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4 Questions to Help You Decide When to Retire

Listen to Best in Wealth Podcast Episode 246

There are a lot of huge decisions you have to make in life. What career are you going to choose? Will you get married? Will you have kids? Will you buy a home? There are many more. But there are not many bigger than this question: When are you going to retire? 

Maybe that is your only huge decision left. Have you really thought about it yet? Because if you are going to retire early, we have to plan for it. In this episode of Best in Wealth, I cover four huge questions you have to consider to help you make one of the biggest decisions of your life.

Outline of This Episode

  • [1:02] What big choices have you made in your life?
  • [2:33] What the 2024 Retirement Confidence Survey tells us
  • [9:48] 4 things to consider when contemplating early retirement
  • [11:04] Question #1: Why do you want to retire early? 
  • [12:34] Question #2: What is your plan for retirement income?
  • [15:00] Question #3: Do you have a plan for health insurance? 
  • [18:00] Question #4: When are you going to collect Social Security? 

What the 2024 Retirement Confidence Survey tells us

Deciding when you are going to retire is an enormous decision to make. Americans are not mandated to retire at a certain age. Certain milestones may make the decision easier. 

  • Age 62: This is when you are first eligible for social security (though you will take a big hit on benefits)
  • Age 65: This used to be the full retirement age (and is still the age when you are eligible for Medicare)
  • Age 67: This is when you can collect your full retirement benefit from Social Security
  • Age 70: If you wait until 70 to retire, you can collect a larger social security benefit

A recent survey suggests that most people want to retire in their mid-60s. In reality, many retire earlier. It may be due to downsizing, deteriorating health, etc. According to the 2024 Retirement Confidence Survey, the median expected retirement age is 65. Only 28% of people expect to retire at this age (up 23% from last year). Most retire closer to age 62.

52% of current workers are expecting to retire gradually. 36% are expecting to retire all at once. Yet 74% of current retirees had a full stop to work and only 18% engaged in a gradual transition. These are all things to consider when deciding what age to retire. 

Why people like to retire earlier

If you had to choose now, when would you retire? Many people want to retire earlier than the traditional mid-60s. Why? People like to retire earlier to enjoy time while they are healthy and physically active. They can travel everywhere they have been waiting to go. They can play pickleball. 

As a financial advisor, we play a huge role in helping clients consider the ramifications of their choice (based on both financial and lifestyle factors). When we are helping our clients contemplate early retirement, there are many things to consider. 

When we onboard clients, we have meetings about investment planning, retirement income strategies, tax strategies for retirement, and insurance and estate planning. That’s before someone is officially signed as a new client.

4 things to consider when contemplating early retirement

Here are four things we consider that may help you make this decision if you are doing this on your own: 

  1. Why do you want to retire early? Are you tired of your current job? Do you have a plan or routine in place for when you retire? What if you simply need a new career? Too many people retire and become depressed because no one depends on them anymore. If you have a good “why,” you can move on to the next step. 
  2. What is your plan for retirement income? We have to look at the wide range of outcomes for retirement plans for an extended retirement. People are living longer and longer. If we have to plan for 40+ years, numerous ranges of return and inflation outcomes must be considered.
  3. Do you have a plan for health insurance? If you are going to retire at 55 or 60, you are not eligible for Medicare yet. Extended health care coverage (COBRA) is expensive and has a time limit (18 months). What can you do to bridge the gap between retirement and Medicare?
  4. When are you going to collect Social Security? If you retire at 55, will you have enough money to survive until age 62 at the very earliest? We have to figure out how you will navigate uneven cashflow until you can claim Social Security. 

Everything matters when we are planning for retirement—especially an early one.  

Resources Mentioned

Connect With Scott Wellens

Podcast Disclaimer:

The Best In Wealth Podcast is hosted by Scott Wellens. Scott Wellens is the principal at Fortress Planning Group. Fortress Planning Group is a registered investment advisory firm regulated by the Securities Act of Wisconsin in accordance and compliance with securities laws and regulations. Fortress Planning Group does not render or offer to render personalized investment or tax advice through the Best In Wealth Podcast. The information provided is for informational purposes only and does not constitute financial, tax, investment or legal advice.