How To Calculate Retirement Age

How To Calculate Retirement Age

What is the best age to retire? Determining the answer to this question can be a more complicated process than you may anticipate. You must consider many factors before making this major life transition.

Youll ask yourself how much am I currently earning and spending? How much can I expect to spend in retirement? How much will I get in Social Security when I retire? The answers to these questions will begin to inform what the best retirement age is for you.

We have developed this guide to help you answer these questions and estimate retirement age. By coming up with general goals of your financial future, you can use a retirement age calculator for a retirement estimate based on your specific financial situation.

Remember that the following is no substitute for a detailed financial plan created by a Certified Financial Planning Practitioner or CFP®. to talk with an advisor.

What Is The Average Retirement Age

The average retirement age is 64 for men and 62 for women, but before you start counting the number of years you have left in the workforce, you may want to know some crucial factors.

About half of workers intend to continue working past age 65, and many retirees return to work. Some cut their workload to part-time, and others choose to change careers. Some retirees even return to working full-time and retire again later. In other words, the average retirement age isnt very clear-cut.

Additionally, if you base your decision on the average retirement age of 61, you wont be able to collect your Social Security benefit and you wont be eligible for Medicare.

When Taking Ira Money Earlier Can Be A Good Thing

There’s no question that a higher RMD age gives you more choices in how you use your retirement savings. Even if the RMD age does rise, you might still want to consider taking distributions earlier than later.

For instance, most people see their taxable income plunge once they stop working. If you’re in a low tax bracket, you might be able to take distributions and pay just 10% to 12% in federal tax on them. Doing that in your mid- to late-60s and early 70s can be smarter than taking nothing because it could reduce your RMDs and prevent you from paying higher tax rates of 22% to 24% or more.

Nevertheless, a higher RMD age puts the decision in your hands. For those who want their retirement savings to grow tax-deferred as long as possible, Washington’s latest proposals are exactly what retirees want to see.

The Motley Fool has a disclosure policy.

Read Also: How Long Will My Ira Last In Retirement

Record Hike For Social Security Checks In 202: How Much You’ll Get

Recipients of Social Security are about to see their benefits get considerably larger.

Inflation has wreaked havoc on American budgets in 2022, but it’s going to make Social Security checks quite a bit bigger in 2023. Beginning in January, Social Security benefits will increase , based on this year’s cost-of-living adjustment, or COLA. That’s the largest hike in benefits since the all-time record of 11.2% in 1981.

“A COLA of 8.7% is extremely rare and would be the highest ever received by most Social Security beneficiaries alive today,” Senior Citizens League policy analyst Mary Johnson said in a statement earlier this year. In fact, the COLA has only risen above 7% five times since it was introduced in 1975. The 2022 COLA, in comparison, was only 5.9%.

Next year’s increase represents the agency’s attempt to keep up with ongoing inflation. The adjustment is determined annually by shifts in the Consumer Price Index, which charts year-over-year price fluctuations for goods and services.Read on to learn all about 2023 Social Security benefits, including how much more you’ll be getting next year and when the increase will appear in your check.

For more on Social Security, learn how to access your payments online and how benefits are calculated.

How To Calculate The Amount Youll Need At Retirement

Retirement planning requires you to calculate your retirement age and how much money you will need to save before retirement. The most common retirement savings options in the U.S. are:

• Employer-offered retirement plans, such as a 401
• Social Security
• Investments and savings

You may want to replace a significant portion of your pre-retirement income. On average, Americans live 20 years after retirement. You need to ensure you have enough saved and invested to sustain you for approximately two decades after retiring.

Don’t Miss: Best Places To Retire In California

Using This Retirement Calculator

• First, enter your current age, income, savings balance and how much you save toward retirement each month. Thats enough to get a snapshot of where you stand.

• Want to customize your results? Expanding the Optional settings lets you add what you expect to receive from Social Security , adjust your spending level in retirement, change your expected retirement age and more.

• Hover over or tap on the color bars in your results panel to get further insight into where you stand.

• You can adjust your inputs to see how various actions, like saving more or planning to retire later, might affect your retirement picture.

Disclaimer Of Warranties And Limitation Of Liability

THIS WEBSITE AND ANY DOCUMENTS ARE PROVIDED BY APS AND PSPP ON AN “AS IS” AND “AS AVAILABLE” BASIS. APS AND PSPP MAKE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, AS TO THE OPERATION OF THIS WEBSITE OR ANY ASPECT OF THE INFORMATION, CONTENT, MATERIALS, DOCUMENTS OR PRODUCTS AND SERVICES INCLUDED ON THIS WEBSITE. YOU EXPRESSLY AGREE THAT YOUR USE OF THIS WEBSITE AND THE CONTENT THEREIN IS AT YOUR SOLE RISK.

