What Age Is The Right Age To Retire?
By David Dierking
My parents have been retired for a good dozen years or so now. They’re your typical middle class working couple. They worked hard for many years. Always made sure my brother and I had what we needed. Helped put us both through college as much as they were able. They’re the textbook definition of a couple that had earned a good retirement.
They decided that they were ready to retire as soon as they booted my brother and me out of the house for good. They were regular if not huge retirement plan savers. They built up their nest egg with an assist from an inheritance left by my dad’s uncle. It was the final piece that put them over the top in their quest to officially retire.
My folks have done well in their retirement so far. They’ve bought an RV and travel across the country every winter stopping to do some hiking, sightseeing and visiting friends.
But every once in a while they drop hints that maybe they’re not as financially well off as they’d like. They applied for early Social Security benefits as soon as they reached age 62 because “they needed it”. They regularly ask me when the right time to get in or out of the stock market is.
Did they retire at the right time or did they leave a little too early? I’m not sure we’ll ever know the answer to that but there are a few lessons to be learned from their story. Retirement planning requires careful consideration of a number of factors including the size of the portfolio you’re working with, how old you are and your plans and financial commitments in retirement.
And all those factors need to line up. You may have a big portfolio and the means to retire but if you have some big costly plans for retirement it still might not be big enough. You may be ready to retire early but if your entire portfolio is tied up in IRAs and 401(k)s that you can’t access until you’re 59 ½ (technically there are some ways around this but that’s an article for another day) what do you do then?
The right age to retire comes when you have a portfolio big enough to provide you an acceptable stream of regular income that has little chance of running out AND when the timing is consistent with what you want for yourself. That last part can be just as important as the financial considerations.
I’ve seen people work themselves to the bone to get to retirement only to find themselves bored silly and have no idea what to do with their days once they got there. Some people plain and simple just like their job and/or the social interaction that comes with a day at the office. For these folks, they may never fully retire. They may continue in a part time or consultant’s role because that’s what provides them the greatest fulfillment. Just because you have the means to retire doesn’t mean that you have to.
The answer to the question is different for everybody but in reality you’ll get only one chance to find the right one. If you address both your financial considerations as well as your personal ones, odds are you’ll come out in great shape either way.
Photo credit: mikebaird
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