When Should I Retire?

The ideal retirement filing age depends on your specific financial situation, health, and goals, but here are the key considerations:

Social Security timing:

• You can file as early as 62, but benefits are permanently reduced by about 25-30%

• Full retirement age is 66-67 (depending on birth year) for maximum benefits

• Delaying until 70 increases benefits by about 8% per year after full retirement age

Financial readiness factors:

• Whether you have enough savings to maintain your desired lifestyle

• If you have employer-sponsored retirement plans (401k, pension) and their vesting/distribution rules

• Your expected healthcare costs and insurance coverage

• Outstanding debts like mortgages

Personal considerations:

• Your health and family longevity history

• Whether you want to continue working part-time

• Spousal benefits if married

• Your anticipated expenses and lifestyle changes

Common strategies:

Many financial advisors suggest having 10-12 times your annual salary saved by full retirement age. If you're not there yet, working a few extra years can significantly improve your financial security.

The "break-even" analysis for Social Security typically favors waiting until full retirement age or later if you expect to live into your 80s or beyond.

Consider consulting with a financial advisor who can run projections based on your specific situation, including your savings, expected Social Security benefits, and retirement goals.

Here are additional important factors to consider when deciding on retirement timing:

Employment situation:

• Whether your employer offers bridge health insurance or early retirement packages

• If you're facing job loss or reduced hours anyway

• Opportunities for phased retirement or consulting work

• Whether you enjoy your work and find it fulfilling vs. stressful

Family dynamics:

• Caring for aging parents or grandchildren

• Your spouse's retirement timeline and benefits

• Whether adult children still need financial support

• Family health history that might affect your longevity planning

Healthcare considerations:

• Access to employer health insurance vs. purchasing individual coverage

• Eligibility for Medicare at 65 and what it covers vs. doesn't cover

• Chronic health conditions that might benefit from continued employer coverage

• Long-term care insurance needs

Tax implications:

• Your current tax bracket vs. expected retirement tax bracket

• Required minimum distributions from retirement accounts starting at 73

• State tax differences if you plan to relocate

• Roth conversion opportunities in lower-income years

Lifestyle and location:

• Whether you plan to relocate to a lower cost-of-living area

• Travel plans and their associated costs

• Home maintenance capabilities as you age

• Proximity to healthcare facilities

Economic environment:

• Market conditions affecting your retirement account balances

• Inflation's impact on fixed incomes

• Interest rates affecting bond investments and annuities

Legacy planning:

• Whether you want to leave an inheritance

• Long-term care costs that could deplete savings

• Life insurance needs and costs

The interaction between these factors is complex, which is why personalized financial planning is so valuable.