Maybe 65 isn't always the ideal age to retire.


For decades, people have been told that age 65 is the year they are "supposed" to retire, but that may not always be the case.

Financial planner Chelse Stevens with Capital Financial Group wrote up some guidelines for planning to retire at your ideal age.

Financial planner Chelse Stevens shares her tips for finding the right age to retire. (4/21/14)

Where did goal of retirement by the age 65 originally come from?

The age 65 for retirement stemmed from the social security system in 1935, where the committee in charge looked at actuarial tables and decided that between ages 65 and 70, we would be able to sustain this retirement system and not be unreasonable in the length of time we made people wait.

Why is 65 is not necessarily the best age for everyone?

If you look at how we came up with age 65 it was based on actuarial tables, or these tables that were created that showed the likelihood of your passing as you got older, were set in 1935, and obviously our average life expectancy has increased since then. Another thing to take into account is the social security system has increased their 'retirement' age for benefits and have encouraged people to take benefits later, which tells me that on average, people should wait longer to retire.

What is the trend you see for retirement age?

With my clients that are in their 50's and 60's, they are looking at their social security statements, their savings accounts, and 401k statements and are realizing the numbers are not adding up to equal the needed monies to cover their rising health care costs and monthly expenses. They're realizing that they will most likely have to work longer than 65.

Now, people under 50 are more ambitious, wanting to retire at 55 or 60, with the likelihood of Social Security being there like it is for their parents and grandparents is very unlikely. Our system as a whole can not work in the long or even intermediate term with the amount of monies we will be shelling out. That being said, in order to not have Social Security in the retirement calculation greatly increases the amount of money needed to retire, so instead of say 10-15% of your income you might be looking at 20-25% of your monthly take home pay to be able to 'retire early.'

How do you know what age is best for you?

First, take a step back and look at your age, what you have saved up, and your debts. If you haven't been saving 10-15% of your income since you started working, the likelihood that your retirement age will be prior to 65 is pretty low, especially if you haven't been doing all of the right things. The best thing to do is talk to a professional and put all of your cards on the table and they will be able to give you a realistic range. The reason I say range, is that a lot of what we are talking about is dependent on how your investments perform. If they do amazing then maybe the fact you weren't saving as much as you were supposed to would be offset by the fact you were picking the right investments, and the opposite is true as well.

Any other tips?

If you are dead set on an age to retire and the numbers really aren't working out, you won't be able to survive without working longer, don't forget that maybe what you think retirement was supposed to look like might change For example, what if you retired from your current job, and instead worked part time at Lowes because you like home improvement, or you really enjoy talking ot people so you become a receptionist at an office, or you work at a non profit. Instead of putting a huge strain on your assets you would be able to cover maybe most of your fixed costs per month and still be able to 'retire' at that age you had dreamed about. The worst hing you could do is retire just because you have always been told that is the age to retire and then run out of money at age 80 and have to find work because you can't put food in your pantry.

Presented by: Chelse Stevens, Capital Financial Group

Presented on: 4/21/14

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