Retiring at 70 may seem like a foregone conclusion. After all, at this point, you’ve maxed out Social Security and you’re probably at your peak earnings potential. You’ve been working for over thirty years and should be ready to take it easy.
Yet for many people, retiring at 70 is still an "if" rather than a "when." They may think they are ready, but when it comes time to retire, they keep pushing back the date.
“Some people aren't meant to retire. Some want to play golf, want to travel and see all these beautiful places, and some people want to continue to build something regardless of what age they may be, whether it's 70 or 80,” says Michael Berkhahn, vice President at Graham Capital Wealth Management. “Should you retire at 70 depends on what you're looking for out of retirement.”
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When it comes to retiring at 70, you don’t have to worry about strategies for claiming Social Security since you can no longer collect an additional 8% per year for delaying. Nor do you have to worry about waiting for Medicare to kick in, since that occurs at 65. But there are both financial and emotional matters to consider. Here’s a look at six of them.
1. Am I financially capable of retiring?
Regardless of the age you want to retire, the number one question to ask yourself is can you afford to retire? “Did you save enough to sustain the lifestyle you prefer to have?” says Valerie Johnson, wealth planning manager at Axtella. “Put your financial plan on paper and take the emotion out of it.”
If you don’t think you can afford it, you may have to put retirement on the back burner, lower your expenses or work part-time.
If you do decide to continue to work, make sure to collect your Social Security benefits. Besides not getting a bump in your monthly benefit, you aren’t penalized for working and collecting Social Security after you’ve reached your full retirement age. That’s 66 for people born before 1960 and 67 for those born in 1960 and beyond.
2. Do you have to leave your job?
If you are nearing 70, you may feel like you have to retire, but do you really? If you like your job, can still do your job and nobody is pushing you out of your job, you don’t have to contemplate retirement simply because you’ll be 70 soon. That’s particularly true if your job isn’t physically demanding, there is no set mandatory retirement age or you can do it from the comfort of your own home.
“If you love your job, love your co-workers and love what you get out of work in relation to what you put in, that’s an ideal situation,” says Johnson. “Is it something you have to keep doing or is it something you want to keep doing? You have to make the distinction.”
3. What’s your plan for your retirement free time?
At 70, you aren’t in the slow-go phase of retirement yet, which means you should have a plan for how you’ll spend your free time when you retire. If you don’t, that may be a sign you aren’t ready.
Without a plan as to how you’ll spend your hours away from work, you could fall into a depression or face other emotional challenges. “If you were getting so much value from your work relationships and it just stops, how else are you going to value yourself and your time both mentally and physically?” says Johnson. “You can’t just sit around and watch TV all day.”
4. Is there longevity in your family?
If you are on the fence, you may want to look at your family’s health history for an answer. If longevity is on your side and family members have lived well into their late 80s and 90s, working a few more years may be a financially smart move. After all, chances are you’ll need to amass a lot of savings for more than thirty years in retirement.
But if family members don’t make it past their early 70s or you have health concerns, you may miss out on bucket list items if you put off retirement any longer. “Are you going to live to 100? Are you healthy? It does make a difference,” says Jennifer Pagliara Horton, executive vice president and financial advisor at CapWealth.
5. Is fear preventing you from retiring?
We spend decades saving for retirement, and the idea of spending the money we have amassed can scare us into paralysis. Instead of devising a plan to make our money last for twenty or thirty years, we continue to work and save.
“Spending something they saved can be very scary,” says Horton. “It's a huge mindshift. Clients are so afraid of losing it all.”
If that fear is preventing you from retiring, a visit with a financial adviser may be all it takes to get you off the fence. An adviser can come up with a withdrawal strategy that will ensure you don’t run out of money in retirement.
Want to go it alone? There are many “retirement rules” that can serve as guidelines, including the Bucket Retirement Rule, the 4% rule and the Die with Zero rule.
6. Are you set up for success in the home?
Your housing is a big part of your budget while you're working and will continue to be when you retire, which is why you should have your housing set up before you call it quits. That’s particularly true the older you are when you retire.
After all, if you retire at 70 or later, you likely want to get busy pursuing your hobbies, traveling, or spending time with loved ones, rather than selling your house or making your existing one more suitable for aging in place.
“Are you set up for success in retirement in your current environment? Do you need to downsize to a ranch-style house or do you need to go into independent living? What is your living situation for the next 10, 20 and 30 years?” says Horton. “If you have ten steps between the garage and getting in the house, are you able to sustain that, and for how long is that viable? Those physical barriers can become an issue when someone is 75 or 80.”
You need a plan for aging in place if that's your goal. You should also consider the element that most people overlook: the location of your home.
Follow your gut
Retiring at 70 is a big deal. It's not that easy to reenter the workforce, so it can evoke a greater feeling of finality than retiring at, say, 62. It's also a pivotal point in your life. You're still young enough to enjoy traveling, hobbies and other bucket list items, but that won’t last forever.
As a result, the decision must be based on a multitude of factors, including your finances, health, your feelings about your job and the milestones you want to achieve, but not solely on your age.
“If someone wants to keep doing something they love and they are mentally and physically capable of doing it and it brings them joy, why not?” says Horton.
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