 62 or Medicare at age 65), having ample savings or a guaranteed pension can help you ease into retirement. So can a retiree health care plan from your employer, which can assure that you have coverage until you’re eligible for Medicare.
  • ‚ÄčIf you don’t have a pension—which is true for an increasing number of retirees—you’ll need to determine if the savings you’ve accumulated will be sufficient to see you through a long retirement with the lifestyle you’re accustomed to. As shown in the charts below, Social Security typically covers only 1/3 of the income needed in retirement. For those with higher incomes, Social Security provides only 15% of the required income.[1]
  • Don’t underestimate your life expectancy and think that you will live only another 10 to 15 years after retiring. That estimate has changed dramatically over time because of advances in medical care and diagnosis. A 65-year-old today could be retired for 30 to 35 years—almost as long as he or she spent working. 

Bottom line: Deciding on the right time to retire and move into the next phase of life is a very personal choice.  If you ask five people when it’s best to retire, you will get five different answers. To help you make the decision that’s the right fit for you, here are three different approaches you might take to evaluate your retirement situation and begin a productive, informed discussion with your financial professional.

The Non-Mathematical (Emotional) Approach

If you know you’ll have sufficient assets to fund your retirement, you’ll also have the flexibility to make a more qualitative approach to your retirement decision. In this case, the key factors to consider are how you feel about retiring and the quality of life you’d like to maintain.

It may seem cavalier in some ways, but quality of life issues can play a significant role in deciding when to retire. That is: What good is it to have a great financial situation if you continue to work so long that your health starts failing and you have no time to enjoy your retirement—or your family?

For this approach, consider:

How do you want to spend your time? 

Sometimes continuing to work 60- to 80-hour weeks is not as feasible as when you were young. Though you could still perform your job, the demands are too high and time with family and friends too valuable to give up for the sake of a job and the incremental financial cushion.

What interactions will you have once you retire? 

One aspect many retirees miss when they leave work is interaction with co-workers. But if you have an active network of family and friends nearby, those work relationships become less critical to your day-to-day happiness. Should you need more socializing down the road you can always volunteer at a worthwhile nonprofit or charitable organization in your area.

What are your priorities? 

What is most important to you now? There is no rule book, and it is truly up to you as an individual, but nearing retirement can cause you to reflect on questions like “Do I have all I need?”, “How is my health?”, and “Am I able to be there for my family members when they need me?”

Everyone will answer these questions differently, of course, but with this approach the financial view takes a second seat to the more holistic life view which drives the decision to make the move to retirement. 

The Social Security Rules Approach

The age at which you can start receiving full Social Security retirement benefits depends on your birth year. You can elect to take benefits as early as age 62 (earlier only if you are a surviving spouse or you are on disability). Or you can wait until you reach age 70.[1] With this approach, you’ll want to think about:

What is your full retirement age? 

Full retirement age (also known as normal retirement age) is the age when you are eligible to receive your full Social Security benefits. Under current law, if you were born in 1938 or later, your full retirement age is now some point after age 65—all the way up to age 67 for those born after 1959. 

Can you afford to delay taking your Social Security benefits?

There is an income “penalty” for taking Social Security before your full retirement age and an extra “credit” for delaying. 

For example, if you were born in 1944 and your full retirement age is 66, and you intend to take your benefits at age 68, you can get a credit of 8% per year multiplied by two (the number of years you waited). This makes your benefit 16% higher than the amount you would have received at age 66.2   On the other hand, if you take your benefit at age 62 instead of age 66, your monthly payout will be 25% less for as long as you live._ftnref1[2]

You can also refer to your annual Social Security statement, which lists your projected benefits at age 62, full retirement age, and age 70. If you need a copy of your annual statementyou can create an account at www.ssa.govto view and print it. 

If you have enough other income to live on and are in good health, it may be best to wait as long as you can to take your Social Security benefits, but no later than age 70 because the benefits stop growing after that. Your financial advisor can help you decide the best strategy for your situation.

The Pragmatic Approach

Over the last 20 years, the number of people who continue to work past age 65 has steadily increased, not just because they need the money, but also because society has changed.[3]For example,

More women are participating in the workforce – and staying in it longer. Workers have become healthier and more educated. Jobs are less strenuous, which means that more people are willing and able to work longer. 

In addition, the definition of retirement has changed. So, rather than completely retire, many older workers are phasing out of one career and into another. 

Depending on your own circumstances, working into the second half of your sixties and beyond can offer the prospect of a happier, more financially secure retirement when the time comes. Here are four reasons why you may want to take this pragmatic approach and continue working for at least a few more years.

A bigger pension. 

If you’re lucky enough to have a pension, and it hasn’t been frozen, you may get a bigger payout by working a few more years. Pensions are calculated based on pay and years of service. Some plans base the benefit on your average earnings over the last three or five years of employment; others on your average earnings over all the years in which you’ve participated in the plan. Assuming your income is still going up, your pension benefit could be greater for every additional year you work.

You like working. 

Work isn’t all about paychecks and benefits. “The relationships, the recognition and the sense of fulfillment that work provides give people purpose and structure,” says Dee Cascio, a psychotherapist and retirement coach in Sterling, Va.[4] That can be especially true for men, she says, who often rely on work for their social network. If you don’t have a plan for how you’ll spend your time after you leave the workforce, you may want to stay on the job until you do.

A fatter nest egg. 

A rule of thumb used by many retirement planners is to have enough in savings to last for 25 years. That allows you to draw down 4% each year without too much risk of running out of money during your lifetime.

So, for example, if the difference between your projected retirement spending and guaranteed income (including Social Security and pensions) in retirement is $30,000 a year, you’ll want to save 25 times $30,000, or $750,000 by the time you retire. If you fall short of the 25-year savings guideline, working longer may be your only viable solution. Not only can this help you increase your retirement contributions at work, but you’ll also have fewer years for drawing down savings once you retire. 

Even if you don’t add a penny, the money in your retirement accounts will still continue to benefit from tax-deferred growth. Plus, you won’t be required to take required minimum distributions (RMDs) at age 70 ½ from the retirement plan you have with your current employer. (You will need to take RMDs from any retirement accounts you have with formeremployers, however.) 

Coordinating with your significant other. 

Although couples are increasingly retiring separately, most still hope to retire within a year or two of each other, says Richard Johnson, Director of the Program on Retirement Policy at the Urban Institute. “When you retire, you have more leisure. Most people want to spend that leisure with their partner,” Johnson says.5If your partner is much younger or simply not ready to retire, working several more years yourself is a simple solution to the “home-alone” syndrome.

There truly is no single answer for everyone when it comes to retirement. Many factors come into play when you consider the emotional, financial, and logistical aspects of when to retire. But you don’t have to make this decision alone. Scheduling a meeting to sit down with your financial advisor, who can realistically evaluate your retirement assets, can help you fully enjoy the next phase of your life.
This article is for informational purposes only and should not be construed as investment or legal advice.  

[1]Social Security Web Site (ssa.gov); July 2018

[2]ssa.gov, July 2018 https://www.ssa.gov/planners/retire/agereduction.html

[3]From KIPLINGER’s; 6 Good Reasons You Shouldn’t Retire at 65– Jane Bennet Clark; February 2015

[4]From KIPLINGER’s; 6 Good Reasons You Shouldn’t Retire at 65– Jane Bennet Clark; February 2015

[5]Social Security Administration, Income of the Aged Chartbook, 2014  https://www.ssa.gov/policy/docs/chartbooks/income_aged/2014/iac14.pdf