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What Is the Best Age for Retirement?

Most workers, no matter what job they have, eventually reach the point where they're thinking about their age for retirement. Settling on an age for retirement isn't an easy decision. The fact that folks are living longer lives needs to be taken into account, as do any potential health or financial hardships.

When choosing the right age for retirement, you basically have three choices: early retirement, “on time” retirement, and late retirement. Each approach has its own set of advantages and disadvantages, so you should definitely weigh the pros and cons before deciding which one is right for you.

Retiring Early (Age for Retirement: 55 – 62)

For most people, early retirement can come between the ages of 55 and 62. Some folks may actually opt to retire earlier, or go into semi-retirement (where they continue to work by choice, rather than necessity).

The most obvious benefit of retiring early is that it gives you more time to enjoy the “fruits of your labor.” Even if your age for retirement is 55, this generally means you've spent at least 30 years working hard. Now you have the opportunity to relax and enjoy your time with friends and family.

However, choosing an early age for retirement has a significant number of drawbacks. Consider:

  • Early retirement means you've had fewer years to accumulate benefits. If you're considering an early age for retirement, you'll need to save more each year to make it work.
  • Your income will have to last longer if you opt for early retirement. For example, if you retire at age 55 instead of 65, then you'll need an extra ten years of income.
  • Social Security and pension plans may not be immediately available. Or if they are available, you'll likely be subjected to restrictions and benefit reductions.
  • You'll end up paying for your own health insurance until your Medicare benefits kick in.

In short, if you opt for an early age for retirement, you'll need to find a way to accumulate more money for your retirement accounts in a shorter period of time.

Retiring “On Time” (Age for Retirement: 62 – 67)

The traditional age for retirement is between the ages of 62 and 67, when most folks qualify for early or full Social Security benefits.

Choosing this age for retirement can give you a number of advantages:

  • You have more time to build up your retirement fund, and more time to let it grow with compounding interest.
  • You qualify for Medicare right away, so you don't have to worry about the gap in your insurance coverage.
  • You'll receive full benefits from your pension plan and Social Security.

On the downside, you'll have to wait a few years before you can start enjoying the rewards that come from retirement. Also, if you're considering pursuing a potentially rewarding second career, you may find it more difficult than you would with early retirement.

Retiring Late (Age of Retirement: 67 and Up)

There are a number of reasons why you might choose to postpone your retirement. Sometimes, it's necessitated by finances; you simply don't have the savings to support yourself at the traditional retirement age. Other times, it may simply be that you enjoy what you do for a living and you're not ready to give it up.

By waiting to retire, you give yourself more time to save up, while reducing the number of years you'll need that income. For example, if you retire at age 70 instead of 62, then you'll have eight more years to accumulate money and eight fewer years that you'll need to use it. You'll also continue to build up your pension plan, and may even qualify for higher Social Security benefits.

On the downside, you'll have fewer years to enjoy your retirement. If you're considering a later age for retirement, you'll definitely want to include “quality of life” issues in your decision-making process.

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