The average retirement age in the U.S. is 63, according to the U.S. Census Bureau. But that doesn’t mean 63 is the best age to retire for you. In fact, it is probably better to wait until you are older since Social Security benefits are reduced and Medicare isn’t available until you’re 65.

That said, optimal retirement age is specific to the individual and only you can decide when the time is right. Below are discussion points that can help you with that decision—starting with what is perhaps the most important point to consider.

A sign on a door that reads "retired" for the best age to retire.

Your Retirement Plans

One of the regrets voiced most frequently by retirees is that they did not have a plan in place. The euphoria of having “nothing to do” is often replaced by the sad realization that you have “nothing to do.”

To avoid this scenario, spend time before retirement thinking about life after retirement. What do you want to do? Travel? Work part time? Volunteer at a nearby school, local museum or nonprofit group whose work you admire and want to support?

Perhaps you want to take some time off to relax before diving back in. That’s not a problem, of course, but it’s best to explore more active options ahead of time and put them on your “to do” list for later. What’s most important is that you remain physically and mentally active in retirement.

Your Financial Status

Your financial status will not only play a role in what you do in retirement, it will also help determine when you can do it. Will your retirement income—from Social Security, IRAs, 401(k), pension (if you have one), savings and investments—provide you with 80 percent of your current income? If so, chances are you can maintain a similar standard of living in retirement.

Social Security and defined benefit pension plans (if you have one) both provide a set, unchanging income stream. For most people, a portion of retirement income—sometimes a large portion—comes from a 401(k), Traditional and/or Roth IRA or other retirement savings account.

These accounts will be drawn down over time. Experts say you should not withdraw more than about 4 percent of your 401(k) or IRA each year to avoid running out of money before you run out of time. Obviously, inflation, interest rates and investment income play a huge role in determining whether the 4 percent rule works for you.

Social Security and Retirement Fund Rules

Your ability to tap into your retirement income is subject to rules that let you maximize your benefits and avoid penalties. Social Security, for example, is available to you as early as age 62 but with reduced benefits. Full Social Security retirement age is 66 to 67 (depending on when you were born; check out this Social Security calculator for specifics). If you wait until age 70, you will receive the largest benefit.

IRAs and 401(k) plans have rules about when you can begin withdrawing funds without penalty. Traditional IRAs and 401(k) plans impose a 10 percent penalty (plus taxes) on any funds withdrawn before the age of 59½. Roth IRAs impose the same penalty—but only on earnings, not on contributions. Roth IRAs also require that funds must be in the account for at least five years before you can withdraw earnings without penalty.

Your Health Status

Your health is an important factor when deciding when to quit the workforce. If you currently have employer-provided healthcare, are facing expensive surgery and are not old enough for Medicare, you likely will want to get that surgery out of the way before retiring. In fact, postponing retirement until at least the age of 65 to qualify for Medicare makes sense regardless of your health status.

Fidelity has estimated that a 65-year-old couple on Medicare retiring in 2018 will spend roughly $280,000 on healthcare during a 20-year retirement. This, by the way, doesn’t include long-term care, which can add thousands of dollars to that figure.

If you are forced to retire early due to health or disability, you might consider that a worst-case scenario since it would take the decision out of your hands. But consider that the longer you wait to retire, the more likely health will be an issue—especially if you have a physically demanding job or one with a high stress load. Concern about having enough time to enjoy retirement while you’re in good health could be one reason to leave sooner rather than later.

Arriving at a Number

Deciding when to retire will require that you consider all of this information—your plans for retirement, your finances, the rules for withdrawal of funds and your health. None of these elements is more important than the other. All play a role in your final choice of a retirement age.

Consider each area and how it applies to you. Discuss everything with your significant other and with your financial advisor (to make sure you haven’t forgotten anything). Doing your homework in this way will help you enter retirement with your eyes open, whatever age you decide is right for you.

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