10-Year Plan: How To Retire at 67 Years Old

Updated on June 23, 2023
10-Year Plan: How To Retire at 67 Years Old

Embarking on a 10-year plan to retire comfortably at 67 years old—the highest FRA—requires understanding how to make strategic decisions and create a comprehensive financial roadmap. By gaining insight into the essential components of a successful retirement, you can approach this new chapter of your life with confidence and peace of mind.

Determine Your Ideal Retirement Savings Amount

Before you can create a solid retirement plan, you must determine the ideal amount of savings needed to retire comfortably. By doing so, you’ll be better prepared to make informed decisions about your investments and spending habits. To calculate this number, start by multiplying your average annual salary by 80 percent. This percentage represents the typical amount most retirees require to maintain their lifestyle, as it falls within the 70–90 percent range of their pre-retirement income.

For example, if your average annual salary is $48,500, multiply this by 80 percent (0.8) to get $38,800. This is the amount you’ll need each year during your retirement. Next, consider the number of years you expect to remain financially independent. Since the average lifespan in America is 79, and the Full Retirement Age (FRA) is around 66–67, you’ll likely need financial support for at least 12 years. Multiply your annual retirement income ($38,800) by 12 to get a total savings goal of $465,600. This figure represents the median amount you should aim to save in order to retire confidently and maintain your desired lifestyle.

Utilize Non-Social Security Retirement Accounts

Expanding your retirement income sources beyond Social Security is a wise decision to ensure financial stability and minimize taxes on withdrawn funds. Investing in alternative accounts, such as Individual Retirement Accounts (IRAs), creates additional income streams that can support your expenses while delaying Social Security benefits.

Delaying your Social Security benefits after your Full Retirement Age (FRA) allows you to accrue two-thirds of 1 percent in delayed retirement credits every month that you postpone your benefits. This strategy increases your overall income from Social Security when you eventually start drawing it. Additionally, by relying on other sources of income, such as IRAs, you can optimize your tax strategy. Social Security benefits can be taxed up to 85 percent, while tax liabilities on retirement accounts like IRAs are generally lower.

Consider Downsizing or Moving

As you approach retirement, downsizing your living space or moving to a retirement community can effectively reduce expenses and make the most of your savings. Choosing a smaller home or relocating to a more affordable area significantly decreases your housing costs, including mortgage or rent payments, property taxes, and maintenance expenses. This reduction in expenses frees up funds that you can allocate toward your retirement savings, ensuring that you have enough to maintain your desired lifestyle.

Moving into a retirement community or 55+ neighborhood also offers numerous advantages. These communities cater to the needs of retirees, providing a wealth of engaging activities, resources, and support services. By finding the perfect retirement community, you benefit from a comfortable living environment and access to various amenities, such as fitness centers, social events, and health-care services.

A well-rounded 10-year plan for retiring at 67 involves setting realistic savings goals, diversifying income sources, and optimizing your living situation. However, this hard work is well worth it to have a relaxing future in your golden years.