When to Retire? Average Retirement Age, Social Security & Calculator

The age at which you retire can have a big impact on your finances. Here's what you need to know.

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Retirement age is the age at which a person stops working or becomes eligible for certain benefits, such as Social Security. You can start taking Social Security benefits at age 62, but there are many other factors to consider when deciding when to retire. The average retirement age for Americans varies widely.

There are different ways to define retirement age. It's useful to understand these definitions as they can affect your financial decision-making.

Average retirement age in the U.S.

According to the Federal Reserve, the most common age to retire is 62. Though this coincides with the earliest age you're eligible to draw Social Security, when you retire doesn't necessarily have to revolve around Social Security or retirement account rules. What's appropriate depends on who you ask.

  • According to a 2019 survey by the Insured Retirement Institute, 24% of baby boomers plan to retire before they turn 65, 29% plan to retire between age 65 and 69 and 26% plan to retire at age 70 or older. Another 8% said they plan to never retire.

  • A 2018 Gallup poll of nonretired Americans found that people, on average, plan to retire at age 66.

  • People age 18-29 expect to retire at age 63, on average.

  • People age 30-49 plan to retire at age 65, on average.

  • People age 50-64 plan to retire at age 67, on average.

  • Since 2009, Americans have said they expect to retire when they're 65 to 67 years old, according to Gallup. Only 12% of Americans said they want to retire before age 60.

Many people consider their eligibility for various retirement benefits alongside their personal financial situation to pinpoint their optimal retirement age.

Retirement age for Social Security

Turning 62 might not sound like a milestone birthday, but it is: It's the earliest age the Social Security Administration (SSA) allows individuals to start claiming benefits from the system.

Still, that doesn't mean you necessarily should jump at the chance the minute this checkered flag waves.

Claiming Social Security "early" at age 62 will result in a reduced monthly benefit compared to how much you're eligible to receive at full retirement age, which for most people is 66 or 67. Put off drawing benefits until age 70 and your monthly take will increase by as much as 8% a year. (There is no incentive to claim after age 70.)

How much you receive from Social Security every month depends in part on much you've earned, your age and when you start claiming benefits.

Find your Social Security full retirement age

Although individuals are eligible to start collecting benefits starting at 62, only when you reach Uncle Sam's definition of "full retirement age" will the SSA pay 100% of your benefits. Full retirement age ranges from 65 to 67, depending on your year of birth. For those born in 1960 or later, it's age 67. (If you were born before 1960, use this tool from the SSA to find out when you can celebrate.)

For someone whose full retirement age is 67, starting benefits at age 62 means taking a nearly 30% monthly hit. Conversely, pushing the date forward earns you delayed retirement credits and increases the size of your monthly Social Security check by up to 32% (if you wait until age 70).

How to determine when to start Social Security benefits

How hearty your family tree is. If you come from healthy genetic stock — lots of relatives who became octo- and nonagenarians — and you also expect to live long and prosper, waiting to file may be the better way to go. Extra padding on Social Security checks can come in handy if there's a good chance you might outlast the rest of your investment income.

But filing early can ease the financial burden if you're dealing with pricey health issues, especially if you stop working and lose access to employer-provided health insurance before you're covered by Medicare. If those health issues mean you have may a shorter life expectancy, waiting to take benefits simply may not be worth it — unless you're looking to boost your surviving spouse's future benefits. (There's more on this below.)

Whether you're still working. Once you reach your full retirement age, you can continue to work and still get your full benefits penalty-free. Individuals under full retirement age for the entire year, who have already begun claiming benefits and earn over the annual limit will be penalized with a $1 deduction from their benefit payment for every $2 earned above that limit ($18,960 in 2021). You'll still get credit for those earnings and the SSA will recalculate your benefit once you reach full retirement age.

If you're eligible for benefits on someone else's record. If you're half of a twosome — even a divorced twosome (if married over 10 years) — the effect of all of the issues above should be considered for both parties and, if living together, on you as a couple. For example, a spouse in poor health may want to start benefits earlier while the healthier one delays filing. Or if you're the higher earner, you may want to delay receiving a heftier benefit while you're still alive and, if you die first, leave behind higher survivor protection for your spouse.

