How do you know when it's time to start a new chapter in your life?

Factors to Consider to Determine the Best Retirement Age for You

by Gary Foreman

According to the federal government, your "full retirement age" can be anywhere between 65 and 67, depending on when you were born. And, if you choose, you can begin taking Social Security at a reduced level when you're 62. The IRS says that you can begin taking money from your IRA without penalty when you're 59 1/2. Your company's pension plan may have yet another year in mind. So what factors should you consider to determine the best retirement age?

Your body may be telling you it's time to retire. Your brokerage statement might be telling you that it's not the best time to retire. Your spouse might have even a different opinion. To help us put the retirement question into perspective, we reached out to Kimberly Howard, CFP(r) and owner of We wanted to find out what factors she thought were important in deciding when to retire.

Q: Having sufficient income is important to most retirees. Is there a way to estimate how much income will be needed?

Ms. Howard: Income needed for retirement depends on your expenses during retirement. For most newly retirees, their expenses increase. Mostly due to wanting to do all the things they have been putting off during work years. After a couple of years, expenses drop to around 80% of working years. The catch is medical expenses have outpaced those reduced working years expenses.

Q: What role does the existence of debt play in determining the best retirement age?

Ms. Howard: Having debt during retirement causes additional stress. Credit card debt can derail planning retirement. Home mortgage stress usually outweighs the income tax deduction received.

One of the most important ingredients for a comfortable retirement is to be debt free when you retire.
Will debt derail your retirement? This simple checklist can help you find out.

Q: Lately you hear people speaking of a "phased retirement." What does that mean and how does it work for people?

Ms. Howard: More and more people are "phasing in" their retirement. They usually quit their full-time jobs and work part-time. This allows them more time, while providing income plus structure and purpose.

Q: Many who are considering retirement are caregivers for their grandchildren or elderly parents. How does this play into the decision of choosing a retirement age?

Ms. Howard: Being a caregiver can be a full-time job. Many do not realize they need some time for themselves.

Will you leave
thousands of dollars on the table
by taking Social Security
at the wrong time? Find out.

Q: Some people fall into retirement when they lose a job a few years before they were planning on retiring. Is that acceptable? Or are there factors they should consider before making that retirement choice?

Ms. Howard: Having a balance between income and expenses is the top priority when determining when to start retirement.

Q: Different programs have different retirement ages. IRAs, pensions, Social Security, Medicare, etc. all have different age thresholds. How can someone contemplating retirement integrate all these various programs?

Ms. Howard: Having a retirement plan is crucial. Retirement program eligibility dates vary. Most allow you a one-time selection process. Selecting correctly could set you up for a successful retirement.

Reviewed January 2018

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Gary Foreman

Gary Foreman is a former financial planner and purchasing manager who founded The Dollar website and newsletters in 1996. He's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money, and Gary shares his philosophy of money here. You can follow Gary on Twitter. Gary is also available for audio, video or print interviews. For more info see his media page.

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