When to Retire?

One of the regrets voiced most frequently by retirees is that they didn’t have a plan in place. The euphoria of having “nothing to do” is often replaced by the sad realization that you have “nothing to do.”

To avoid this scenario, it’s a good idea to spend time before retirement thinking about life after retirement. What do you want to do? Travel? Work part-time? Volunteer at a nearby school, local museum, or nonprofit group whose work you admire and want to support?

Perhaps you want to take some time off to relax before diving back in. That’s not a problem, of course, but it’s best to explore more active options ahead of time and put them on your “to-do” list for later. What’s most important is that you remain physically and mentally active in retirement.

How Much Money Do I Need to Retire?

In other words, how much do you need to retire comfortably? By now, you've likely heard the conventional wisdom: that you should aim to have a nest egg of $1 million to $1.5 million. Or that your savings should amount to 10 to 12 times your current income.

For people approaching retirement, those figures might be a source of panic, denial, and dread. But a true retirement number is different for everyone. It depends on factors such as where you'll live and how healthy you'll be as you age. And most challenging of all—how long will you live?

The bottom line: While there's no magic amount you should strive to attain, there are some questions you can ask yourself to determine your optimal "number."

When Do I Begin to Take Social Security?

You can start receiving your social security retirement benefits as early as age 62, but the longer you wait beyond that, up to age 70, the higher your monthly checks will be. The trade-off, though, is that the longer you delay, the fewer checks you'll receive over your lifetime.

Due to that, it's only natural that every retiree would want to figure out what the best age will be for them to start taking benefits. Actuarially speaking, the total benefits you collect are expected to be about the same over the course of your retirement no matter when you start.  There are three key ages that stand out as the best times to start taking benefits, depending on your personal circumstances. Those ages are 62, your full retirement age, or age 70.

How Should I Take My Pension?

If you're one of the lucky 30 million American workers still covered by a traditional defined-benefit pension plan, you'll likely be faced with a crucial and irrevocable decision when you retire: should you take your pension in the form of a guaranteed monthly check for life or should you grab all of your pension money upfront and manage the funds yourself? The vast majority of retirees choose the lump sum—90% of them, according to the Society of Actuaries. Before you join them, consider the risks.

How Do I Invest My Retirement Money?

Where should you invest your money? The answer will depend on your goals and willingness to take on more risk in exchange for higher potential investment rewards. Common investments include:

  • Stocks: Individual shares of companies you believe will increase in value.
  • Bonds: Bonds allow a company or government to borrow your money to fund a project or refinance other debt. Bonds are considered fixed-income investments and typically make regular interest payments to investors. The principal is then returned on a set maturity date.
  • Mutual funds: Investing your money in funds—such as mutual funds, index funds, or exchange-traded funds—allows you to purchase many stocks, bonds, or other investments all at once. Mutual funds build instant diversification by pooling investor money and using it to buy a basket of investments that align with the fund’s stated goal. Funds may be actively managed, with a professional manager selecting the investments used, or they may track an index. A Standard & Poor’s 500 index fund, for example, will hold 500 of the largest companies in the U.S.
  • Real estate: Real estate is a way to diversify your investment portfolio outside of the traditional mix of stocks and bonds. It doesn’t necessarily mean buying a home or becoming a landlord—you can invest in REITs, which are like mutual funds for real estate.

*Investments are subject to risk, including the loss of principal. Some investments are not suitable for all investors, and there is no guarantee that any investing goal will be met. Past performance is no guarantee of future results.