When it comes to picking the best age to retire, there’s no one-size-fits-all solution. The question is hugely dependent on the person’s occupation, their financial situation, the country they’re living in, and a host of other factors. Retirement stats can tell you more about it.
A person’s reasons for retiring can also play a significant role. A person considering retirement after a long and successful career at a job they enjoy may put it off for a few more years, while a person who saw their job as nothing but a way to put food on the table might jump at the first opportunity.
So, the question of when is the best time to retire is important if you want to enjoy the rest of your life in relative comfort. Let’s take a closer and more detailed look at some of the conditions for retirement and what you can expect.
Average Age of Retirement
In many countries, there is a minimum age when a person is eligible for retirement, barring special circumstances. While most countries set the legal limit between the ages of 60 and 65, the average retirement age varies, as evidenced by OECD statistics.
Each country has a specific retirement scheme, so you can do your research, weigh your options, and choose when you’ll retire. While it may still be far off in the future for you, it’s never too early to start planning for it.
Yet, you should also keep in mind what retirement entails exactly. How much money will you have? How healthy and active do you expect/want to be? What about your family situation?
The best age to retire varies from person to person, so let’s do some digging and help you figure out what’s the best option for you.
Retirement Before the Age Of 60
Enjoying life has a different meaning for everyone. As we mentioned before, there are people who enjoy their work, and there are people who work only because they have to. Not everyone is lucky enough to be doing what they love.
In the latter case, it’s likely that these people will want to retire earlier because they want to make up for the years they “wasted” working. So, “how old do you have to be to retire” is a question people contemplate for many reasons, and some of them are:
- Dissatisfaction with their career
- Health problems
- Desire to spend more time with family
- Loss of motivation for work
However, it’s difficult to determine whether this trend is on the rise or not. According to available statistics, in some European countries such as Finland, more than 10,000 people had decided to retire before 60 in 2019. If you take the previous year into account, a slight increase is evident.
If you decide to retire early, you must take into account everything that comes with that. On the one hand, it’s true that you get more time to spend with your loved ones or alone (sometimes loneliness is bliss), but you should still think about your finances.
If you don’t have enough savings or other retirement options to carry you through, opting for retirement before 60 may lead to financial problems later on.
The fact is that with early retirement, you trade financial security for the ability to be free from work for longer. Most people who retire relatively young usually face significant financial challenges, because they need to figure out how to supplement their income in future years.
Another critical item to take care of is your savings account. Many people get the impression that their savings are inexhaustible and start spending earlier. Alternatively, they start getting into debt, thinking they won’t have to worry about it. However, if you want to retire earlier, check the numbers carefully just in case.
What Is the Best Age to Retire?
According to MoneyTalksNews/U.S. Census Bureau, the average retirement age is 64. At first glance, this may seem ideal, or at least acceptable.
One of the reasons why people consider this specific time for retirement is because the eligibility for Social Security retirement benefits starts at 62.
Therefore, another reason why 62 is a good age to retire is that, on average, people are still vital and have enough money to live comfortably for the rest of their lives. It doesn’t matter if their dream retirement place is Boca Raton or a tropical island in the Pacific; this retirement age is perfect for either.
Of course, there are always statistical outliers. Some people just feel better after 65, or they need the extra time to save enough for the upcoming years. The ideal retirement age for these people will be a bit later. And then there are people who simply enjoy their work and what they do. They are mostly owners of businesses, though this is not the rule.
These people will spend more time on their jobs but also enjoy significant financial benefits, as Social Security benefits increase to 132% of their standard monthly amount if the age of retirement is 70. As we mentioned before, an important reason why people choose to retire later than usual is their financial situation.
According to Eurostat statistics, almost half of men over the age of 65 are still employed. These are mostly part-time jobs, while the number is slightly higher for women—about 64.1%.
A large number of people retire financially unprepared, for various reasons. If you look only at the financial aspect, the answer to the question of what is a good age to retire would be—as late as you can.
Why Do People Retire?
As mentioned previously, there are many reasons why people choose to retire. On the one hand, some people want to have more free time to spend with their families or simply enjoying their hobbies.
On the other hand, the financial aspect is also important, and the age at which someone chooses to retire also depends on this aspect. In general, however, there are three reasons:
- Social Security
The Best Age to Retire for Longevity
The desire to retire earlier lies in the fact that people want to live longer. This mindset is mostly right for people who are engaged in physically demanding occupations, or those exposed to significant stress in their jobs.
With that in mind, it may not be surprising that people in such professions decide to take such a step. Relief from physical and mental stress can have a positive impact, and for such people, the best time to retire is before they turn 60.
Health and vitality are closely related to work. There are many examples of people reporting various illnesses after leaving their jobs and retiring. However, even if someone has the desire to retire earlier because they want to live longer, retiring from work earlier isn’t a guarantee.
Quality time spent with family and more leisurely physical activity, among other things, can also positively affect life expectancy.
The Best Age to Retire for Health
Health is one of the essential aspects when it comes to retirement. Of course, there are many things in life that people care about, but for most, it is health. It is quite natural to take into account that with age come specific health problems, and people in later years are more sensitive and fragile.
Consequently, older age comes with higher treatment costs, which is an important consideration when making such an important decision. For those with the question “at what age do people retire for health,” the closest correct answer would be 65.
