In retirement planning, the "when" is almost as important as the "how much." Should you strive to retire early, or stick around until normal retirement age? Or, should you keep working well into your golden years?

flickr/ Steven Dipolo

Here are a few considerations that can help you figure out the ideal retirement age for you.

Money matters
Obviously, before you retire, you want to have enough money to be able to meet all of your expenses and maintain your lifestyle for many years to come. But, how much is enough?


Experts tend to recommend about 80% of your pre-retirement income as a good guideline of how much you'll need. However, everyone is different. Some people may need more than this, if you want to travel a lot, for example.

And many people could comfortably retire on much less than this, especially those who have been saving aggressively. For instance, a couple who has been saving 20% of what they make is already used to living on just 80% of their income. And, there are a lot of pre-retirement expenses that are greatly reduced or even eliminated in retirement.

If you commute to work, odds are you'll be spending much less on gas once you retire. Maybe your mortgage or car loan will be paid off by then, eliminating that recurring expense. The point is that you should figure out how much income you'll need, and that you shouldn't just rely on a universal rule from the "experts."

Once you figure out how much income you need, subtract what you expect to receive from Social Security and any other constant income streams you anticipate having (like a pension). Then figure out how much of a nest egg you'll need to get to your income number.

The "4% rule" is used frequently by financial advisors, meaning that you can plan to withdraw 4% of your nest egg each year. I have written several times about this rule being too conservative, but it's a good idea to err on the side of caution when you're in the planning phase.

So, to calculate how much you'll need to meet your income goals by withdrawing 4%, take your income requirement you came up with after factoring in your other retirement income sources like Social Security, and divide the number by 0.04. For example, if I need $40,000 per year in pre-tax income from my investments, I should plan to save $1 million before I can retire.

What will you do afterward?
Another factor in retirement is keeping busy once you're retired, which a lot of people don't take into consideration. If you retire too early, you may find yourself bored, especially if your spouse and your friends are still working.

Source: flickr/ kdothq

Post-retirement plans can also tie into the money issue. For example, if you plan on working part-time after you retire, your initial income requirements from your investments can be decreased significantly.

And, if you don't plan on working, what are you going to do with your time and how much is it going to cost? If you plan to play golf three days a week, for instance, the costs involved can add up fast. The point is that whatever activities you plan to do after retirement can cost money, and that needs to be a part of determining how much you need to save.

Problems with early retirement
If you are one of the fortunate people with enough money to retire early (before you turn 65), that doesn't necessarily mean you should do it. There are a few things that apply to early retirees that you need to consider.

For example, you'll have to figure out how to obtain health care. If you're going to have to pay for it, fortunately the Affordable Care Act makes it, well, affordable, but it can still increase your income requirements significantly.

You also may not have access to some of your retirement savings. If you retire before 62, you won't be able to get Social Security, so that needs to be factored into your income needs. Plus, you won't be able to withdraw your money from an IRA until you're 59 and a half, unless you want to pay a hefty penalty. Some company retirement plans allow withdrawals before this age if you retire, but make sure you double-check. Having enough money to retire is meaningless if you can't use it.

And another problem with retiring early is that your money will have to last a lot longer, so you may want to limit your withdrawals, at least at first. According to one recent report, there is a 31% chance that one member of a married couple will make it to 95 years of age. So, if you retire at 65, there is roughly a one-in-three chance that your money will need to last for 30 years. If you decide to retire early, say at 55, now your money needs to last 40 years.

No such thing as "standard retirement age"
The bottom line is that there is no such thing as a standard retirement age. Many people continue to work well into their 70s and even 80s not because they need the money, but because they simply enjoy working too much and couldn't picture life without it. And then there are plenty of people who will already have one foot out of the door as soon as they can afford to retire.

It all depends on you – your financial situation, personal life, and your goals. With some solid planning, you'll be able to make an informed decision on the perfect time for you to retire.

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