What’s the Ideal Retirement Age?

by | Oct 31, 2013 | Financial Planning, Retirement Planning

It’s easy to accept facts as they are, that “things will never change.” The Yankees win every year, you retire at age 65 and get a gold watch.

I was reading an article about how, in 2013, the US is passing Russia and Saudi Arabia as the largest producer of natural gas. This was pretty widely known. But the US is also about to become the world’s largest producer of petroleum.

This is not a well-known point.

We’ve become accustomed to the fact we import most of our oil, that banks don’t fail, that real estate prices/home values go up every year. We seem to accept these things as gospel truth — until they are no longer true.

We seem to accept two more things here in the United States:
1. Americans are living longer, on average, thanks to medical advances, and taking better care of ourselves
2. The generally accepted, ideal retirement age is 65.

If the first point is true, why do we accept the second point as true?
Do we suddenly become useless on our 65th birthday?

In my position, I am asked a lot of financial planning type questions. But they often get back to the basic topic: Will I have enough money to live on after I am retired?

Answer: I don’t know, no one does. You probably do not have enough to maintain your CURRENT life-style.

But there IS no hard and fast rule you must retire at age 65. The ideal retirement age is going to vary from person to person. In many cases, those last few years of working — whether they be until you are age 65, 70 or beyond, can be a great way to remain relevant, stay social (for your mental health) and also (most importantly) step on the gas and sock money away for retirement.

I’m discovering many folks simply did not know that when Social Security was created in the 1930’s, the average life expectancy in the United States was 66. There was no guarantee when the program began you would live a long life off social security anyway.

And with more baby boomers retiring each day, soon the system financing social security will be upside-down: fewer workers will be contributing to the Social Security program and more retirees will be withdrawing money from the program. The entire social security approach needs to be re-worked, but no one is willing to step up and do the dirty job.

We need to remain flexible in our approach to many financial issues we face. Today in 2013, many people still have no confidence in the stock market. Yet where will they earn an acceptable rate of return? We may live in a world without Social Security, the next generation has already accepted this as gospel truth. So what’s the ideal retirement age? That’s going to depend on you, your savings, your lifestyle, and your overall beliefs. One thing’s for certain though, there is no “law” stating you must retire at age 65. The only constant is change.

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