It's not uncommon to land on a specific retirement age well ahead of that milestone. And frankly, there are no rules with regard to retirement, either.
It's not like there's a mandatory retirement age in the U.S. You could work until your early 60s or your late 70s -- it really depends on you (and, well, your ability to secure a job).
A recent survey from New York Life found that Americans believe they'll be able to retire at age 64 on average. But is that a good retirement age to aim for? Here's why it is -- and it isn't.
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The upside of retiring at 64
By age 64, you may be ready to wrap up a lengthy career. And the good news is that if you retire then, you'll be eligible to collect Social Security right away, since you're allowed to start taking benefits as early as age 62.
Furthermore, funds you have socked away in an IRA or 401(k) plan are no longer subject to early withdrawal penalties once you reach age 59 1/2. So if you're 64, you're free to tap your nest egg as you see fit, and you won't have to worry about being penalized. The only thing you'll have to account for are taxes on your withdrawals, in the event you're tapping a traditional IRA or 401(k).
Retiring at age 64 might allow you to kick off that period of life at a time when your health is still strong. That could make it possible to meet different goals, like traveling to parts of the world you've never been to.
The downside of retiring at 64
While you're allowed to sign up for Social Security at age 64, you should know that you're not eligible for your complete monthly benefit based on your personal income history until you reach full retirement age. That age is either 66, 67, or somewhere in between, depending on your year of birth. If you claim benefits at 64, you may have to settle for a reduced monthly payment for life.
Also, while you'll be able to tap your savings penalty-free at age 64, do remember that you want that money to last for many decades. So you'll need to be careful in the context of withdrawing funds -- and perhaps withdraw a bit more conservatively given that 64 is a bit on the young side to be retiring.
And speaking of which, while it's nice to retire at an age when your body is still cooperative, retiring too early could put you at risk of growing bored with your newfound freedom. You may end up getting restless if you retire at any age when you may still be capable of working full-time.
Finally, if you leave your career behind at age 64 and lose your health insurance, you'll need to buy coverage independently. You're not eligible for coverage under Medicare until age 65. And going without health insurance is a truly bad idea -- even for a limited window of time.
Clearly, there are benefits and drawbacks to retiring at age 64. So if it's an age you're considering, think through the pros and cons before setting your mind on that specific age.
Of course, just because one survey points to 64 as a projected average retirement age doesn't mean you want to retire at that age. If you love your job, your goal may be to keep doing it until your 70s. And if you're well-off financially and miserable at work, you may decide to call it quits at 60. What you should do, therefore, is make a pros and cons list of any potential retirement age you land on so you can determine whether it's really an optimal choice.
