Choosing Your Retirement Date

One of the biggest questions facing workers in middle age is: When should I retire? These days, people are living longer and, even if one retires at the traditional retirement age of 65, can look forward to 20 years or more of active retirement. Flexible work schedules may offer different options in when one chooses to retire, but to retire comfortably, especially at an early age, takes advance planning.

How Much Money Do You Have Saved

The most important factor in choosing your retirement date is how much money have saved up, considered together with how much income you can anticipate from a pension plan, Social Security, or other sources of income. It is many people’s dream to retire at 45, and many people indeed do just that, but for a comfortable retirement at that age, one must start saving early — from the very beginning of one’s entry into the job market. Take full advantage of any 401(k) plans offered by your employer, especially if your employer provides matching contributions. Be frugal in your living habits. And don’t just contribute to a 401(k); put aside as much money as you can, starting with a tax-advantaged Roth IRA account, and then saving in taxable accounts.

Work Part Time Ahead of Retirement

Retirement at such a young age is unrealistic for most. However, you may have other options. If you’re in your mid-50s and want to spend more of your time in leisure pursuits but can’t yet afford full retirement, see if your company might allow you to work part-time. You will still benefit from a partial salary and the satisfaction of keeping busy, and at the same time your company will save money by paying you less. If you can’t work out such an arrangement, then consider retiring from your full-time job and consulting on a part-time basis. As a consultant, you might make close to your full salary but work only half the time. Consultancy has its risks — you won’t be able to count on a regular paycheck, as your employment will be to some degree dependent on the overall economy, on your contact list, and on your ability to market yourself.

Or, if you need just a little income to pay your bills, then retire from your full-time job and pick up part-time employment in an entirely different field, perhaps some occupation you’ve always enjoyed but that doesn’t pay enough for one to make a comfortable living. Jobs for 50 and over in a field in which you have little or no working experience may be difficult to find, but if you show enthusiasm and willingness to work at a low salary, you may convince an employer to take you on.

Retirement in Your 60s

If you’re still working in your 60s, you have several options in choosing a retirement date. You can first consider retirement at 62 — the earliest age at which you can begin collecting Social Security. Your Social Security payments will be at a lower rate than if you were to retire at full retirement age (65, 66, or 67, depending on the year of your birth), but you may have adequate income or resources to otherwise enjoy a comfortable retirement. Or, if you continue to work and pay into the Social Security system beyond your full retirement age, your eventual Social Security payments will be larger. After the age of 70, your Social Security benefits will not increase further, so, as far as Social Security is concerned, there is no advantage to working beyond age 70.

There are many options for picking your retirement date; the more money you can save during your working years, the more options you’ll have. With careful planning, you can ensure an enjoyable and rewarding retirement.