What Is The Best Retirement Age?

Best Retirement Age

I’m asked, either directly or more often – indirectly, about when it’s best to retire. Or some version of “what is the best retirement age?”

And as you might suspect, as with many personal finance matters, it’s more personal and less of a purely financial decision.

In other words, it depends.

In fact, according to the Social Security Administration (SSA), their definition of your “full retirement age (FRA)” depends on when you were born.

As you’ll see in the chart on this page from the SSA, if you were born in 1937 or earlier, your FRA is 65.

If you were born in 1960 or later, your FRA is 67.

And if you were born between 1937 and 1960, your FRA will fall somewhere between 65 and 2 months to 66 and 10 months.

But these full retirement ages really only impact your Social Security retirement benefits, if you’re eligible to receive them.

And regardless of the year, you were born or when your FRA is, you can still retire whenever you want. Your retirement date can be completely different than when you elect to start receiving your Social Security retirement benefits.

So, your Social Security decisions can relate your best retirement age, but they aren’t necessarily dependent upon it.

Another perspective on when the best time to retire involves the timing of accessing accumulated retirement savings.

If you have money in a 401k, 403b, IRA or other tax-deferred retirement accounts, in most cases (not all) you can’t access these funds prior to age 59 1/2 without paying a 10% penalty.

This is in addition to this money likely being taxed as ordinary income in the year you take it out of your retirement account.

So if you’re planning to retire prior to age 59 1/2, be sure to consider the accessibility and potential tax liability associated with funds in your retirement accounts.

Among the possible exceptions to the penalty associated with taking funds from a company retirement account prior to 59 1/2, one of the most notable is also tied to your age.

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Note: none of the above constitutes tax or legal advice. Please consult the advice of a qualified legal or tax advisor regarding your own situation.

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