TO THE FULL EXTENT PERMISSIBLE BY APPLICABLE LAW, APS AND PSPP DISCLAIM ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. APS AND PSPP DO NOT WARRANT THAT THE WEBSITE, ITS SERVERS, OR EMAIL SENT FROM APS, PSPP OR ITS AUTHORIZED AGENTS ARE FREE FROM VIRUSES OR OTHER HARMFUL COMPONENTS. APS AND PSPP DO NOT WARRANT THAT ACCESS TO THIS WEBSITE WILL BE CONTINUOUS OR WILL BE AVAILABLE AT ANY GIVEN TIME. APS AND PSPP WILL NOT BE LIABLE FOR ANY DAMAGES OF ANY KIND ARISING FROM THE USE OF THIS WEBSITE OR THE DOCUMENTS, INCLUDING BUT NOT LIMITED TO, DIRECT, INDIRECT, INCIDENTAL, PUNITIVE, AND CONSEQUENTIAL DAMAGES.

THE LAWS OF CERTAIN JURISDICTIONS DO NOT ALLOW LIMITATIONS ON IMPLIED WARRANTIES OR THE EXCLUSION OR LIMITATION OF CERTAIN DAMAGES. IF THESE LAWS APPLY TO YOU IN YOUR JURISDICTION, SOME OR ALL OF THE ABOVE DISCLAIMERS, EXCLUSIONS, OR LIMITATIONS MIGHT NOT APPLY TO YOU, AND YOU MAY HAVE ADDITIONAL RIGHTS.

Also Check: How Much Does A Couple Need To Retire At 62

How We Use Your Information

We use your personal and financial information for the purposes consistent with managing your pension, for example including but not limited to:

• Verifying your identity
• Provide you with requested services
• Provide information to you about your benefit, and any other information about your pension
• Respond to any special needs or inquiries you may have
• For internal quality assurance purposes, voluntary focus groups and member engagement
• Manage our risks and operations
• Meet regulatory and legal requirements and
• Use your Social Insurance Number for income tax-related purposes as required by the Canada Revenue Agency.

How Should I Invest For Retirement

Financial advisors recommend that your age should guide your retirement investments. When youre younger, choose more aggressive, stock-based investments that may see higher returns. As you get older, shift investments to increasingly conservative, bond-based funds to keep your retirement balance stable.

Your own personal willingness to take on risk should guide how you approach investing for retirement as well. Check out our guide on how to invest for retirement. And if youd prefer to have someone else manage your retirement investments, consider reaching out to a financial advisor or choose a robo-advisor or a target-date fund.

Looking For A Financial Advisor?

Get In Touch With A Pre-screened Financial Advisor In 3 Minutes

Read Also: Judson Retirement Community Chagrin Falls

How Can I Save More For Retirement

When it comes to saving for retirement, the first step is picking the best retirement account. If youre already saving in a retirement account, make sure youre contributing enough to get your employers full matching contribution and then put your contributions on autopilot.

These strategies have been proven to help people save more for retirement, but dont stop there. Make a plan to gradually boost the amount you contribute each year, preferably each time you receive a raise. For more, see our guide on how to save for retirement.

What Is Retirement Age

Retirement age varies from country to country. The U.S. retirement age is 62, at which point you can begin receiving reduced payments of Social Security benefits. However, if you choose to delay retirement until you reach full retirement age or your 70th birthday, you can receive full Social Security benefits.

Retirees aged 65 or older can receive some Medicare benefits for free if they paid Medicare taxes for a minimum of 10 years.

Recommended Reading: Comptia Network+ N10 007 Retirement

Calculate Your Retirement Savings And More

Do you know what it takes to work towards a secure retirement? Use this retirement calculator to create your retirement plan. View your retirement savings balance and calculate your withdrawals for each year. Social security is calculated on a sliding scale based on your income. Including a non-working spouse in your plan increases your social security benefits up to, but not over, the maximum.

How To Use Scripboxs Retirement Calculator Online

Scripboxs Retirement Calculator online is an intuitive tool. Also, it allows investors to try various permutations and combinations to determine their retirement corpus. It is available online for free. Let us see how one can use the retirement calculator online to maintain a comfortable retired life in India.

Step 1: Enter Your Current Age

These help in planning investments. In other words, a retirement fund would vary from person to person. For example, an investor starting their retirement savings at 30 years may have a more aggressive portfolio. While an investor beginning at 45 years is likely to have a less aggressive portfolio. Therefore, the corpus is determined by knowing your current age.

Step 2: Enter Retirement Age

Provide the age at which you want to retire. Your retirement age and your current age will help in determining the period available for building your retirement corpus. For example- if you are starting very early at an age of 20 years and you wish to retire at the age of 60 years then you have 40 years to build your retirement corpus. On the other hand, if you start at an age of 35 years then you will have 25 years to build your corpus for a retirement age of 60 years. Hence, the gap between the current age and retirement age plays a vital role in retirement planning.

Step 3: Enter I Want to Plan for Age

Step 4: Enter Current Monthly Expenses

Expenses Breakdown:

Also Check: Employer Retirement Plans Small Business

How Much Money Do You Need To Retire

A common guideline is that you should aim to replace 70% of your annual pre-retirement income. This is what the calculator uses as a default. You can replace your pre-retirement income using a combination of savings, investments, Social Security and any other income sources . The Social Security Administration website has a number of calculators to help you estimate your benefits.

