When Should I Retire?

By George Chamberlin

For those of us still working, choosing a retirement age is likely to be an issue we think is important but equally likely to be something we have not really decided. Probably the most important thing to know about this decision is that it will be – or should be – unique to you and your life. Usually, though the conversation about retirement starts with…

…What everyone else is doing

Many times people will respond to a question about retirement age without really thinking or by saying what they believe an advisor – or perhaps their spouse – expects them to say. One might say they will retire at what may be considered a normal retirement age, such as age 65, or respond that they plan to retire at that point in life when they reach financial independence. This sort of knee‐jerk reaction to the important question of retirement suggests that the person responding to the question likely has not really taken the time to think about this issue. You and your advisor can make the process more meaningful by raising questions that will require you to look at what you are doing and want to do.

Things to ask yourself about retirement

What do you think of your job? If you love it and it is something you can do without significant physical effort, you might want to keep doing that job well beyond age 65. Alternatively, retiring today might not be soon enough, especially if that job causes stress which may manifest physically, emotionally or mentally.

Might you change careers or work part time – effectively retiring from your current job or employment? This requires that you know what type of work you would want to be doing and whether there is a way for you to obtain that work that makes sense for your situation.

Would you like to have more time to do those things – travel or family or hobbies or volunteer work – you cannot spend enough time on now because of your job? Are these things important enough to you that you might want to leave a full‐time position and move on to something less demanding or retire entirely from the work force?

Is there a financial incentive to remain in your job for a time and defer retirement? Pension or health benefits, eligibility for company stock, extra time off or other reasons to keep working? How long would you need to work to obtain these incentives and benefits? This line of questioning is intended to look at factors beyond simply a desire for an ongoing paycheck or the need to meet a budget.

What about health? Do you need to retire sooner to enjoy good health or nurse existing poor health for a family member? Does your health (or that of your spouse) limit employment choices or your goals and plans for spending your time in retirement?

Do you have some major financial goals tied to your planned retirement – at whatever age – such as buying a second home or paying off a mortgage or funding a trust for grandchildren? This question is focused on spending other than your basic retirement lifestyle and budget which, naturally, should come first. If additional spending may play a role, then it is important to define it in terms of value and timing as well as its relative priority among all goals.

Getting to a decision

As you can see from these questions, there are a lot of ways one can look at timing their retirement and the factors that might play into that decision. A thoughtful discussion of these items could make your course of action much easier to see and will help guide you to the right decision. Of course, your current financial situation ties into these questions and the factors listed for them. Your decision about when to retire and what you do with the answers to these questions must be based on your finances since the freedom to retire at any time is, at least in part, dependent on your resources.

Your advisor will talk with you about your aspirations and dreams for your retirement as well as the necessities and potential limitations and use the results of that talk to lay out your options for different approaches to choosing retirement ages. Comparing various plans allows your advisor to show how different choices affect you and let you choose the tradeoffs in retirement timing that are right for you.

© George Chamberlin