Investing
September 10, 2018

When Should You Plan to Retire?

Simple. Thrifty. Living.

Planning for your retirement is one way to support long-term financial health. But making those calculations isn’t always easy. In order to know how much to put away, and in what instruments, you need some sense of when you’ll tap into the funds. Thinking about these factors can help you come up with a reasonable plan for your future.

This may be one of the hardest factors to predict, but it may also be one of the most important. People are living longer, even if they are only in average health. As a result, you can reasonably expect to live on your retirement savings for a couple of decades or more. If you retire at age 65 and live until the age of 90, that’s 25 years of retirement. If you don’t think your retirement savings will be enough, you might want to consider staying in the work force.

There are two important ages when it comes to Social Security: 62 and 70. Sixty-two years old is the earliest you can start receiving your Social Security entitlement, but your benefits increase the longer you wait to be paid out. These increases stop at age 70, but if you keep working until that age you will receive the maximum benefit. The Social Security Administration has a planning tool that allows you to determine both your life expectancy and your benefit amount based on the age you begin to withdraw.

Regardless of when you retire, Medicare becomes available to you at the age of 65. However, it doesn’t cover all expenses. You also have a choice of Medicare plans, so it may cost you more or less than you originally anticipate. In your retirement planning, budget for premiums, out-of-pocket costs and dental services. If you can stay on your employer’s health care plan by working longer, it may be worth your while.

There are conflicting academic studies about whether retiring early is good or bad for physical and mental health. Like many issues surrounding life planning, it’s a highly individual factor. Weigh your own feelings about this issue and whether it’s better for you to keep your job for longer or to enter your retirement years.

It’s hard to know what life will look like in the years leading up to retirement. But having a plan in place can help you feel more in control of your financial life. Regardless of what happens, it usually works in your favor to look ahead and take sensible steps to give yourself security.

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