When Can You Retire? Why the Answer Is a Date, Not a Number

Retirement readiness depends on income, taxes, timing, healthcare, and the life you plan to live after work ends.

Almost everyone asks the same question first. What's my number?

It's the wrong place to start, and it's wrong in a way that costs people years. Some keep working long past the point they could have stopped, because a balance they read in an article never showed up. Others stop too early on a number that looked fine on paper and didn't survive contact with a real tax bill and a real health insurance premium.

Retirement is not an amount. It is the point where reliable income covers the life you actually intend to live, with enough margin to absorb the years that go wrong.

Why does "what's my number" fail as a first question?

Because two households with identical balances can have completely different answers.

One has a pension, a paid-off house and a spouse still covered by an employer health plan. The other has a mortgage with eleven years left, a kid finishing college and six years to go before Medicare. Same balance. Not remotely the same readiness.

A single number can't hold that much information. What it can do is give you a false sense of precision about a decision that's mostly about structure.

What does retirement readiness actually measure?

Four things, in this order.

Your income floor. What arrives every month regardless of what markets do. Social Security, any pension, any income you've already contractually secured. That's the foundation, and most people have never written it down as a single monthly figure.

The gap. What your portfolio has to produce beyond that floor to fund the life you want. Not the life you have now. The life you intend to live, which for most people costs more in the first few years than it did while they were working.

The split between fixed and discretionary. A plan with a large discretionary layer has flexibility. A plan where nearly everything is a fixed obligation has almost none, and that changes how much margin you need.

Your margin. What happens if the first several years go badly, and what you'd actually be willing to change.

You'll notice that none of the four is a portfolio balance. The balance is an input.

What about the 4% rule?

You've probably seen it quoted as a readiness test. It was never designed as one.

It came out of research in the 1990s testing whether a fixed initial withdrawal, adjusted for inflation, would have survived historical market conditions over a thirty-year retirement. That's a useful academic finding. It is not a plan, and it was not built to tell you whether you can retire.

The assumptions are the problem. It assumes steady spending, a particular portfolio mix and a fixed horizon. Real retirements are lumpier than that. Heavy travel early, healthcare weight later, a roof somewhere in the middle, and often a stretch of helping an adult kid that nobody budgeted for. Converting all of that into one percentage substitutes a tidy average for your actual cash flow.

Use it as context if you like. Don't use it as your answer.

Which ages actually drive the decision?

Sixty five gets most of the attention, but four ages can shape your retirement plan.

Sixty three. Medicare premiums generally use income from two years earlier.¹ That means a large income event at 63 can increase your premiums at 65, making this an easy planning opportunity to miss.

Sixty five. Medicare’s initial enrollment period lasts seven months, starting three months before the month you turn 65.² If you retire earlier, you will need to bridge health coverage, which can be a significant expense.

Sixty seven. For those born in 1960 or later, full retirement age is 67.³ Claiming earlier reduces your monthly benefit, while waiting increases it. Deciding when to claim Social Security depends on your health, your spouse’s benefit, and your other income sources.

Seventy three. Required minimum distributions generally begin at 73.⁴ The years between retirement and 73 can offer valuable tax planning flexibility before required withdrawals begin.

What if you retire and keep working part time?

If you claim Social Security before full retirement age and continue working, benefits may be withheld above the annual earnings limit. In 2026, that limit is $24,480, with $1 withheld for every $2 earned above it.⁵

The reduction is not permanent because benefits are recalculated at full retirement age. Still, part time income can reduce the Social Security cash flow you expected that year.

What happens to the plan if one of you dies first?

A surviving spouse at full retirement age can receive the higher Social Security benefit, but not both.⁶ That means two checks become one, while expenses like property taxes, insurance, and upkeep may barely change.

Run the retirement plan with each spouse as the survivor. If either scenario falls short, address it early. This is also where retirement and estate planning in New Jersey connect, since beneficiary designations can determine where retirement assets go.

Why does the order of returns matter more than the average?

During retirement, poor market returns early on can have an outsized impact. When you are withdrawing money, a down market may force you to sell more shares at lower prices, leaving fewer assets to benefit from a recovery.

That is why two retirees with the same average return can have very different outcomes depending on when losses occur. Building flexibility into the plan can reduce the need to sell during downturns and help prevent emotional decisions. It is where behavioral finance becomes a practical part of retirement planning.

Does living in New Jersey change the math?

Yes. New Jersey does not tax Social Security benefits and offers retirement income exclusions for eligible taxpayers age 62 or older or disabled, subject to income limits.⁷

Because eligibility depends on income, the order and timing of withdrawals can affect state taxes. For New Jersey retirees, withdrawal planning should account for both state and federal consequences.

How do you know you're actually ready?

Seven questions. If you can answer all seven in specifics rather than generalities, you're close.

1. Do you know your income floor as a single monthly dollar figure?

2. Do you know the gap your portfolio has to cover beyond it?

3. Do you know which account you'd draw from first, and why that one?

4. Have you priced health coverage for every year between your retirement date and 65?

5. Do you know what three bad years at the start would do to the plan, and what you'd change in response?

6. Does the plan still work for whichever one of you outlives the other?

7. Do you know what you're retiring to?

That last one isn't a financial question and it belongs on the list anyway. The most common regret we hear has nothing to do with money. It comes from people who planned the exit carefully and never planned the twenty years after it.

Where do you start?

Start with your income floor. Compare what arrives each month with what you expect to spend. The gap between those numbers is the amount your retirement plan needs to cover.

Our retirement income planning process starts there, then considers withdrawal sequencing, Social Security timing, and taxes. A complimentary review can help you see whether your retirement date aligns with your plan.

Scott E. Jones, BFA™, CPFA®, CRPC®, RFC®, is the founder of Genesis Wealth Advisor Group, LLC, a fiduciary financial planning firm in Marlton, New Jersey, specializing in retirement income planning, behavioral finance and Social Security strategy. He also founded Genesis Advisor Alliance, a professional community for advisors seeking independent support and resources to grow on their own terms. This article is for educational purposes only and does not constitute personalized financial, tax or legal advice. Composite examples are fictionalized illustrations and do not represent actual clients or outcomes.

Securities and investment advisory services offered through Osaic Wealth, Inc., member FINRA/SIPC. Osaic Wealth is separately owned, and other entities and/or marketing names, products or services referenced are independent of Osaic Wealth.

Sources

1. Social Security Administration, Medicare premiums: https://www.ssa.gov/benefits/medicare/medicare-premiums.html

2. Social Security Administration, Retirement Benefits (Publication No. 05-10043): https://www.ssa.gov/pubs/EN-05-10043.pdf

3. Social Security Administration, Benefit reduction for early retirement: https://www.ssa.gov/benefits/retirement/planner/agereduction.html

4. Internal Revenue Service, Retirement topics, required minimum distributions: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds

5. Social Security Administration, Receiving benefits while working: https://www.ssa.gov/benefits/retirement/planner/whileworking.html

6. Social Security Administration, Survivors benefits, if you are the survivor: https://www.ssa.gov/benefits/survivors/onyourown.html

7. New Jersey Division of Taxation, Retirement income: https://www.nj.gov/treasury/taxation/njit6.shtml