The average age of retirement in the United States is around 60 years old. Given that, however, most would love to retire earlier.
So, is 57 a good age to retire? The answer is both a Yes and a No. It’s a Yes because you may sign up for retirement at any age and the resignation will vary from person to person. However, it’s also a No because this will make you ineligible for social security benefits until you hit 62.
Most workers seek to break their daily working routine and opt to pursue their dreams or hobbies. Back in the days, most people waited until the late 60s or early 70s to retire, though American citizens choose to retire much earlier.
Since signing up for retirement is a significant decision, the right age to retire depends on yourself.
At What Age Should You Retire?
Retiring is a process, and the happiest retirees begin planning for about five years. Most people are unaware of the need for planning and end up opting for early retirement when their companies bring up the offer.
As discussed earlier, there is no right or wrong age to retire; it all depends on how prepared you are.
Factors to Consider When Opting for Retirement
- The duration you spent schooling
- Student loans
- Cost of education
- Life expectancy
- If you own or rent a house
- Cost of healthcare
- Several job changes during your career
- Passive income generation
Different Ages for Retirement: Which One Works for You?
Retiring around 20-30 is quite early. During this period, you probably haven’t achieved your career goals yet. The primary reason that should make you consider retiring this early will be if you are planning to start a business. At this age, your enthusiasm and energy are at their highest.
This is the age where the majority of the working population begins to gain confidence. Within this age bracket, you have gained experience and are willing to push yourself to greater heights. Retiring at this age should only be for those with a clear purpose and a plan in what they will pursue after retirement.
During this age bracket, the money and power have started trickling in, but the mortgage and kids are coming to you too. Most people consider 40 as a deadline to achieve their goals or change their destiny. This makes this range not an ideal age to retire.
You are enjoying your prime years at your workplace, and retiring seems like not a so good option. At this age, you have worked for more years than you spent at school. Also, quitting your job does not seem like a bad idea, and there is no shame in retiring.
Years have gone by, and if you don’t love your job, you start questioning yourself on how you have managed to work this long doing something you are not enthusiastic about. You begin to wonder about the differences you made and if you have had any impact on those around you. If you had passed a chance to do something different in life, you start wondering what direction your life would have taken.
If you would like to retire at 50 and haven’t saved much, you might as well retire and move into a low-cost community. Also, consider setting up a 72t payment in your IRA account. It will help you access the retirement benefit money free of withdrawal penalty charges.
Maybe you have been doing your job to get your children through college. For others, perhaps the job paid you well enough to keep you motivated. At this bracket, most people consider retiring to follow their passion.
Retiring at 55 could be a feasible idea since most people think their retirement money is inaccessible until they are 59.5. However, there is a special rule in the majority of the 401k plan, which allows people between 55 and 59.5 to access their money.
You start feeling a sense of accomplishment having worked this long, but nostalgia is likely going to catch up with you.
A census done by the U.S Census Bureau shows 62 to be the average retirement age for most citizens. 62 adds up since it is the earliest that you can claim your social security benefits. However, you should be careful with how early you collect these benefits.
You can get much more if you delay collecting these payments. Therefore, it is essential to plan and have other means of savings. Consider checking consolidated accounts, checking the rules surrounding social security claims, and estimating taxes the State will require you to pay.
This period a realistic age to retire, and it’s when you can get to enjoy most Medicare benefits. Nonetheless, at this age, you are faced with numerous decisions to make. What type of health supplement policy would you want? How do you start planning for long-term health care expenses? How well would you handle potential cognitive declines?
At this age, you will also need a plan on how to handle decumulation – how much will you be withdrawing from your accounts? And in what order?
If you have kept your job ‘til you are 70, then it’s likely that you really love your job. Also, you are probably not the type of person who was looking forward to retiring. The best thing about retiring at 70 is that you get the maximum of your social security benefits.
Besides, some retirement products become more attractive with age in terms of reverse mortgages and annuities. You will have to consider making IRA withdrawals since the minimum distribution age starts at 70.5. Failing to meet this requirement will draw a hefty penalty.
How to Determine the Best Age to Retire?
We have seen different age brackets, and you are probably wondering which is the best age for you to retire. Here are three things that will guide you in making this crucial decision:
1. What You Will Do After Retiring
What you intend to do after retiring determines whether or not you are ready for retirement. Retiring without a detailed plan of ventures you would want to start will make retirement seem like a bad option. In a worse scenario, it may lead to depression.
2. Whether You Can Afford to Retire or Not
You should have enough financial resources before considering retirement, and these finances should be enough to support you. One of the facts you should consider is that you need almost 80% of your usual income to maintain the same living standards even after you retire.
Only withdraw 4% of what is in your retirement savings annually to avoid being bankrupt.
3. Your Health
If you are considering retirement before 65, chances are your healthcare expenses will be high. This is because you can only get access to most of Medicare once you reach 65. Also, the majority of people opt to retire due to health issues. Therefore, if you have health issues, it is wise to retire early and take care of yourself.
Challenges You May Come Across if You Choose to Retire Early
You might think of retiring as a transition from a stable paycheck to a fixed income. Nonetheless, some shortcomings will come when you retire at 51. For instance, the retirement benefits from the traditional IRA cannot be accessed.
Statistics in America show that a significant number of workers won’t benefit much from IRAs. An estimated 42% of working adults get less than $10,000 from long term savings. This amount is barely enough to push you through retirement.
Social security is only available for seniors who claim it after they turn 62. Therefore, retiring at 57 deprives you of these benefits. If you have little savings, then inaccessibility to these funds may leave you frustrated.
Think of healthcare. Most employers offer health insurance to their employees. But after retirement, Medicare eligibility won’t kick in until you reach 65. This means that you would have to pay the cost for medical bills.
How to Plan for Retirement
Have you made up your mind and are ready to cope with the above challenges? If you haven’t, here are some steps which will help you make early retirement work for you:
- Start saving consistently – try to set aside a specific amount of money per month. Stick to your goal. For instance, if you are 24 years old and start saving $650 a month, then by 57, you will have saved a fortune that will be helpful after retiring.
- Think twice before investing – retiring early may be beneficial, but it has its downsides too. The transition from a full-time job to a free day without a structured schedule can cause emotional upheaval. It could also result in depression after retirement.
- Take advantage of the social security bonus – most Americans lag in their retirement savings. Saving more every year could boost your retirement savings and your income. Always find a way to maximize your social security benefits and enjoy peace of mind after retirement.