The reason for that is a financial one, again. On the one hand, early retirement relieves you of the stresses that come with work, which results in a slightly longer lifespan. But on the other hand, the reduced income puts you under more financial pressure.
Statistics say that people who leave their jobs before the average age of retirement, which is 65, have, on average, about $1,000 more in healthcare-related monthly expenses.
With this in mind, many think that people who retire after 65 have a slight advantage, at least when it comes to healthcare. If you decide to retire after the age of 65, you should already be eligible for Medicare.
In this regard, you should be aware of data that says, according to Fidelity, that married couples over the age of 65 usually spend around $295,000 a year on health care.
Best Age to Retire for Social Security
A Transamerica Center survey has shown that 64% of workers are confident in full retirement with a comfortable lifestyle, with only 18% being very confident.
With that in mind, it’s no wonder that people decide to retire as late as possible to enjoy all the benefits. When it comes to royalties, if you opt for a slightly earlier pension, you can expect lower revenue by as much as 25%.
On the other hand, when talking about just income, retiring at 70 would be the best choice. The reason for this is that, in that case, your monthly benefit from social security will be higher.
How to Know It’s Time to Retire?
a long working life, many people simply feel like leaving everything and enjoy life. However, desires are one thing, and reality is quite another. So, people often ask the question of how to decide when to retire?
Keeping in mind that this feeling is widespread, you can use several guidelines to assist you in making this decision. Among these guidelines, several stand out:
- You are tired of working
- You are free of debts
- You no longer have to take care of your kids
- You are financially secure
Fed Up with Work
When thinking about the best age to retire, it’s important to keep in mind that those at a younger age can still have a lot of work ahead of them.
However, young people, no matter how dissatisfied with their jobs they are, can always change their careers and look for something better.
However, if you are more mature and find the thought of any other job difficult at your age, you can consider these as signs you need to retire.
You Are Free Of Debts
Imagine this situation: for a long time now, your job has not brought you the same feeling of excitement as before. You no longer go to work with the same excitement and, instead, wake up every day with the same thought—how much longer can you go on like this?
You realize that your children have already found their homes and settled down. Your grandchildren are growing up, and you have a desire to spend more time with them. As a result, you are considering retiring at 60.
The question arises whether the necessary conditions exist for you to take the essential rest from work without any worries. One of the conditions for a worry-free retirement is to get rid of all debts.
This situation means that you have already repaid the mortgage for your house, or you haven’t previously loaned money from the bank for a new car.
Settling all debts is the best retirement guide you will get. Retirement, especially earlier, also means a decrease in income. Debts, installments, and mortgages are just additional costs that will burden your already limited budget.
For this reason, it would be best for you to consider and postpone your retirement for a while longer, at least until you find a way to offset the additional costs.
Taking Care of Your Kids
Children are everything and, as parents, you will always be ready to help them in any way. But, if you are already a certain age, have no debts, and no longer need to help your children, this can be a good sign of when to retire.
It’s clear that parents and grandparents are always there to help their loved ones. As a result, many are willing to postpone their retirement to contribute to a better life for their progeny.
However, if you see that your children are already living their lives independently from you, and your grandchildren are slowly moving towards becoming independent, it’s usually a good sign that you are ready for your long-deserved retirement.
If you have amassed savings to your account on time, you have probably also settled all debts. This situation could be the ideal answer to the question of when can you retire without regret.
If you have decided to retire at any age, it’s essential to be sure you have carefully planned all your future expenses. Planning your potential costs well and making a good plan to make your savings last as long as possible are the main prerequisites for a carefree retirement.
Transitioning To Retirement
One of the questions that often bothers those who are ready to retire is how to go through this process. People, after certain working ages, struggle between retiring immediately or preparing for retirement more slowly. Indeed, there are pros and cons in both cases.
In case you want to retire immediately, you must take all the necessary steps to make the process as smooth as possible. If you have carefully calculated your expenses and the way to use your savings frugally, you can immediately go on your well-deserved vacation.
However, if you are unsure, take on some part-time work. According to a Transamerica Annual study, only 22% of respondents want to quit their jobs immediately and retire. A slightly higher percentage, about 27%, want to switch to part-time jobs first to create a smoother transition to retirement.
What About Early Retirement?
Of course, some people simply want to retire as early as possible and spend the rest of their lives doing something that makes them happy. However, the question arises as to how financially feasible this process really is.
For example, let’s assume you were the owner of your own business, which you sold, or done the same with expensive real estate that brought in a substantial income. In this case, retiring at 35 can seem like a complete hit.
However, if this isn’t the case, you need to be sure that what you are doing is the right thing to do. It’s undoubtedly clear to everyone that the IRA’s rules on withdrawing money before 55 are stringent.
On top of all that, you have to consider the potential health costs, which can be very high. Given all these facts, many believe that the best age to retire early is somewhere around 55.
If nothing else, you will be seven years away from social security eligibility. Additionally, be ready to pay a 10% penalty to the IRA if you decide to retire early (between 55 and 59 ½, to be precise).
Without a doubt, everyone has at least once thought about retirement and all that it brings. When it comes to this crucial topic, the crucial thing is to find a middle ground between desires on the one hand, and reality on the other.
Given that each person is different, it’s complicated to determine what the best age to retire is. There are no universal instructions on when to take the indefinite vacation from work.
However, all that matters is that you are sure that you want to retire and that you have covered all possible aspects of making your final decision. Good luck!