When Should I Retire?

Consider these items to ensure a comfortable retirement

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Retirement is about the alignment of money and values. When deciding if you should retire, determine the type of lifestyle that you want to live and if you can afford it.

In addition, account for the timing of your retirement and how it will affect your Social Security benefits. For those born before 1937, the full retirement age is 65. For those born after 1960, the full retirement age is 67. If you retire before full retirement age, your monthly benefits will be permanently less than your full retirement benefit—since you will be receiving them for a longer period. Also, if you continue to work, part of your salary may be deducted from your monthly benefits until you reach full retirement age.

Social Security wants you to remember that you're not being penalized—your benefits are spread out over a longer period. Not all experts believe that is true. However, in most cases (not all), it's best to file at full retirement age if possible.

Key Takeaways

  • If you retire before full retirement age, your monthly Social Security benefit will be permanently less than your full retirement benefit.
  • To determine when you can retire, estimate your total annual spending, add up your income, and be realistic about withdrawal rates.
  • If you go through your financial projections and determine you can’t afford retirement, explore ways to save more money or find work you enjoy.
  • Consider what retirement means to you: Does it mean leaving the workforce altogether or changing to a new way of working?

Can You Afford to Retire?

Just because you’ve reached retirement age and might be eligible for a pension or for social security doesn’t mean you should retire. Maintaining a comfortable lifestyle means different things to different people.

For example, if retiring today could be accomplished, but you would need to downsize your home, car, and overall lifestyle, it may not be ideal for you. For others, it may be perfect. Some people retire, while others prefer to work longer if it means maintaining a higher standard of living in retirement. So, the question is not can you retire, but how much do you need to save to have the kind of retirement you want.

It would be nice if there were a simple answer that would tell you how much savings you need to retire. However, everyone is different, and the right amount for you may be drastically different for someone else. Work through your numbers with the help of a financial planner to calculate the amount that you need to afford your desired retirement.

Steps to Help You Decide

In addition, there are several steps to determine if you can afford to retire:

  1. Estimate your total annual spending, including periodic expenses like dental work and home repairs.
  2. Add up all of your potential sources of income in retirement. Be sure to look at how much more income you may receive by claiming Social Security at a later age, or waiting to collect your pension until a later age.
  3. Be realistic about how much you can withdraw from personal savings and investments. Withdraw too much, too fast, and you risk running out of money too soon. Be cautious about using academic rules-of-thumb. They don't always work so well in the real world.
  4. Don't be shy about seeking professional help. Retirement is a big decision, and many of the decisions you'll make are permanent. A qualified retirement planning expert can help you come up with a projection based on realistic assumptions.

If you go through your financial projections and determine you can’t afford retirement, it's probably too soon. Instead, explore ways to save more money, or find work you enjoy, so it doesn’t feel like work. Revamping your career may allow you to work longer and accumulate the funds you'll need.

If your finances are lined up to support a comfortable retirement, your next item should be to define what retirement means to you.

What Does Retirement Mean to You?

For some, retirement means simply leaving their current job. These people are fine working, but they want a change, and making a change may come with a pay cut. For others, retirement means a complete exit from the workforce. If you're married or have others who are financially dependent on you, they should be part of the decision. If you're single, the answer is likely much simpler.

Some career-oriented people are not suited for retirement. They are used to being “the go-to person” and find they get bored in retirement. If this sounds like you, the answer as to when you should retire might be "never." Before you retire, give some serious thought to what activities inspire and motivate you.

Start a list of hobbies that you want to pursue or organizations to which you want to contribute your time. From a mental and physical health perspective, stay active. Your body isn't made to remain still all the time. Part of your retirement planning should include strategies for staying active and mentally challenged.

As an alternative to traditional retirement, look for ways you can try out retirement. Perhaps your current situation offers part-time work or a sabbatical. Maybe you can take a long leave of absence. Retirement is a major life change just like moving, marriage, or a job change, so plan on going through an adjustment period. The more time you spend thinking about and planning for retirement, the more likely you’ll retire at the right time.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Social Security Administration. "Normal Retirement Age."

  2. Social Security Administration. "Starting Your Retirement Benefits Early."

  3. Social Security Administration. "2020: How Work Affects Your Benefits," Page 1.

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