In the U.S., almost 40% of workers expect to work past 70, according to a Willis Towers Watson survey. Yet 63 is the average age of retirement. Sometimes, retirement comes involuntarily because you can't find a job, or can't work any more for health reasons. If you're able to choose when to retire, however, you'll have to determine the right age. 

Unfortunately, that's not an easy question to answer because the choice is different for everyone. There is, however, a way to determine what the right age to retire is for you: It's the age when you're financially and personally ready to leave the workforce for life.

How can you figure out what that age is? Ask yourself these five questions.

Binder labeled retirement savings with a calculator and a coffee cup.

Image source: Getty Images.

1. How many years have you worked?

If you have a defined benefits pension plan provided by your employer, you may have to work a certain number of years to earn your full pension. Of course, since many workers don't have defined benefit plans, this may not be an issue. 

However, Social Security benefits are based on a formula that includes a calculation of average wages over your highest 35 years of earnings. If you haven't worked for at least 35 years, you'll have years of zero wages factored in, lowering average earnings.

If you earned the equivalent of $50,000 every year of your career, your benefits would be based on an average wage of $50,000.  But if you earned the equivalent of $50,000 and only worked for 25 years, you'd have 10 years of zeros, and the average wage your benefits would be based on would drop down to $35,714. 

If you haven't gotten your 35 years in, consider working longer if at all possible, unless you plan to claim Social Security on a spouse's work record. And if you're earning far more at the end of your career than the beginning, working a little longer could also boost benefits, as well. 

2. What will your Social Security benefits be?

Your Social Security benefits are affected by more than just average wages over 35 years. The age at which you retire also matters. Social Security designates a specific age as full retirement age (FRA), depending when you were born. If you were born in 1960 or later, FRA is 67.

If you retire before FRA, Social Security benefits are reduced for the rest of your retirement. The reduction is equal to 5/9 of 1% per month of early retirement for the first 36 months and an additional 5/12 of 1% per month if you retire more than 36 months early. 

This doesn't necessarily mean FRA is the right age to retire. You could decide claiming early makes sense if you don't think you'll have a long life expectancy and want benefits early, or if you claim early so a lower-earning spouse can get benefits on your work record.

Alternatively, you could claim late to increase Social Security income as benefits increase by 2/3 of 1% for each month past FRA that you delay retirement up until age 70. This table shows how an average benefit of $1,404 would be affected based on whether you retire early or late. 


Change in Benefits Compared to FRA

Monthly benefit amount


30% reduction



25% reduction



20% reduction



13.3% reduction



6.7% reduction



No change



8% increase



16% increase



24% increase


Table calculations: Author.

You can calculate your break-even point by factoring in the amount of benefits you earn by claiming early and dividing this by the higher benefit you receive by retiring late. If you live longer than your break-even point, you'd be better off for waiting.

3. How long will your savings last during retirement?

As many as 39% of American workers have nothing saved for retirement, according to the Social Security Administration. Unfortunately for most seniors, it's just not practical to live on Social Security alone.

If you have nothing saved, continue working as long as possible to build up a nest egg and have some investment income as a senior. If you have some savings, determine what income that savings will produce for you -- when combined with Social Security benefits and other sources of income -- and compare that number with your projected retirement spending to see if you've got enough to support you. 

For a long time, advisors recommended that you follow a 4% rule, planning to withdraw about 4% of savings every year so you don't spend your principal balance too quickly. However, longer lifespans and lower returns have made this rule outdated. In fact, a senior following this 4% rule has around a 57% chance of running short of cash based on current returns calculated in a 2013 study conducted by the American College and Morningstar.

The common premise that you'll spend less during retirement than while working is also likely wrong, as data from the Employee Benefits Research Institute shows around half of all seniors spend more. 

If you want to ensure you'll have enough money, estimate how much retirement savings you'll need to replace 100% of income earned while working. Use a 2.5% to 3% withdrawal rate, or calculate the costs of buying an annuity to determine if your savings can produce the desired income. If you've got enough saved, you're ready to retire. 

4. What'll you do about healthcare costs?

If you're going to retire before 65, you won't be eligible for Medicare yet, so you'll need to make sure you can afford the costs of healthcare. Options could include:

  • Getting covered through your spouse's employer if your spouse continues working.
  • Continuing insurance through your former employer. COBRA may allow you to maintain coverage for up to 24 months, but you'll typically have to pay the full premiums. 
  • Obtaining insurance through the private marketplace. You can purchase insurance on an Obamacare exchange, or directly through an insurer. Retirement should trigger a special enrollment period so you can enroll even if you're outside of open enrollment. Depending upon your income, you may qualify for subsidies. 

Going without insurance is very risky, so don't retire until you have a plan to get affordable coverage. 

It's also important to realize that Medicare coverage my not be as comprehensive as you think, so you'll still need a plan to cover care costs once Medicare covers you. You'll need to be able to afford Medicare premiums, coinsurance costs, and services Medicare doesn't cover. Costs can be astronomical, as the Employee Benefits Research Institute estimates a senior couple with Medicare and with high prescription drug costs may require $370,000 to cover healthcare expenditures.

Factor in this healthcare spending when determining how long your savings will last, and consider funding a health savings account to have a dedicated pool of money to use for care. If you have no plans for medical care, you're not ready to retire.

5. What are your plans during retirement?

Research from the Institute of Economic Affairs in 2013 revealed a 40% increase in the risk of clinical depression and a 60% increase in the risk of developing a diagnosed physical ailment after retirement. Retirement can adversely impact physical and mental health because retiring could mean the loss of your community, social connections, and sense of purpose.

Before you retire, think about how your days will be structured. If you don't have goals -- like traveling or volunteering -- make a plan for how time will be spent before you leave the workforce because getting a job back if you discover you're bored may be difficult or impossible.

And if you're married, don't forget to talk to your spouse. You should both be on the same page to ensure retirement doesn't cause relationship stress.

Finding the right age to retire

Ultimately, the right age to retire for you will be the age when you've got enough money saved, your savings will combine with Social Security to provide enough income, you've got a plan for healthcare costs, and you and your spouse are both ready for you to retire.

If you want to retire early, make your target retirement age whatever you want it to be -- just create a plan to save that will ensure you're ready. The earlier you get started, the more flexibility you'll have to retire on your own terms.