What Is The Best Age for Retirement?
You’ve been dreaming of a comfortable retirement for decades, one where you can pursue the activities you’ve had to defer while you worked a full-time job and/or raised a family. While many people consider the "official" retirement age as the year you can begin to collect Social Security (65 to 67), the right retirement age for you depends on a number of factors, both financial and lifestyle related.
No one age is the right time for everyone, and while being financially ready to retire is essential, you must also be psychologically ready as well. You should carefully plan for all contingencies before you take this major lifestyle change in order to achieve your dream retirement.
Retirement Nest Egg
Social Security was never meant to fully support you. It is a supplemental program designed to help you manage after you leave the workforce. Actually living well requires much more money than you’ll get from your monthly stipend. Experts often say that you need 1 million to 1.5 million in savings and investments before you retire. Others tell you to have 10 – 12 times your annual income saved. The actual amount that you need depends on your particular situation.
If you plan to travel and indulge in other deferred pleasures, your yearly expenses won’t decline much if at all in your early retirement. As you age, your expenses could decline if you remain healthy and have adequate health insurance. Medicare and supplemental policies will take care of most medical expenses once you reach 65, but you need to consider long-term care issues as well. Nursing homes are wildly expensive. Also, longevity is an issue. Some seniors outlive their retirement savings, even if they remain healthy.
You also need to consider generating income during retirement, frequently through interest yielded by your investments. You can increase this amount by an accelerated savings plan in the decade before you retire. Consult with your financial adviser about investing in companies that routinely increase their dividends during less than stellar economic conditions.
In addition, you may defer claiming social security until you are older than the standard retirement age. If you claim your social security at age 70 instead of 67, your benefit will increase by 24 percent. This plan works particularly well if you enjoy your job and are in hurry to give it up.
You may also downsize by selling your larger home and moving into a smaller, less expensive house that requires less maintenance. Your utility bills will also be lower as will your property taxes. Plus, a smaller home means less daily cleaning and fussing as well and more time for stimulating activities.
If you still have financial concerns, you might consider a part-time retirement job, perhaps consulting in your previous industry. Such a job can provide emotional benefits as well as financial ones, which is important. For some people, retirement offers more than financial challenges.
Your retirement reality can differ from your retirement dream, particularly if you haven’t planned for the emotional challenges this change can bring. If you’ve had a responsible employment position, giving it up can make you feel lost. You will have so much more time on your hands, and while doing nothing feels great for a few weeks, it can get old fast. You may feel unimportant without a paid position. To prevent these feelings, you need to create a meaningful routine, one that makes you feel needed and productive. Otherwise, you may experience depression, a particular danger for seniors.
Some retirees do work part-time, both for the financial and emotional benefits. Others choose to volunteer at hospitals, schools, and charities. Of course, you may choose to travel, but you won’t be on the road all of the time. When you are home, you should have regular activities scheduled.
Recent studies have shown that retirement can accelerate mental decline. Once you quit a demanding job, you may stop challenging your brain. To combat this effect, experts recommend being physically active, eating well, and staying mentally challenged, beyond doing the daily puzzle in the newspaper. Working and volunteering can help keep your brain healthy as can learning a new language or pursuing an intriguing hobby.
Losing mental agility obviously impacts your finances as well. The cost of long-term care is prohibitively expensive and can eat through your savings at an astounding rate, particularly if you do not have long-term care insurance.
With all these factors to consider, you may feel that a happy retirement is out of reach. That notion is simply not true. If you plan your finances well and make the proper lifestyle adjustments, you can have an enjoyable retirement, free of financial stress and emotional issues.
To achieve this happy retirement, you need to work with your financial expert as early as possible in order to build the nest egg you will need. You will also need to plan an activity-filled life that keeps you off your couch and exposes you to new and exciting experiences. Retirement is a beautiful thing when you are ready for it.
And when you are, consider having a Ross Wealth Advisor to help you along the way.