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I recently received a call from one of my clients who told me he had decided to retire. He is 49 years old. He no longer felt passion for his work and had a list of other ways he would rather spend his time. I thanked him for sharing this exciting news and immediately began updating our long-term plans to reflect this new reality. He is confident, content, and enthusiastic about his future...and he should be.
Another client of mine cut back the scope of his work a year ago but continues to operate his business. He is in his 80s and still finds joy and purpose in his work. He is also confident, content, and enthusiastic about his future...and he should be.
Despite the three-decade age difference, these two clients share some important similarities regarding retirement readiness. They both have the resources to support their chosen paths, they have established plans, and they are doing what is right for them.
One question I am frequently asked is about the right time to retire. When I ask, “Well, when would you like to retire?” I often get one of two answers: “As soon as I can,” or “Never.” Neither is a bad answer, but both are not always possible or advisable for everyone.
In Avoiding a Retirement Landmine in 3 Steps, I mentioned a 2016 Oregon State University study showing that retiring early may measurably increase a person’s mortality risk. More recently, labor economist Teresa Ghilarducci found that the decision to retire "early" or "late" should be less about age and more about other factors such as the nature of one’s work. For instance, her research indicates that many American workers may benefit from early retirement since their work tends to be physically demanding. This group includes a range of jobs from convenience store clerks to healthcare workers. Conversely, "knowledge workers" might experience health benefits from working longer, as indicated in the Oregon State study.
None of this considers the economic facts surrounding retirement. For many Americans, long-term retirement income plans include monthly contributions from Social Security. Recent discussions about raising the retirement age for benefits and concerns over the potential insolvency of the Social Security trust fund understandably increase stress levels. While this is not "good news," some adjustments to Social Security benefits over time are inevitable.
When the Social Security Act was passed in 1935, it set a national retirement age of 65. This was feasible for the trust fund’s health since the average life expectancy then was 58 for men and 62 for women. Most Americans statistically wouldn’t live long enough to collect their first Social Security check! In 1983, Congress voted to gradually raise the full retirement age to 67 (over 33 years for workers born after 1959). By that time, life expectancy in the U.S. had risen to between 74 and 75 years. Essentially, during a period when life expectancy rose by about 15 years, Congress started a decades-long process to raise the retirement age by just two years—almost a textbook case of "too little, too late." Over time, people have generally become healthier and live longer than previous generations. This equates to having to provide for potentially longer retirements.
Lastly, it is worth noting that in today’s America, quality healthcare isn’t necessarily free. While some minimal care is available to almost everyone, one’s economic situation correlates with their health outcomes. In a study on the link between income and health, the Urban Institute and the Center on Society and Health found that the two factors are connected, “at every level of the economic ladder.” This is to say that middle-class Americans are healthier than those living in poverty, but not as healthy as the economic upper class. Even wealthy Americans are notably less healthy than those with even higher incomes.
Returning to the original question, "What is the healthiest age to retire?" There is no clear numerical answer. However, there is a system to determine the right answer for an individual. It starts with just a few questions:
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Do you like going to work?
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If you stop working, are you likely to become impoverished?
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Will retirement be hazardous to your health?
If you want to retire and answered "no" to all three questions, then the best age for you to retire is whatever age you are today. If you want to retire but answered "yes" to the second or third questions, there is still hope. The ideal time to retire may not be today, but we can help you improve your answers for the future.
”Sometimes I think about retiring but not stopping work. Just 're-tiring' - put on some new tires and go on to do something else.” - Jeff Bridges
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