It’s important to consider how your expenses will change in retirement. Some, like health care and travel, are likely to increase. But many recurring expenditures could go down: You no longer need to dedicate a portion of your income to saving for retirement. You may have paid off your mortgage and other loans. And your taxes are likely to be lower payroll taxes, which are taken out of each paycheck, will be eliminated completely.

Be sure to adjust based on your retirement plans. If you know you wont have a mortgage, for instance, maybe you plan to replace only 60%. If you want to travel every year, you might aim to replace 100% or even 110% of pre-retirement income.

Restrictions And Prohibited Uses

You agree that you will not use this website for any improper, fraudulent, illegal or malicious purpose, including, without limitation, to impair use of this website by others.

You agree not to modify, adapt, translate, reverse engineer, decompile, disassemble or otherwise attempt to discover the source code of this website. You also agree not to develop any similar or competing business or website that uses any portion of, or look and feel of this website, or any of the Documents.

Don’t Miss: Can You Qualify For A Mortgage If You Are Retired

How Much To Save For Retirement

Naturally, the next question becomes: how much should a person save for retirement? Simply put, it’s an extremely loaded question with very few definite answers. Similar to the answer to the question of whether to retire or not, it will depend on each person, and factors such as how much income will be needed, entitlement for Social Security retirement benefits, health and life expectancy, personal preferences regarding inheritances, and many other things.

Below are some general guidelines.

The Takeaway: Figuring Out When To Retire

The steps to figure out when to retire arent fixed in granite. Yet, throughout your life, its wise to do some periodic planning to see just how long your 401 account will last in retirement. Although Social Security wont go away, it also wont support most Americans lifestyle in retirement. Every decade or so, spend some time going through the process of estimating a best age for retirement so you wont have any surprises as you approach this important life stage.

If youd prefer not to delay retirement, you may want to consider working part time in retirement or moving to a lower cost of living area. There are many additional ways to slash costs, if youre set on retiring earlier.

Don’t Miss: Best Places To Retire In The Poconos

Basing The Calculation On Income

Many financial experts recommend a replacement percentage of 70 to 85%. For example, if you make $50,000 per year, your retirement goal could be to live on between $35,000 and $42,500 per year.

Unfortunately, if you are in an early stage of your career or life, this rule of thumb might not be especially beneficial. Your income now may not reflect how much you will earn later in life or what you can expect to spend at a later life stage. Projecting the amount you will want to have for your senior years can be challenging if you are unsure what your pre-retirement income will be.

This rule of thumb also assumes you spend most of what you earn. If you are a saver by nature and spend a much smaller percentage of what you earn every year, it might not make sense for you to use this method to calculate your retirement savings. If you spend more than what you make and rack up credit card debt, perhaps this approach wont work for you either.

Full Retirement Age For Survivors Benefits

Your FRA may be different if youre a widow or widower collecting survivors benefits. In fact, it may be earlier than the normal retirement age for your own Social Security benefits.

If you were born in 1956, for example, your FRA is 66 and four months. But survivors may begin receiving benefits four months earlier, at age 66.

The earliest you can begin claiming survivors benefits is 60. But much like standard Social Security benefits, youll receive a reduced monthly benefit amount if you want access to your survivors benefits before you reach your FRA.

Don’t Miss: Carolina Estates Gracious Retirement Living

How Much Will Social Security Increase In 2023

The 2023 COLA is 8.7%. Here’s how that breaks down for different groups, according to the Social Security Administration .

Predictions fluctuated greatly earlier this year in June, the nonpartisan Committee for a Responsible Federal Budget estimated benefits would increase by as much as 10.8%.

Read on:Is Next Year’s Social Security COLA Too Small?

In July, Marc Goldwein, the organization’s senior policy director, predicted that if inflation remained on its then-current trajectory, the increase would be 11.4%, the highest ever.

But, by August, Richard Johnson, director of the retirement policy program at the Urban Institute, told AARP that “somewhere in the 9% range is probably a reasonable guess.”

Next Stop Social Security

The Social Security Retirement Planner is like a one stop shop for everything retirement.

Youll get all of this information at the Social Security site:

• Your full Social Security retirement age

• An estimate of your life expectancy

• An estimate of your retirement benefits

• Information about various Social Security programs

• The impact of working in retirement on your taxes

• How certain earnings and pensions can affect your retirement income

Armed with data and information from the Social Security website youll be able to better predict your best retirement age. For your next calculations, do a what if scenario for several possible retirement ages. Take your key Social Security benefit amounts for several years between age 62 and 70 i.e. full retirement age, age 70 and a few additional years between age 62 and age 70.

Next, add in any other sources of income you might expect. Maybe you have a state, federal, or employer pension. Well get to your retirement accounts and savings accounts later. Now you have a tally of your guaranteed income stream at several points in time.

Also Check: Invest 15 Of Income For Retirement