The decision to retire is rarely an easy one. It is a significant milestone that often entails much more than merely ending your career and losing a steady paycheck. Retirement can represent a profound shift in your identity and disrupt a long-established routine. As many individuals approach retirement age, the contemplation of when to make this transition becomes increasingly complex.

For those with a robust 43-year work history, the thought of finally entering retirement is both enticing and daunting. You may find yourself pondering the ideal retirement date, especially if you are feeling fatigued and have reached an age where you are eligible to claim Social Security benefits, albeit at a reduced rate. Moreover, for many, the desire to kick off retirement is fueled by the goal of enjoying this new chapter while still in good health.

Despite the allure of retirement, it is crucial to weigh the advantages of working a few additional years. The decision should encompass a comprehensive assessment of both your financial situation and personal aspirations.

When considering your retirement timing, the first step is to evaluate your Social Security benefits. Those born in 1960 or later, such as individuals who are currently aged 62, will find that their full Social Security benefits will not be accessible until they reach age 67. This age is referred to as the full retirement age (FRA). While you can file for benefits as early as age 62, doing so will result in reduced monthly payments compared to waiting until you reach your FRA. The closer you are to FRA when you apply, the smaller the reduction you will experience in your benefits.

Additionally, health insurance plays a pivotal role in your retirement decision. This is an essential factor to consider at any age. According to a recent study conducted by Fidelity, a 65-year-old who retires in 2023 can expect to incur an average of $165,000 in healthcare and medical expenses throughout their retirement years. These costs can be particularly unpredictable, adding another layer of complexity to retirement planning. Robert Kennedy, Senior Vice President of workplace consulting at Fidelity, emphasized this uncertainty, stating, “Health care costs are among the most unpredictable expenses, especially when it comes to retirement planning.”

It is vital to note that Medicare eligibility typically commences at age 65. Therefore, if you choose to retire before reaching this age, and your health insurance is tied to your job, you may find yourself facing significant out-of-pocket expenses to secure health coverage. Researching your options is essential in this regard. For instance, COBRA provides the opportunity to retain your previous employer's health insurance for a limited duration, while a health insurance marketplace plan could also serve as a viable alternative. Understanding the costs associated with these options will be crucial in making an informed decision.