Key takeaways

  • A financial plan for retirement is a must-have before you stop working, and it should accommodate plans for both early and late retirement.

  • You can start claiming Social Security at 62, but you’ll receive more per month if you wait until you’re closer to 70.

  • Knowing when you’re ready to retire is about more than having enough money. There are emotional and social factors, too.

You’re working hard and saving as much money as you can with the goal of enjoying a relaxing, financially secure retirement one day. But it’s not always obvious exactly when this day has arrived.

The traditional retirement age in the U.S. is typically considered 65 (67 for younger generations), but many people choose to retire before or after this age. Knowing your retirement readiness is a personal decision that hinges on both financial and non-financial factors.

Here are 6 signs that you may be ready to retire.


1. You are financially prepared for retirement.

Being financially prepared for retirement is the most important factor for most people, because you can’t achieve retirement readiness without adequate savings and a plan for income in retirement.

“You’ve got to plan for both early and late retirement,” says LeAnn Erenberger, senior vice president and Wealth Management Advisor for U.S. Bancorp Investments.
Given increasing lifespans, it’s not unusual for people to spend 20 to 30 years or longer in retirement. That means your retirement plan needs to ensure that your assets last as long as you live.

Erenberger recommends creating a budget for all your expected expenses in retirement. “Then, look at the fixed income you’ll receive during retirement, such as a pension or Social Security, plus your retirement savings and other investments, to see if there’s a gap,” she says. “If there is, you may need to work longer or cut expenses.”

“For many people, their job is their identity. You have to determine if you’re emotionally ready to give this up.”

LeAnn Erenberger, senior vice president and Wealth Management Advisor, U.S. Bancorp Investments


How to retire early

  • Max out your retirement savings accounts.
  • Determine how you will pay for healthcare.
  • Devise a retirement income strategy.
  • Eliminate or significantly reduce your debt.
  • Plan for how taxes will affect your retirement finances.
  • Prepare for the emotional aspects of retiring early.
  • Consider working part-time at first to stretch out your retirement nest egg.

Don’t forget inflation, especially with inflation rates currently elevated above the Federal Reserve’s target of 2%. “High rates of inflation can derail a retirement plan because they rob retirees of purchasing power,” says Erenberger. “What things cost today isn’t what they will cost in the future, especially the long-term future.” A solid financial plan can help anticipate these and other factors.


2. You have a Social Security distribution strategy for retirement.

There’s an eight-year window, between ages 62 and 70, when you can start claiming Social Security retirement benefits. The longer you wait, the larger your monthly payment will be. “Claiming Social Security benefits at 62 could jeopardize your long-term financial future, especially towards the end of retirement,” says Erenberger.

More specifically, claiming Social Security any time before reaching full retirement age (which is 66 or 67, depending on your birthday) reduces the monthly payment by approximately 8% each year. Meanwhile, claiming benefits after reaching full retirement age increases your monthly benefit by approximately 8% each year, until you turn 70.


3. You have eliminated or significantly reduced debt before retiring.

Your current level of debt is another retirement sign worth considering. Erenberger recommends carrying as little debt as possible into retirement, especially high-interest credit card debt. “Every dollar you have to spend paying down debt is a dollar you don’t have to meet your living expenses in retirement,” she says.

What about mortgage debt? If you can go into retirement without a home mortgage, this will give you a tremendous amount of financial flexibility. But Erenberger doesn’t necessarily recommend taking money out of a retirement account to pay off a mortgage early, especially if the mortgage features a low interest rate.

“In this case, it might be better to keep the mortgage and use savings to meet retirement living expenses,” she says.


4. You know how you’ll cover your healthcare expenses in retirement.

You’ll qualify for Medicare when you turn 65, but this doesn’t mean your healthcare will be free. The monthly premium for Medicare Part B ranges from $165 to $560 in 2023, depending on income. Plus, there are additional costs if you purchase a Medicare Advantage (Part C) or Prescription Drug (Part D) plan.

If you retire before 65, you’ll need some other form of health insurance until you’re eligible for Medicare. One option is to purchase insurance on the federal marketplace at

If you currently have a high-deductible health insurance plan, making pre-tax contributions to a Health Savings Account (HSA) is one way to save money to cover healthcare expenses in retirement. Unspent HSA funds carry over from year to year, even into retirement. Note that you will no longer be able to contribute to your HSA once you sign up for Medicare, but you’ll still be able to make tax-free withdrawals from it to pay for qualified medical expenses.

You should also have a plan for paying for long-term care or assistance with medical or personal needs over an extended period. Nearly 70% of people turning 65 today will need long-term care at some point in their lives,1 and Medicare does not generally cover these types of expenses. Consider whether Long-term care insurance (LTCI) is a good fit for your retirement strategy.

“Investigate your healthcare options ahead of time and make sure you know what the costs will be, so you can factor them into your retirement budget,” says Erenberger.


5. You are emotionally prepared to leave the workforce.

Finances aren’t the only factor in knowing if you’re ready to retire. You must also decide if you’re emotionally prepared to stop working. “For many people, their job is their identity,” says Erenberger. “You have to determine if you’re emotionally ready to give this up.”

The same goes for your social circle. If most of your friendships are with people at work, you should start building new relationships outside of work before you retire. For example, you could make new friends in your neighborhood, at a local gym or community center, through volunteering or at your place of worship, if you have one.


6. You know how you’ll spend your time in retirement.

The final retirement sign ties into being emotionally prepared to retire. After spending 40 years or longer working full time, retirement can come as a shock if you don’t have a plan for all your free time. “Not knowing how you will spend your time can have negative health effects, both physically and emotionally,” says Erenberger.

Maybe there are hobbies you’ve always wanted to pursue but never had time for, like gardening or learning to play an instrument. Maybe you’d like to spend time volunteering at a charitable organization. Or maybe you want to travel or spend time with your children and grandchildren, if you have them. The important thing is that you have a plan for how you will spend the time that you used to spend working.

Are you on track for the retirement you want? Our retirement calculator can help you track your progress.

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