If you want to invest the cash. Nowhere does it say you're required to spend the money you get from Social Security. You can invest it in stocks, bonds, real estate or whatever. (We lay out a range of options in a piece on how to invest money.)

One investment-related thing you cannot do with Social Security money is count it as "earned income" in order to qualify for an IRA. However, you can still invest via a regular taxable account. Just remember that in the short-term some investments can be very volatile and not appropriate for any cash you know you'll need in the near term (the next five years or so). Weigh that against the guaranteed return you would get on your money by waiting to file and amassing more delayed retirement credits.

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Think it through and get a second opinion

Deciding when to flip on the Social Security benefits switch isn't a decision to make lightly. Once you start taking benefits, the amount you receive sets the base for how much you'll get for the rest of your life. Also, annual cost of living adjustments (COLA) will be based on that amount.

For context, the average monthly Social Security benefit paid out in 2020 was just over $1,500. For today's seniors, that represents a major income artery — roughly one-third of the money they have to live off of, according to SSA data.

You get one do-over in your lifetime: If you start receiving Social Security benefits, then decide you can hold out longer to get a higher payout, there's a 12-month window to change your mind and repay the money you've already received. Not sure where you stand today? The SSA's retirement estimator provides a ballpark benefit amount based on your actual Social Security earnings record.

If you find you have more questions on Social Security issues, a financial advisor can help you run through various scenarios taking into account the income streams available to you, ongoing investment returns, taxes and other parts of retirement planning.

Deciding when to take Social Security is a decision that will affect the rest of your life. Hiring a pro to talk you through the options can be a worthy investment.

Retirement age for Medicare

Health insurance costs play into the decision about when to retire. Some people may wait until age 65 to retire so they can transition directly from private employer health insurance to Medicare, and avoid paying for health insurance entirely out of pocket.

Medicare is the U.S. government's healthcare program for those aged 65-plus as well as younger people who qualify based on disability.

The Social Security Administration handles Medicare enrollment during a seven-month period surrounding your 65th birthday (three months prior to the month of your birth, your birth month, and three months after your birth month). It's important to enroll during this initial enrollment period (IEP) as missing it can result in late penalties.

» Medicare enrollment: How to sign up?

Caveat: Medicare does not cover all the cost of all healthcare expenses in retirement. Keeping in mind potential out of pocket costs, such as long-term care, is important when estimating expense needs in retirement.

Retirement age for retirement accounts

Within retirement accounts, there are stipulations to be aware of once you hit certain ages.

Tax-deferred retirement accounts

If you have tax-deferred retirement accounts — a traditional individual retirement account (IRA), workplace retirement plans such as a 401(k) or 403(b), or self-employed retirement plans such as a SEP or SIMPLE IRA — your retirement age is basically anytime after age 59 ½. That's when you can make withdrawals from your account without facing a 10% early withdrawal penalty. Since your contributions were made pre-tax, you'll need to pay income tax on the amount withdrawn.

IRAs and 401(k)s also come with another key retirement age: 70½. That's when you have to take what are called "required minimum distributions" or "RMDs." Missing a RMD bears a hefty cost — a 50% penalty tax on any portion you failed to withdraw.

Roth IRAs

Roth IRAs are funded with after-tax money, but you gain from tax-free growth and withdrawals in retirement. Another benefit is that Roth IRAs also provide flexibility for account holders because you can withdraw your original contributions at any time, free from any penalties or taxes.

Once you reach the retirement age of 59 ½ and have held your account for at least five years, you can take distributions, including earnings, without paying federal taxes.

Another aspect of flexibility is that Roth IRAs have no required minimum distribution requirement. This means you can decide when and how much to withdraw from your account, which can help you manage tax liabilities during retirement.

Retirement age for target-date funds

If you invest in target-date funds, retirement age can be anything you want. That's because target-date funds age with you by automatically rebalancing your portfolio from growth investments toward more conservative ones as retirement nears.

Your retirement year is the "target date" of most of these funds, and the funds are conveniently named to correspond with your planned retirement year. If retirement comes in 2049, for example, you can choose a target-date fund provider with a fund named with the year nearest that retirement date (perhaps a "Target 2050" fund).

Calculate your retirement age