It may be the quintessential retirement question in all of human history, “When should I retire?” You ask the retirement gods of Valhalla to help you find the answer you seek. But the quest for the perfect retirement age only produces more questions.
It used to be that 65 was the magic retirement age. From the time President Franklin D. Roosevelt signed the Social Security program into law on August 14, 1935, until 1983, being 65 meant a full Social Security benefit. But in those days, life expectancy was much shorter and people lived, on average, 12 years after they retired.
People began living longer—much longer. The government’s response was to raise the age at which retirees could receive a full Social Security payout. So, from 1983 to 2000, Full Retirement Age (FRA) was raised to a minimum of 66 and a maximum of 67, all dependent on when you were born. Under the new regulations, if you claim Social Security before your Full Retirement Age, you receive a permanently reduced Social Security benefit.
There are also some key ages and events to factor in as you search for your perfect retirement age.
- Age 55: You can withdraw retirement plan savings without penalty if you leave your job or retire.
- Age 59½: You can withdraw money from qualified plans and IRAs without IRS penalty, as long as the plan allows.
- Age 62: The earliest age you can collect Social Security.
- Age 65: You become eligible for Medicare.
- Ages 66–67: Social Security full retirement age, depending on when you were born.
- Age 70: When the possibility of Social Security delayed credits ends.
- Age 72: You must start required minimum distributions from your retirement plans.
The reality is, there is no one-size-fits-all perfect age to hang up your career. But there are some things to consider:
- Are you willing to accept a permanently reduced Social Security benefit if you retire before your Full Retirement Age (FRA)?
- Can you wait until your Social Security FRA to receive 100% of your Social Security benefit?
- Will you retire at 65 when you’re eligible for Medicare?
- Can you wait until 70 to draw Social Security when you’ve received all the delayed credit increases possible for waiting past your FRA?
- Are you healthy?
- Do you enjoy your job?
- Do you have enough money saved for retirement?
- How much money do you owe or are you debt free?
- What’s your family’s longevity history? How long did your ancestors live?
Finding your perfect retirement age may also depend on where you live. A study by GoBankingRates found that in most states, people are leaving the workforce before they hit 67 years old.
And what about people that have already retired or discovered their perfect retirement age? Here’s a list of the average retirement age in every state.
District of Columbia: 67
New Hampshire: 65
New Jersey: 65
New Mexico: 62
New York: 64
North Carolina: 63
North Dakota: 65
Rhode Island: 65
South Carolina: 63
South Dakota: 66
West Virginia: 61