Retirement is an exciting time in life, but deciding the best age to retire can be a daunting and complex task. It’s important to think through each of your options carefully to ensure you choose an optimal retirement age that maximizes financial security while also allowing you enough time left in life to enjoy the fruits of your labor. In this comprehensive guide, we’ll walk you through some of the factors involved in determining when the right retirement age is for you. Let’s dive in!
Understand Retirement Eligibility and Benefits
Understanding your retirement eligibility and associated benefits is an important first step in planning for the future. Eligibility will depend on a number of factors, including age, employment type, and length of service. Retirement benefits can include pensions, health insurance, and other financial assistance, and are often based on contributions or years worked. With a bit of research and understanding of applicable laws, you can gain quick insight into what a company or organization may offer you as part of their retirement package, ultimately helping you to make an informed decision about your future.
Evaluate Sources of Retirement Income
Retirement income can include Social Security benefits, investments, private and employer-sponsored pensions, and annuities. It’s important to understand the tax implications associated with each source of income in order to maximize your financial returns in retirement. Additionally, you should review and adjust your asset mix periodically to ensure that some of your income will remain liquid so you can use it when needed. By considering all sources of retirement income and making sure they are working together toward your long-term goals, you can put forth a retirement plan that will work for you.
Consider Working Longer as a Financial Strategy
For those close to retirement age, staying in the workforce for a few extra years might be a wise financial move. By continuing to work and deferring Social Security benefits, you can end up with an increase of as much as 8% in your benefit each year until age 70. Moreover, if you’re continuing to work at or beyond full retirement age, your Social Security benefit will not be reduced due to earnings. Additionally, by working longer than what is typically expected of retirees, you have the opportunity to enjoy increased income and potentially increase your retirement savings. In effect, this could lead to fewer years relying on retirement savings while maintaining the lifestyle that you are accustomed to. Of course, your willingness and ability to stay in the workforce longer will depend entirely on your unique circumstances, but it’s certainly something to consider as you prepare for your golden years.
Don’t Forget About Healthcare
Prior to retirement, you should also be sure to explore healthcare coverage options. Understanding Medicare eligibility requirements and benefits is essential here; this involves researching what medical expenses are covered under Medicare and what costs must still be paid out-of-pocket after enrolling in Medicare plans. Moreover, taking into account any additional medical expenses not covered by insurance—such as hearing aids or dental care—can help retirees prepare financially prior to their chosen date of retirement.
Analyze Personal Life Choices and Goals
Assessing your personal life choices and goals is a valuable exercise at any stage of life, but can be particularly useful as you prepare for retirement. Taking the time to reflect on past successes and opportunities to learn from mistakes can help you gain clarity over what direction you should take in the future. Analyzing your life choices can also help you evaluate if the decisions you have made line up with your ultimate goals. Doing this type of self-reflection provides an excellent opportunity to challenge yourself and create balance in all aspects of life, ranging from career aspirations and financial security to personal relationships and hobbies. Taking a moment to stop and analyze is essential to becoming more in tune with who you are, identifying areas of improvement, and ultimately taking steps toward a better quality of life.
Consult a Financial Professional
Consulting with a financial advisor is an invaluable step in the retirement planning process. A competent financial advisor will have an in-depth understanding of the various factors that need to be taken into account when determining the best time to retire. They can help you evaluate your current situation and provide guidance around budgeting, saving, investing, and Social Security strategies, as well as exploring healthcare coverage options and other income sources during retirement. Working with a financial advisor can be the key to helping you make an informed decision about when to retire.
At Milestone Money, that’s exactly what we do. We help pre-retirees and retirees validate goals and plans, identify risks, and gain flexible solutions that serve you throughout your years of financial independence. Get in touch today to get started!
