Many people have a specific age in mind for retirement. For some people it’s age 55, 62, 65, or after they earn enough service time to draw a pension from their employer. But simply reaching your ideal retirement age doesn’t mean you will be financially prepared to retire then.
The myth of retirement at a certain age. People zero in on a target retirement date for a variety of reasons. Many people in the current generation of retirees worked until they reached the age to begin drawing pension or Social Security benefits. Retirees are eligible to begin drawing Social Security at age 62, but you can increase your Social Security benefits by waiting a few years to begin drawing benefits. Retirees eligible for a pension and Social Security benefits can often choose a date when they can receive both benefits.
But comparatively fewer people in today’s workforce will have a pension to rely upon in retirement. With few exceptions, pension plans are relegated to the public sector and military retirees. If you don’t count yourself among those individuals, then you will need to rethink your target retirement age. You will need to rely on Social Security benefits and your own investments such as your 401(k) plan, IRAs, and online brokerage accounts. Retirees who don’t have a pension plan have more to consider than simply declaring they don’t want to work any longer after age 62.
[Visit the U.S. News Retirement site for more planning ideas and advice.]
How to choose a retirement age. Retirement isn’t just about age. Age certainly plays a role because when you begin to receive your Social Security benefits can have an impact on your payments. But retirement is about a number of factors beyond your age.
You need money. Before choosing a retirement date, make sure you have enough money to sustain your retirement dreams. If you don’t have enough money set aside to pay for your retirement, then you may have to work past your ideal retirement age. Americans who don’t have pensions or other defined retirement benefits probably won’t know when they can retire until they are within two or three years of retirement.
You need a plan. Your lifestyle will be very different during retirement. You will no longer fill the majority of your day with 8 to 10 hours at work. You need to develop plans for that time and have the means to support those plans.
Get started now. Regardless of whether or not you have a retirement age in mind, you should start planning for retirement now. Start saving and investing and work on improving your finances by getting out of debt and paying off your mortgage. You should also plan regular financial reviews with a professional financial planner to make sure your retirement plan is on pace. These reviews become more important the closer you get to your retirement date.