Deciding when to retire is a big question, and if you’re trying to figure out the best time to say goodbye to your work routine, you might be wondering whether 62, 65, or even 70 is the ideal age.
For many years, age 65 was considered the typical retirement age, largely due to the rules around Social Security benefits. When Social Security was introduced in 1940, workers could start receiving their full retirement benefits at age 65.
Today, the full retirement age for Social Security is 66 for people born between 1943 and 1959, and 67 for those born in 1960 or later.
Unless you’ve been saving aggressively for retirement or you have health concerns that could affect your life expectancy, you may need to keep working a bit longer than you originally planned.
As you approach retirement, it’s helpful to keep the following key ages in mind:
-
Age 55: You can start withdrawing funds from your retirement plans without facing penalties if you leave your job or retire.
-
Age 59½: You’re allowed to withdraw money from qualified retirement accounts like IRAs and 401(k)s without incurring an IRS penalty, assuming the plan allows it.
-
Age 62: This is the earliest age you can begin collecting Social Security benefits.
-
Age 65: You become eligible for Medicare.
-
Ages 66–67: These are the ages at which you reach full Social Security retirement, depending on your birth year.
-
Age 70: This is the latest age you can start receiving Social Security benefits. Delaying benefits beyond age 70 won’t increase your payout further.
-
Age 72: You’re required to begin taking minimum distributions (RMDs) from your retirement accounts.
Retiring Early and Social Security
If you choose to retire early and start claiming Social Security benefits, it’s important to understand the financial implications. You can begin receiving Social Security as early as age 62, but your benefits will be reduced by about 25% compared to the amount you would receive if you waited until your full retirement age.
On the other hand, many financial experts recommend delaying Social Security benefits as long as possible. If you wait until age 70 to start claiming benefits, you could receive up to 32% more than if you claimed at full retirement age.
The Bottom Line: When to Retire is a Personal Decision
Choosing the right time to retire is a deeply personal decision. The best way to ensure you’re making the right choice is to consult with a financial advisor who can help you create a customized financial plan. Your advisor will take into account your current assets, debts, and future needs, as well as your goals and lifestyle preferences.
Today, most advisors use financial planning software, which helps them create smart, personalized strategies based on detailed information about your financial situation. This approach provides a clearer picture of how your retirement plan can align with your long-term goals.
