What Are Your Income Options?
The first thing to consider is what income options will be once you retire. Plain and simple: even after you retire, you will still be spending money for living expenses and hopefully some long-needed vacations. You need a source or ideally multiple sources of income to keep up your pre-retirement lifestyle.
The amount of money you have saved up and your age will likely dictate how financially comfortable you will be upon retirement and whether or not you will need to keep working. Most people will qualify for Social Security, but hopefully you have saved up with a 401(k), IRA or perhaps if you’re lucky a pension plan.
Social Security benefits can start as soon as you turn 62. This is called early retirement and decreases your Social Security benefit until you reach full retirement age, which is determined by when you were born. For those born in 1960 or later, the full retirement age is 67. The amount of money you receive from Social Security is determined by how much you earned over your work history (and thus, paid taxes on). The Social Security Administration website has some helpful calculators if you want an idea of how much you will collect from Social Security.
Tax deferred retirement plans such as 401(k) and IRA have different retirement ages, as well. 401(k) plans will vary from plan to plan, but in general, the retirement age is 55. At this age, you can withdraw from the plan without tax penalty. IRAs require you to be 59.5 before you can withdraw without penalty.