Most of us look forward to our retirement; in fact, we can’t wait for that time to roll around! However, given how flexible employers have become in managing their personnel, many people approaching retirement age may be uncertain about how to transition into retirement. Even the most basic of questions — “At what age can I retire?” — will bring forth a variety of different answers.
When you can afford it
The simple answer is, you can retire whenever you have sufficient funds or unearned income to live on in a manner that is comfortable to you. Sports stars and other celebrities can retire in their 30s if they are wise enough with their money to ensure sufficient income for the remaining 50 years or more of their lives.
Or, if you begin saving money vigorously at a young age, you have a chance to put enough aside for retirement in your late 40s or early 50s. However, you will likely need to deny yourself many of life’s pleasures during the prime of your life. For most people, the trade-off is not worth it. Most people conclude that opportunities should be taken throughout the course of one’s lifetime, and not saved up for the end. If we should die unexpectedly at age 50, we will certainly have missed out.
Retire at full retirement age
A more realistic retirement age for the rest of us is “full retirement age” as defined by the U.S. Social Security Administration (SSA). This is the age at which U.S. taxpayers are eligible to receive full Social Security benefits. For Americans born in 1937 or earlier, that age is 65. If you were born in 1938 or later, full retirement age is indexed up month by month, to a maximum of age 67. If you will have no other source of income in retirement, you’ll probably have to work at least until full retirement age as defined here, so you won’t have an income gap between your paychecks and your Social Security benefits checks.
The SSA allows you to begin collecting benefits checks as early as age 62, but the amount of your check will be reduced by as much as 25 percent. This may be an option for you, especially if you have other sources of income.
Health insurance a must in retirement
Another consideration is health insurance, especially if you work for a company that offers good health insurance benefits to employees but not to retired employees. Medicare — the U.S. government-sponsored health insurance program for elderly Americans — does not kick in until you turn 65. If you retire before that age and your company does not offer coverage to retirees, then you will have to find private medical insurance during the interim, which can be expensive.
You may have a few options; check with the personnel department at your place of employment. When you retire, you will mostly likely be eligible to continue coverage through your company through a plan called COBRA (Consolidated Omnibus Budget Reconciliation Act). Under this plan, you can stay enrolled in your company’s group policy for up to 18 months after retirement, but you pay the entire premium, plus a 2 percent administrative fee. You’ll certainly be paying more for your insurance during this period, but it will still be cheaper, through your company’s group plan, than if you were to purchase insurance as an individual.
So, there are many variables to consider in answering the question, At what age can I retire? If you are serious about early retirement, then start saving early, but don’t lead a life so Spartan that you can’t enjoy it in the meantime. If you have other means of income or an inheritance, you can still retire before “full retirement age” if you run the numbers and find that you can manage comfortably. However, if Social Security benefits and Medicare will be the bedrocks of your financial security in retirement, then you will likely have to work until at least age 65.
And that may not be such a bad thing. Many people who retire early find themselves bored, and just go right back to work again anyway!