The decision of when to retire is not an easy one. There are several choices to consider, such as how much money you have saved, how healthy you are, and what kind of retirement lifestyle you want. While the timing of your retirement is ultimately up to you, it might be helpful to be aware of when most people decide to do so.
What is the typical retirement age, and how is it evolving? When planning for retirement, what sorts of financial factors should you consider? While we do our best to answer these questions below, a financial advisor is the best person to help you find answers specific to your situation.
The average retirement age is roughly 64, though this varies from state to state. The District of Columbia has a retirement age of about 67, but numerous conditions, including Iowa, Kansas, Maryland, Vermont, and Texas, have a retirement age of roughly 65. Some states have even lower minimum ages, such as 61 in Alaska and West Virginia and 63 in Alabama, Kentucky, and Michigan.
The typical age of retirement has increased in recent years. On average, males retired at age 62 in 1986, while women did so at age 57. In 2016, the typical retirement age for men was around 65, and for women, approximately 63. Many people may need to delay retirement for a while due to changes to Social Security, fewer employer pensions, and increased life expectancies.
The average monthly Social Security payment is only $1,503, and pensions are on the decline, so retirees hoping for a comfortable lifestyle may find that their budget and anticipated spending greatly exceed their projected income. Because of that, they might have to delay their retirement plans.
Whether considering when to retire, Social Security benefits are a consideration once you reach age 62. At age 62, you become eligible to receive Social Security payments, albeit you will only receive 75% of your expected benefits because you have not yet reached full retirement age (FRA). The percentage of your monthly benefit you will receive increases to 93.3% if you wait to start collecting until you are 65. People born between 1943 and 1959 have a 66 FRA, whereas those born in 1960 or later have a 67 FRA.
Your Full Retirement Age, however, differs from the year you will receive the maximum benefit. If retirees wait until beyond FRA to start collecting benefits, they will get an amount greater than their FRA payment. For instance, depending on the month you were born, you can receive anywhere from 108.3 percent to 115.33 percent of your FRA after waiting an entire year past your FRA. In addition, if you wait until you’re 70 to begin collecting Social Security, you’ll get a check for 132% of your FRA benefit.
You must complete some significant tasks before you can truly enjoy your well-earned retirement. First off, if you haven’t been maxing out your retirement savings contributions yet, do so right away.
It’s essential to keep in mind that if you’re over the age of 50, you can put an additional $6,500 into your 401(k), 403(b), or 457 plan as a “catch-up contribution” (b). Catch-up contributions of up to $1,000 per year are allowed for anyone 50 and older with a conventional or Roth IRA.
When you turn 65, you become eligible for Medicare, a federal program that helps pay for medical care for seniors.
The best outcome would be best if you were a citizen of the United States or have worked enough time to qualify for Social Security to be eligible for Medicare. For those approaching retirement, this is a crucial piece of the jigsaw. Healthcare bills are a hefty outlay that can’t be avoided after you hit retirement age. According to some estimates, a retired couple may spend as much as $285,000 on healthcare and related medical costs throughout their golden years.
Not to mention, don’t overlook your Social Security benefits. To estimate your Social Security retirement or disability payment, use the Social Security Administration’s online calculator. The shape of that figure and its impact on your retirement savings could also change your projected end date.
The typical retirement age in the United States is 64; however, this can vary widely depending on a person’s financial situation, the size of their Social Security payment, the amount they’ve saved for retirement, the availability of pensions, and even their preferred retirement lifestyle. At age 62, you become eligible to receive a portion of your Social Security income. Still, it’s important to remember that this is only a tiny fraction of what you’ll get in your lifetime.