The Right Age to Retire

The “right age to retire” can be different for everyone. Some retire in their thirties while others work well into their sixties and seventies. America’s official retirement age (when workers can claim their full Social Security benefits) is between 65 and 67, and Medicare benefits kick at age 65. However, Social Security alone won’t cover a comfortable retirement for most people. Whenever you decide to retire, it is important to consider the best time to retire from a financial perspective.

Other than hitting retirement age, another way to tell that you’re ready to retire is being debt-free. Having debt can put a major strain on your finances, even on a fixed income. Debt can also make it harder to deal with unexpected expenses. If it isn’t possible to get rid of all outstanding debt before retirement, try to whittle down most of your debt. If all of your kids are grown up, out of the house, and earning their own income, it will be a lot easier to retire. However, if you’re still supporting your kids or elderly parents, you may want to put your retirement plans on hold for a while.

Budgeting for retirement is very important. Before you leave your full-time job, it is important to figure out whether you can live comfortably on your port-retirement income. Adding up monthly costs and factoring in your “wants” is a good way to start budgeting. Once you’ve calculated your estimated monthly expenses, figure out whether you’ll have enough income to cover them. Add up your estimated Social Security benefits, retirement account distributions, pension payments (if you get them), and any other sources of income. Remember that you will owe income taxes on all distributions expect Roth IRAs, Roth 401(k)s, and a portion of Social Security.

While these are not the only way to determine if retirement is right for you at your current stage of life, they are important factors to consider. Retirement is meant to be enjoyable, and making sure that you are able to support a comfortable lifestyle is very important. Retiring too early can be a mistake that leads you to not enjoying retirement at the fullest, so take time to plan carefully in order to make the right decision on when to retire.

At Elder Law of Omaha our passion for seniors and their care is top priority. If you have questions about estate planning or how to plan for long term care and the future, then please give us a call to set up your complimentary 30-minute consultation at 402-614-6400. Visit our website at www.ElderLawOmaha.com.