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What to Know Before You Choose Your Retirement Age

Retirement Age

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Your retirement age determines when and how you can access your retirement money. Retirement age rules vary from plan to plan and from country to country.

Your 401k plan, for example, may define retirement age differently than your pension plan or Social Security. Here are the things you need to know before you choose your retirement age.

1. What is My Retirement Age for Social Security?

The earliest age you can collect your Social Security retirement benefits is age 62, but you do not have to begin benefits at this age. The amount of benefits you receive will depend on the Social Security retirement age that you choose. If you take Social Security at 62, or any time before full retirement age (defined in this article), and continue to work and earn an amount in excess of the earnings limit, your Social Security benefits will be reduced. Don't start collecting your Social Security benefits until you understand how your start age affects your benefits. Married couples in particular need to do careful planning by using a Social Security calculator, as they can get more out of their benefits when they coordinate when and how they each begin their benefits.

2. What Age Can I Begin Withdrawals From My 401k Plan?

You may be eligible to withdraw money from your 401k plan as early as age 55. Different rules apply to distributions you take at different ages. Key 401k retirement ages to be aware of are 55, 59 1/2, and age 70 1/2. If you are not yet 55 and you need to access your 401k money, you might be able to use a 401k loan, or take a hardship withdrawal, however there is creditor protection provided to money in a 401k plan, so you need to think twice before you cash out of your 401k plan.

3. What is the Average Retirement Age in the United States?

The U.S. Census Bureau tells us the average retirement age in the United States is 62 and the average length of retirement is 18 years. Interestingly enough, Social Security defines 62 as your early retirement age and at this age you will receive a reduced Social Security benefit. A lot of Americans are foregoing additional benefits by claiming Social Security early. Those who have pensions, a large amount of savings and the ability to maintain a budget, will likely be in good shape if they choose to retire at 62 or earlier. Those who don't have those things need to consider working past the average retirement age.

4. What is Early Retirement Age?

Many Americans think of age 55 or earlier as an early retirement age. If you can save enough early on in life, early retirement is achievable. Early retirement is most common for those who are either extreme savers or who started work early in the military or in some form of civil service (which means they are eligible for a pension at a young age). My definition of early retirement age is any age before age 65. Rather than retiring early, consider finding work you love to do. Many people use early retirement from one job as an opportunity to find a second career that they truly enjoy.

5. Check Out Effective and Official Retirement Ages by Country

The official age of retirement and effective age of retirement are two different things, and they vary from country to country. The official age of retirement would be the age at which government retirement benefits kick in. The effective age would the the age people choose to retire, even if benefits are not yet available. This article and graph lays it out country by country.

6. Step by Step Guide - What to Do at What Age

This retirement age timeline tells you what retirement planning events are triggered at specific ages, and what you need to do as you near each age. The key ages are 55, 59 1/2, 62, 65, 70, 70 1/2, and 75. Before you choose your retirement age you will need to become familiar with the rules. There are action items you'll want to take as you near each age.

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