Retirement

Retirement is the stage of life when an individual stops working full-time and relies on savings, pensions, or investments for financial security. It typically occurs at a certain age, but some people retire early or transition into semi-retirement.

The traditional retirement age is 65 in the United States. The full retirement age (when you can collect full Social Security benefits) is 66 or 67 years old, depending on your birth year. The early retirement age is 62 (the earliest age you can collect Social Security benefits). Typically, 40% of pre-retirement income comes from Social Security for those who decide to retire early.

If you delay collecting Social Security until age 70, you will receive the maximum benefit.

Key Aspects of Retirement

Financial Planning: Ensuring sufficient savings and investments for a comfortable lifestyle.

Pension & Social Security: Utilizing government or employer-provided retirement benefits.

Healthcare Considerations: Managing medical expenses and insurance coverage.

Lifestyle Adjustments: Shifting focus to hobbies, travel, or personal interests.

Estate & Tax Planning: Organizing assets for future generations.

Types of Retirement

Traditional Retirement – Full withdrawal from the workforce.

Early Retirement – Retiring before the standard retirement age.

Semi-Retirement – Working part-time while enjoying retirement benefits.

Phased Retirement – Gradually reducing work hours before fully retiring.

Understanding Retirement

How much Social Security you will receive depends on how much you paid into the system during your working years. This amount should be considered when calculating how much you will need to save for retirement.

This, of course, depends on how long you'll expect to live in retirement, and how much annual income you'll need to live comfortably.

Since people are living longer than ever, many don't have adequate retirement savings needed to sustain themselves throughout their remaining years.

Saving for Retirement

When developing a retirement savings plan, it's important to determine how much income you'll need in retirement to comfortably live.

Expenses should be considered, such as whether there will be a mortgage or rent payment. and if so, how much. The three most frequently used methods of saving for retirement are:

Employer-sponsored retirement plans, such as a 401(k)

Retirement savings, such as investments

Social Security retirement benefits.