The Right Age to Retire
To help pick your date, make the most of benefits to which you’re entitled, and run the numbers to see whether your expenses will match up with your income.
When it comes to retirement, the question "What’s your number?" generally refers to the amount of savings you have accumulated, or the income you need to maintain your standard of living. But there’s another number that can be just as critical—and just as elusive. Consider:
TOOL: Retirement Savings Calculator
In the latest Retirement Savings Assessment from Fidelity Investments, the average age at which people said they plan to retire was 64.5. Yet Wells Fargo’s Middle Class Retirement study found that more than one-third of those surveyed expect to work until "at least 80." In the real world, roughly 50% of Americans start collecting Social Security benefits at age 62 or within two months of leaving the labor force, and 70% or more claim their benefits before the normal retirement age of 66, according to a study by Suzanne Shu, of UCLA, and John Payne, of Duke University.
And circumstances have a way of derailing even the best-laid plans. In a study by Genworth, fewer than half of retirees said they left their jobs at the age they had anticipated. Deciding when to retire depends on a complex mix of lifestyle preferences, changes in circumstances (such as divorce or widowhood), health considerations, and, of course, financial readiness. In our cover story 6 Steps to Retire When You Want, we profile two individuals who took different paths: Daryl Owens, 65, who plans to continue working part-time as a nurse anesthetist till age 70, and Bob Parisi, who retired from his job as a data-processing manager at age 59.
To help pick your date, make the most of benefits to which you’re entitled and run the numbers to see whether your expenses will match up with your income. My husband and I recently took advantage of an analysis by Kiplinger’s Social Security Solutions to determine our optimum strategy for claiming benefits. The result: My husband should claim at the standard retirement age of 66, then suspend his own benefits. I’d be eligible for a spousal benefit and he could delay collecting until age 70, when he’d qualify for a larger payment and I could file on my own. Meanwhile, we could both continue working.
That’s not a bad idea. In the Fidelity study, simply delaying retirement from 64.5 to full Social Security retirement age put baby-boomers firmly in the “green zone” on Fidelity’s new retirement readiness score—meaning that they’d be on track to cover at least their estimated essential expenses (though not discretionary expenses such as travel). If the numbers work in your favor, don’t be afraid to follow Parisi’s advice and "take the plunge."
The best cars. Associate editor Jessica Anderson has what many people would consider a dream job. As the driving force behind our car coverage, Jessica spends hundreds of hours undertaking such hardship duties as test-driving the Tesla (and more than 80 other vehicles in 2013). You’ll benefit from her experience in our annual rankings of the best values in new cars. This year we highlight the improvement in American cars and the changing definition of American. You might be surprised to find that the list of cars that are domestic in origin, if not in nameplate, include BMW SUVs (made in South Carolina), Mercedes-Benz SUVs (Alabama), and the Subaru Legacy and Outback (Indiana). As for the new crop of Detroit models, “General Motors and Chrysler have finally turned a corner,” says Jessica. “American cars are back!”
P.S. For another example of people who are enjoying their dream job, see the inaugural installment of our Success Story feature.