#AskGradMoney: Should I Plan to Retire at age 70?
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"I heard that I can get the maximum Social Security payment if I wait to retire at age 70. Since I definitely want more money in retirement and likely won't be able to save as much as I want to, should I just wait to retire until after 70? Thanks!"
This question is way more common that you think, and it really shouldn't be. There are some advisors and online sites that provide the same useless formula to everyone who reaches a certain age. If you have any savings that is definitely something and it sounds like you still have time until retirement. The reason I mention this is that there are so many people in their 50s who haven't remotely started saving for retirement and THESE are the people who will end up working until age 70 and beyond.
If you have saved, you can retire without much money woes. If you haven't saved, and you're still young, let this be a lesson: start saving NOW.
Some advisors say generally that you have enough to retire if, after you subtract out all predictable income (i.e. Social Security, government/corporate pensions, or net income from owned property like collecting rent) the annual amount you will need to fund your lifestyle with taxes is about 1/20 or less of the liquid assets you have invested. But that's just one method.
The point generally is that if are able to save for retirement, even if it's 20 years earlier, then you should be alright. But age should not be the determining factor in this decision: it's how well prepared are you to fund your life for the rest of your life.
Social Security's site has a tool to help you calculate what your potential monthly social security amount will be. Many think this is substantial to live on for the rest of your life, but you would be wrong. Social Security is designed to supplement retirement savings or annuity payments, not replace them. You need to have something set aside to make up that difference if you want to maintain your current lifestyle going forward. Your Social Security payments are NOT the same amount as your current paycheck, but many people expect them to be.
If you have zero retirement savings and you're already in your fifties, then it's pretty likely that retiring at age 70 will be the best bet for you since that's the maximum social security payout, but it likely won't be enough to help make up the difference in your retirement spending forever. You may need to keep working.
Retirement timing should be based on savings, not age, so while it's tempting to have that as a target, knowing and understanding how your savings are important now for the future is vital.