Is retiring at 65 a huge mistake? Here's what you need to consider

Retiring at age 65 is no longer a given. About 1 in 5 Americans (19%) aged 65 and up were employed in some capacity in 2023, nearly double the share from 35 years earlier, according to the Pew Research Center. And while Gallup found that, as of 2022, the average U.S. retirement age was 61, the average expected retirement age among non-retirees was 66, up from 60 in 1995.

The age of 65 has long been thought of as an appropriate time to bring a career to an end in the U.S. After all, it's when Medicare eligibility begins. However, retiring at 65 may not be right for you for a number of reasons.

The problem with retiring at 65

One could argue that retiring at 65 means stopping work too young. For one thing, you're not eligible for your complete monthly Social Security benefit until full retirement age, which is 67 if you were born in 1960 or later. If you sign up for Social Security at 65, you’re looking at a permanent reduction to those monthly checks.

Also, with life expectancies increasing, retiring at 65 could mean needing your nest egg to last longer than expected, depending on your health and family history. That could put a lot of pressure on your savings. Continuing to work increases your savings potential.

There's a flip side to consider, too. While 65 may be too young for some people to retire, it may be too late for others — notably those with questionable health.

You won’t necessarily want to work until age 65 if your health starts declining in your 50s. More time at work could mean less time to enjoy retirement. So, all told, there’s a huge balance to strike.

Factors to consider when choosing your retirement age

Nailing down the right retirement age isn’t easy, and it’s often best to keep your plans flexible in case they need to be tweaked. But in general, you should account for these factors in your decision:

• Your health: If your health is strong as you progress in your career, you may be able to plan for a later retirement.
• Family history: If your family has a history of longevity, you may want to consider a later retirement.
• Savings level: Retirement can be stressful when you don’t have enough money to support the lifestyle you’re used to. Limited savings could easily justify a later retirement.
• How you feel about work: If you’ve saved well and can afford to retire early, doing so could mean escaping a stressful job you dread. But if you love what you do, it’s easy to make the case for working longer.

Consider the pros and cons in choosing when to retire. Meeting with a financial adviser and discussing your options is also not a bad idea. They may be able to help you target an age that gives you plenty of time to enjoy retirement without putting yourself at risk of running out of money.