When to Adjust Your Target Retirement Age?

The best way to give yourself the greatest chance to retire with a sufficiently large nest egg is to plan ahead. Among other things, this means to start saving as early as possible, to save consistently and try to maximize your contributions every year, to invest in a way that matches your investing personality, and perhaps even to set a target retirement date.

However, even if you successfully execute every aspect of your retirement plan, your personal situation may change in ways that might cause you to rethink the age at which you want or plan to retire.

So when might it be appropriate for you to change your target retirement date?

• When You Want to Work Longer. If you’re fortunate enough to love your job or career, then there’s certainly no reason to stop doing what you love simply because you reach a particular age. If you still derive personal satisfaction from your job or career, then you may choose to keep working past the target retirement age when you were younger.
• When You Provide Financial Assistance to Your Children. Because many individuals are waiting until later in life before they have children, those individuals will have financial obligations with respect to those kids, even as they get closer to retirement age. In addition, many people choose to continue providing financial support for their children as the children graduate college and enter adulthood. In either case, a person may decide that it’s appropriate to adjust their target retirement age forward to account for those expenses.
• When Your Nest Egg is Underfunded. Unfortunately, this is probably the most common reason that someone decides it’s appropriate to adjust their target retirement date. If you haven’t been able to save enough money to have a well-funded retirement account, continuing to work makes sense, if you prioritize making additional contributions to that account.
• When You Want a Particular Health Insurance Option. While employer-sponsored health care insurance options look very different than they did a few decades ago, you may still find that you’re able to get the best insurance coverage at your job. Because health care related expenses are often the single-largest cost of retirement, keeping a valuable insurance policy in place might be essential to meeting your overall financial goals.
• When You’re Eligible for Valuable Benefits. In addition to the availability of employer-sponsored health insurance coverage, your employer may offer other valuable benefits that would be prohibitively expensive for you to replace if you left the workforce.

All the situations we’ve discussed thus far relate to adjusting your target range out to a later date. But if you’ve exceeded your financial assumptions and prior expectations about retirement savings, then you may decide to retire earlier than you originally planned; just be sure to approach that decision with a more conservative approach going forward so that you don’t outlive your nest egg.