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Commentary: What to consider when choosing your retirement date

Age 65 has historically been used as a benchmark for retirement. But with longer life spans and, consequently, longer retirements, you may want to work as long as possible. For those with more physically demanding jobs or more financial flexibili...

Bruce Helmer and Peg Webb, financial advisers at Wealth Enhancement Group and co-hosts of “Your Money” on KLKS 100.1 FM on Sunday mornings.
Bruce Helmer and Peg Webb, financial advisers at Wealth Enhancement Group and co-hosts of “Your Money” on KLKS 100.1 FM on Sunday mornings.

Age 65 has historically been used as a benchmark for retirement.

But with longer life spans and, consequently, longer retirements, you may want to work as long as possible. For those with more physically demanding jobs or more financial flexibility, you may be looking to retire as soon as possible.

So how do you decide when you should retire?

While we can't give you a specific retirement age, we can recommend you consider the following before putting a retirement date on your calendar.

Have you saved enough? This is probably the most important question you should be asking yourself before retiring. After all, a successful retirement largely hinges on the ability to financially provide for all of your goals. The rule of thumb to calculate how much you need to have saved is to multiply your desired annual income in retirement by 25.

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This will give you a good ballpark figure to work off of when planning when to retire, but it's possible you could need significantly more than that estimate. For example, if you're dreaming of doing some serious traveling in retirement, it's possible your living expenses will be higher than you expect, meaning the 25-times benchmark will underestimate the amount you'll need to have saved.

What about health insurance? If you retire after age 65, while you'll still likely have additional medical expenses, Medicare will provide a strong foundation for your health insurance needs. But if you retire prior to age 65, you'll need to think about where you'll get your health insurance if your employer doesn't offer retiree medical insurance. COBRA or a private policy can help fill in the gaps, but both can be pricey. Don't overlook these costs when calculating your retirement expenses.

Have you factored in Social Security? Social Security should have crossed your mind when thinking about your retirement, and for good reason: 65 percent of beneficiaries receive at least 50 percent of their retirement income from Social Security, according to the Social Security Administration. Retiring earlier may mean you'll have to claim your benefits earlier, leading to a permanently reduced benefit. On the other hand, working longer can provide the flexibility to delay receiving your benefits, allowing them to grow until you reach age 70. There is no "best" age to claim Social Security; your own situation will dictate how and when you should claim your benefits.

How does your partner feel? Do you and your significant other have the same retirement goals? If you haven't had that conversation yet, it's important to take the time to see if your retirement plans are in alignment. Does your spouse want to have more free time to pursue a favorite hobby? Is working as long as possible your partner's primary goal? Does your partner find more value in spending time with friends and family or greater financial security from a delayed retirement?

Choosing when to retire isn't so much about a specific age as it is reaching the pre-retirement goals you and your significant other have set. The feeling of satisfaction that comes from having reached your goals is the best indication that you're ready for retirement.

By Bruce Helmer and Peg Webb, financial advisers at Wealth Enhancement Group and co-hosts of "Your Money" on KLKS 100.1 FM on Sunday mornings. Email Bruce and Peg at yourmoney@wealthenhancement.com . Securities offered through LPL Financial, member FINRA/SIPC.

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