The Best Age to Retire Based on Your Savings & Lifestyle

Personalized Retirement Planning | by Jules Buxbaum | Thursday, January 02, 2025

Finding your best retirement age isn’t just about hitting a magic number—it’s about matching your savings to your lifestyle goals. Professionals, freelancers, and anyone eyeing a comfortable future all wonder whether to leave work at 62, 65, or even 70. If you’re worried about the timing, check out our guide on common mistakes to avoid when planning for retirement to see how small decisions can make or break your plans.

At 2Pi Financial, we meet many individuals who strive for financial independence as early as possible. Yet your personal timeline depends on more than just hitting a full Social Security age. While age is part of the equation, the real key is balancing personal factors like future earning potential, overall savings, and the type of lifestyle you envision after leaving the workforce.

Understanding Your Financial Standing

Your financial standing is the bedrock of deciding when to retire. You’ll want to weigh your total retirement savings, anticipated expenses across the next few decades, and expected sources of income, such as pensions or Social Security. Along with this, consider rising living costs over time.

According to Vanguard’s “How America Saves 2022” report, the median balance in a 401(k) for those 65 and older is around $279,9971. That number suggests many people may still face gaps in funding a 20- to 30-year retirement. If you’ve fallen short of your target, you might explore part-time work, boost contributions in your 50s, or postpone retirement a few years to build your nest egg.

Healthcare costs are also crucial. Fidelity estimates that an average 65-year-old couple today might need $315,000 saved (after tax) to cover medical expenses in retirement2. Those numbers highlight the importance of checking your insurance options if you think you’ll retire before Medicare eligibility at 65. Paying for private insurance in those gap years can potentially erode your precious savings.

Lifestyle and Health Considerations

Envisioning how you plan to spend your retirement is just as important as the financial side. Some people want to travel extensively, while others wish to focus on hobbies or family. That variation affects how much cash you’ll need each month once you stop earning a paycheck.

Health plays a huge role too. Longer life expectancies amplify the risk of outliving your money. According to the Social Security Administration, a woman at 65 today can expect to live until about 86.7 on average3. If you lean toward early retirement—say 60—you’re looking at covering roughly 26 years of expenses, which could require a bigger savings cushion.

Why Age Alone Isn’t the Full Story

Traditional advice often says, “Your age should dictate your portfolio’s mix of stocks and bonds.” At 2Pi Financial, we question that. Our view is that your future earnings capacity relative to your current wealth influences how much risk your portfolio can handle. An older person with strong future earning opportunities might sustain a more aggressive mix, whereas a younger individual holding a substantial inheritance might adopt less risk.

Target-date funds are an example of the simplified approach, automatically transitioning you from equities into bonds as you age. But if you’d like a more personalized strategy, glance at our analysis of target-date funds and alternative approaches. The key takeaway is that the right decision doesn’t hinge on any single factor—especially not just calendar age.

The Role of Equity in Retirement Portfolios

Another question is how much of your retirement portfolio should ride the ups and downs of the stock market. Historical trends show that equities have usually outperformed bonds over the long term. At 2Pi Financial, we believe most people need that growth potential to maintain a comfortable life once they retire.

While a less volatile portfolio can be appealing, it can also limit returns. In a scenario where you expect your financial plan to span 25 or 30 years, too small an allocation to stocks might hinder your long-term sustainability. If you’d like to refine your stance on stocks and bonds, look at our guide on portfolio diversification for long-term success.

How Tools Like Two Pi’s Financial Planning Engine Help

Your retirement decision shouldn’t be guesswork. This is where technology can shine. Two Pi’s Financial Planning Engine—available at 2pifinancial.com/2pi-financial-planner—lets you input your savings, risk tolerance, and preferred timeline to see the probability of success. It adjusts for inflation and factors in potential changes like delaying retirement or boosting your savings rate.

For example, you might discover that contributing an extra 3% of your income now or opting to retire two years later significantly increases your likelihood of sustaining your assets. You also receive insights into recommended withdrawal rates. If you’re more comfortable with an aggressive equity allocation, the engine will show how that can improve returns over time, balanced against higher volatility.

Wrapping Up

The best retirement age isn’t a fixed number. It’s an intersection of what you’ve saved, what you want from life after work, and how confident you feel about market risks. If you need guidance on building those savings sooner rather than later, check out our step-by-step approach for saving at every age to kick-start your plan.

Before you commit to a final retirement date, run different scenarios that account for your financial health, future income potential, and personal preferences. With thorough planning—plus a well-structured portfolio designed to handle market changes—you can find the right moment to leave the workforce and still maintain the lifestyle you’ve always envisioned.

References

1. Vanguard. (2022). “How America Saves 2022.” Available at: https://institutional.vanguard.com/how-america-saves-2022

2. Fidelity. (2022). “How Much Do I Need for Health Care in Retirement?” Available at: https://www.fidelity.com/viewpoints/retirement/retiree-health-costs

3. Social Security Administration. (2023). “Benefits for Retirees: Life Expectancy Data.” Available at: https://www.ssa.gov/retirement