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Maurie Backman
7 min read
The U.S. doesn't exactly have an official retirement age. Sure, there are age-related requirements you need to meet to be eligible for certain programs, like Social Security and Medicare. And you generally can't make penalty-free withdrawals from an IRA or 401(k) before turning 59 and 1/2.
But otherwise, you get to decide when you want to retire. Let’s say, for example, that you’re in your early 60s and you’re planning to retire within the next year. You earn $200,000 per year and you’ve built a substantial nest egg. But with your retirement now just one year away, you’re left asking yourself: am I really ready to retire?
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A 2024 MassMutual study found that 63 is the optimal age for retirement, according to both retirees and pre-retirees. But whether you’re younger or older than that, if you have one more year until your retirement kicks in, now’s the time to get serious.
You may be eager to retire for a variety of reasons, whether it’s burnout at work or the desire to spend more time with family. But before you make your decision official, make sure you’re ready both financially and emotionally.
First, look at your savings. A 2024 Northwestern Mutual survey found that Americans think it’ll take $1.46 million to retire comfortably.
That doesn’t mean you’ll need a $1.46 million nest egg to pull off retirement. You may have other income, like a generous Social Security benefit, that allows you to get away with saving less. But it’s important to see what shape your savings are in, and also, how much annual income your savings will give you.
Remember, $1.46 million might look like a lot of money. But if you apply a 4% annual withdrawal rate to that sum, that gives you $58,400 in annual income, not including adjustments for inflation. Whether that will suffice for your retirement depends on what you want your senior years to look like.
It’s also important to estimate your retirement expenses — and make sure you’re accounting for unknowns, like home repairs or higher-than-expected medical bills. It may help you to know that Fidelity puts the cost of healthcare spending in retirement at $165,000 for a 65-year-old retiring today. But if you have known health issues, you may want to brace for larger bills.
