Retiring in your early to mid-60s is the sweet spot for countless Americans. After all, at 62, you can begin collecting Social Security benefits, albeit at a lower amount than if you wait until your full retirement age (FRA). By age 65, Medicare kicks in, which covers about 80% of your health care expenses.
As it stands, the average age of retirement in America hovers around 62, according to MassMutual. For many people, retiring early is not so much a choice as a necessity due to a job loss, illness, or the need to care for a loved one. Moreover, they are burnt out or are simply ready to start their next chapter.
But whether or not you join the ranks of people retiring between the ages of 60 and 65 depends on several factors, from the size of your retirement nest egg to the planning around how you’ll spend your time. Your lifestyle will also play a role in whether you can retire at 60, have to wait until 65, or delay even longer.
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To give you an idea of how much you may need, JPMorgan crunched the numbers to create retirement savings benchmarks based on age and income. This model assumes a retirement age of 65, an annual gross savings rate of 5%, a portfolio of target-date funds and a retirement lasting 35 years.
|
Household Income |
Target Savings by Age 60 |
Target Savings by Age 65 |
|
$80,000 |
$550,000 |
$650,000 |
|
$100,000 |
$745,000 |
$925,000 |
|
$150,000 |
$1.065 million |
$1.34 million |
|
$200,000 |
$1.36 million |
$1.71 million |
|
$250,000 |
$1.72 million |
$2.15 million |
|
$300,000 |
$2.25 million |
$2.78 million |
In addition to ensuring you have the income to sustain a lifestyle you envision, you have to consider health care costs if you are retiring before 65. Plus, you need a plan for how you’ll spend your time. For many of us, our self-worth is connected to our jobs; without a job, we may feel lost.
Ultimately, money is always the driving force behind our decisions, and that’s true when you retire. To make sure you are on track, take our short quiz.