Assuming your employer doesn't force you into retirement, you have the option to end your career at whatever age works for you. That age may be 50, or it may be 70, and the choice is yours.
But many people seem to land on age 65 when it comes to retirement. And it's easy to see why.
Age 65 is a common threshold at which senior discounts go into effect. And it's also the age at which you're allowed to enroll in Medicare.
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But retiring at age 65 could have some negative consequences. And one major player in the financial space agrees that retiring at 65 may be premature for a lot of people.
Don't be so quick to end your career
Although age 65 is when Medicare eligibility begins, it's not full retirement age for Social Security. That ages hinges on your year of birth, and it's either 66, 67, or somewhere in between.
But if you retire at age 65 and claim Social Security at the same time, you'll end up facing a reduction in your monthly benefits for the rest of your life. And that alone could have seriously unfavorable consequences.
Not only that, but Americans are living longer these days in general. And because of that, retiring at 65 could mean having to stretch your savings longer.
In fact, in a recent letter to investors, BlackRock CEO Larry Fink said, "It's not just that more people are retiring in America; it's also that their retirements are increasing in length...All this is putting the U.S. retirement system under immense strain."
He then went on to say, "No one should have to work longer than they want to. But I do think it's a bit crazy that our anchor idea for the right retirement age -- 65 years old -- originates from the time of the Ottoman Empire."
It's a statement worth taking to heart.
The reality is that while everyone is entitled to a nice, lengthy retirement, it's also not out of line to say that a 20-year retirement may be more than enough. But for some people, leaving the workforce at 65 will mean having a retirement that lasts longer than that -- in some cases, much longer. And at that point, the risk of running out of money starts to increase.
Consider working longer if you're able to
If you're confident in your level of savings and are miserable at your job, then you may decide to move forward with retirement at age 65. But otherwise, it pays to consider delaying that milestone a few more years.
For one thing, it could result in a higher monthly benefit from Social Security. Of course, retiring at 65 doesn't automatically mean signing up for benefits at 65. But waiting until full retirement age to claim Social Security (or even beyond for a boosted benefit) could do a lot of good for your financial picture.
Similarly, working a bit longer gives you an opportunity to not only pad your savings, but leave your nest egg untouched a few more years. That gives you more leeway to take withdrawals when you want or need to without having to stress about depleting your cash reserves.
Finally, remember that retirement doesn't have to be an all or nothing concept. You may decide that you're ready to scale back on work at age 65, and that's fine. But rather than taking a "hard stop" approach to work, reduce your hours by 50% and see where that takes you. And if that's not possible at your current place of employment, seek out a different job.
There's certainly nothing wrong with retiring at age 65 if you've crunched the numbers and feel that's the right time for you to end your career. But at least consider what you have to gain by delaying retirement another couple of years.
