'Stay working, girlfriend': Suze Orman says the final few years on the job are worth far more than most people realize

For example, Kiki, 43, told Suze Orman’s Women & Money Podcast that she wants to retire at age 58 — even though she’s a “recovering workaholic” and doesn’t know what she’ll do in retirement.

“For some reason, I’ve always had 58 in my mind,” she told Orman. But she has “no clue” why. She’s debt-free and has already saved more than $400,000. But, in terms of retirement readiness, Orman still gives Kiki a failing grade of “F.”

Yet, if Kiki waits another decade to retire, this will give her “more than you need” in retirement. “Your way to an A is just stay working, girlfriend,” Orman told Kiki.

There’s no “correct” retirement age for everybody — here’s what to consider.

When should you retire?

Your full retirement age (FRA), as defined by the government, is between ages 66 and 67, depending on the year you were born. But the average retirement age is 64.6 for men and 62.6 for women, according to data from the Center for Retirement Research at Boston College.

But many people have a different age in mind.

More than half of Americans (53%) have a specific age at which they plan to retire, according to an Allianz retirement survey. And seven in 10 aspire to “emulate the financial strategies of those who achieve early retirement.”

Maybe they want to enjoy their retirement while they’re still mobile and healthy. But sometimes early retirement isn’t a choice: a layoff, unexpected health issues or even caregiving responsibilities could derail your plans.

Or maybe, like Kiki, you have a retirement age in mind, but don’t really know why.

But no matter what age you have in mind, the more important question is whether you have enough income to sustain your current lifestyle in retirement.

Kiki, for example, has $357,000 in a retirement account, $43,000 in an emergency fund and almost $10,000 in investments. She doesn’t have any mortgage or consumer debt (she sold her home and is currently renting). So, at age 43, she has a net worth of $410,000.

Orman says if Kiki retires at 58, realistically she’ll need about $4,000 to $5,000 a month for expenses. By then, she should have around $970,000 in her 401(k) and $230,000 in her Roth IRA. But she can’t withdraw money from her 401(k) without paying taxes.

Kiki wouldn’t yet qualify for Social Security and would also need to cover medical expenses until age 65, when she’s eligible for Medicare.

Orman recommends she wait until age 67, in which case “you would have about $1 million more than you currently would have if you retired at 58.” Plus, she’d be able to claim her full Social Security amount, leaving her with about $7,300 a month in after-tax income, “which is then more than you need.”

Other retirement considerations

When determining when to retire, you’ll need to figure out if you have a reliable stream of retirement income that will last throughout your golden years — since it may need to last 20 or 30 years, or even longer (the average life expectancy in the U.S. is around 79).

While Kiki has an arbitrary retirement age of 58 in her head, she can’t claim her Social Security benefits until age 62 and doesn’t reach her full retirement age (FRA) until age 67.

Claiming Social Security before your FRA means you’ll see up to a 30% reduction in your monthly payments — and that reduction is permanent. Waiting until after your FRA bumps your monthly check by 8% annually, up until the age of 70.

Kiki also can’t access her retirement accounts until age 59 ½ without incurring an early withdrawal penalty. At the same time, drawing too soon will affect her long-term income. Building a plan for sustainable withdrawals is essential.