Feb 11, 2025
Planning for retirement isn’t just about saving money for your golden years. In fact, the age at which you retire is a significant decision that can greatly affect your post-retirement finances.
People often debate about the ideal age to retire in America, and there are a few schools of thought. For some it could be 65, when you qualify for Medicare benefits, but others might suggest 60, when you’re old enough to gain access to the funds in your Individual Retirement Accounts (IRAs) without incurring a 10% tax penalty.
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The truth is there isn’t necessarily a one-size-fits-all answer. Some people may decide to retire earlier due to health concerns, or to spend time with family, while others may feel confident enough to extend their working years well into their 70s.
Only you can decide when is the right time to call it a career, but according to a recent survey, there seems to be a consensus on the ideal retirement age in America.
And the survey says…
The 2,000 retirees and pre-retirees who participated in MassMutual’s 2024 Happiness and Retirement Survey believe 63 is the ideal retirement age for Americans. And while it’s hard to pin down exactly why the respondents collectively landed on 63, there are pros and cons to retiring at this age.
For example, one benefit to retiring at 63 is that you have access to the funds in your IRAs, and since you didn’t immediately dip into these funds when you were eligible at 59 ½ years old, your IRAs were likely able to continue growing due to three extra years of investing into them.
Another benefit to retiring at 63 is that you’ve delayed claiming your Social Security benefit by one year, which means your benefit checks will be slightly larger. Retirees are able to claim Social Security benefits at 62, but your benefit checks will grow by a certain percentage for every year that you delay your claim until you reach the age of 70.
And, of course, retiring at 63 allows you to begin enjoying your golden years right away, as opposed to delaying your retirement and stressing out at the office for a few more years. But there are disadvantages to retiring at 63 that are also worth considering.
For example, retiring at 63 means you would have to fund your own health care for a couple of years. Since the qualifying age for Medicare is 65, retiring at 63 could put a strain on your finances as you’re forced to cover your own healthcare costs for two years. Retiring early also forces you to start spending your retirement savings sooner than later, and the earlier you dip into that pot, the more likely you are to potentially run out of retirement funds.
As much as age is an important factor in deciding when to retire, so too is the status of your retirement savings. More than 35% of pre-retirees surveyed believe they are behind on their retirement savings, while 34% believe they will eventually outlive their savings after they retire.
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Your financial situation will likely be a significant factor in your decision on when to retire, but there are other factors that can play a crucial role in that decision as well.
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What drives happiness in retirement?
We all want to enjoy our golden years when they come, and most of the survey respondents seem to be doing just that. The vast majority of retirees surveyed (82%) noted that they’re more relaxed on a day-to-day basis than they were before retirement, while around 75% reported feeling less stressed since quitting their day jobs.
But happiness in retirement often depends on how well you’ve prepared for it financially, and that preparation can go beyond simply saving your money. As the MassMutual survey notes, 61% of retirees say they were much happier in their golden years because they followed through on their plans to pay off debt five years prior.
Money, however, isn’t the only factor in preparing for a happy retirement. Your health, connection to community, and maintaining a sense of purpose also play huge roles in enjoying your post-retirement days.
As the survey notes, retirees who spend their days doing certain activities — such as spending time with loved ones, exercising, traveling, and pursuing their favorite hobbies — were found to be much happier than the respondents who don’t do such things. It’s also worth noting that the majority of retirees who prioritized taking care of their health, along with preparing their finances well in advance, also saw higher levels of happiness.
But none of the factors above have any direct correlation to an “ideal” retirement age. When you choose to retire is entirely up to you, and the factors that should be considered can vary from person to person.
Your finances, health, social connections and hobbies are bound to have a significant effect on your level of happiness when you retire. How these things factor into your decision on when to retire is up for you to figure out.
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Sarah Li-Cain, AFC is a finance and small business writer with over a decade of experience.
