Most countries no longer have a fixed age of retirement. This gives you the flexibility to decide when to retire. However, it does mean that you need to understand the implications of that decision, and what you need to consider. There are practical, legal, emotional and financial aspects that you will need to take into account.

There is, of course, a distinction between your own wishes—when you would ideally like to retire—and what is financially and legally possible. It is also important to consider whether you are actually ready to retire, or indeed if you need to consider early retirement because of your health. This page explains more about all these situations.

The Ideal Situation: When Would You Like to Retire?

The first step in deciding when to retire is to consider your own wishes.

If everything else was equal, when would you actually like to retire?

The answer to that question sets a starting point for all further thinking. It might range from ‘tomorrow’ right through to ‘I don’t really want to retire just now, and I can’t see myself wanting to leave my job in the foreseeable future’. Clearly those two very different positions will affect your decision in very different ways.

Unfortunately for most of us, however, our own wishes are not the only aspects to consider in deciding when to retire...

What Are the Practical and Legal Aspects to Deciding When to Retire?

One of the most important questions to consider is the age at which you can legally draw on your pension.

This includes both any state provision (for example, the state pension in the UK, or social security in the US), any pension from your employment, and any private pension pot. The rules for different types of pension may vary.

You also need to know if there are any rules about when you must retire from your employment.

For example, in England, judges cannot work after the age of 75. This rule also applies to magistrates and coroners.

Your employer may also have rules about the age beyond which you cannot work.

These rules set the framework within which you can make your decision about when to retire. It is therefore important that you understand them fully.

There may also be practical aspects to your decision.

The most important of these is likely to be your ongoing ability to perform your job.

That will obviously depend heavily on what you do. It is, for example, far easier to continue to do office work than physical work like hospital nursing, construction work, or building maintenance. However, the ability to do office work might be affected by health conditions such as arthritis, or by your eyesight. There are also other job demands that may influence your decision. For example, if your job requires a lot of travelling, and you find that increasingly tiring, you may want to retire sooner.

Your health will often affect your ability to do your job and to enjoy doing so. Both mental and physical health conditions could also affect how you approach work—and this might include stress or burnout. These may even become so severe that you need to stop work, or at least work differently.

Another important practical aspect is your family situation and commitments.

These can have implications for your financial situation, but also your time. For example, you may need or want to stop working, or reduce your working hours, to care for elderly parents, or to provide childcare for grandchildren. However, you may be aware that you will need to continue to support young adult children for a few years more, and therefore wish to continue to work, at least part time, for a few years beyond the age at which you could draw down your pension.

It should be clear that all these practical issues are both very important, and also highly personal. Your levels of work stress, the impact of any health conditions—and indeed whether you develop any health conditions—and your family situation are all very individual.

It is therefore important that you are clear about what matters to you when making decisions about retirement age.

What are the Financial Aspects of Deciding When to Retire?

The main financial aspect of your retirement timing decision is when you can afford to retire.

This depends on two things—or, more precisely, the balance between them:

• The likely income from your pensions, other investments, and any other sources; and

• Your likely outgoings over the course of your retirement.

As a rule of thumb, you should not retire until you are reasonably confident that your income will cover your planned outgoings for your likely lifespan—which, given average life expectancy at 65 years old, could easily be 20 years or more.

You may find our pages on Understanding Pensions and Financial Planning for Retirement are helpful in considering this issue.

It is also worth remembering that your outgoings are not fixed.

You can, for example, move to somewhere with a lower cost of living, or downsize so that your housing costs less. There are also other ways to save, and our page on Reducing Your Outgoings may be helpful.

Similarly, your income is not fixed. You may be able to supplement it in some way. For example, deferring your pension (that is, working longer before retirement) may mean that you can increase the benefits available to you at the point of drawdown. You might also consider working part-time in retirement, either in your current job, or in something else entirely. Our page on Making More Money also contains some other ideas that you may want to consider.

What Emotional Aspects Should You Consider in Deciding When to Retire?

The general consensus among age charities and advisers is that there are a number of emotional signs that show that you are ready to retire.

They include:

• A long-term feeling of achievement at work

  People often report a sense of satisfaction with what they have achieved across the course of their career when they are approaching the ‘right’ time to retire. This is not a short-term ‘great project’ sense, but a longer-term, ‘big picture’ sense of fulfilment. This might be seen as a sign that you are ready to step away.

• A reduction in motivation, which may apply to either new or existing tasks

  Conversely, other people report that they have become less motivated. Tasks and responsibilities that once excited them now seem mundane, and they find it harder to motivate themselves to perform well at work.

• Wanting more time to do things outside work

  People who are ready for retirement often find themselves thinking about what they could be doing instead of working. They may increasingly want more freedom to pursue hobbies or activities, or spend time with family, or travel. New grandchildren can be a particular trigger for this feeling, but there are many other changes that can also contribute.

• Feeling positive about change

  As our page on Personal Change Management makes clear, most of us are not good at managing change. If, therefore, you find yourself excited and energised by the prospect of retiring, and the changes that will bring, this is a very good sign that you may be ready for retirement.

Making The Decision

Deciding when to retire is a very personal decision.

It is bounded by a legal and institutional framework of what is possible and required, but within that, there is a lot of freedom for you to decide.

Being in the right place financially and emotionally is crucial to set you up for a productive and comfortable retirement. However, it is also useful to remember that retirement does not have to be an ‘all or nothing’ event. Even those who retire from their existing full-time work on health grounds may find that there is plenty that they can do, some of which may even provide an income.

If, even after reading this page, you are still finding it difficult to decide, you may want to visit our pages on Decision-Making, which include a framework for decision-making that could be a useful starting point.

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A Final Thought

When deciding when to retire, it is important to remember that there is no ‘right answer’.

It is also helpful to realise that retiring is neither ‘all or nothing’, nor a single, final and irrevocable decision. If you don’t like being retired, or you find you need additional income, you can always find yourself a part-time job, or do some volunteering. There is an enormous amount of flexibility available to you.

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