9 Key Signs You’re on the Right Track To Retire at 65 or Sooner

According to a recent Gallup survey, the average retirement age in the U.S. is 62 years old. This is also around the same time that you can start collecting Social Security benefits, though you won’t be eligible for full benefits until you’re 66 or 67 years old, depending on when you were born. That’s why many people wait to retire until they’re at least 66 years old.

But if you want to retire by the time you’re 65 years old or even sooner, it’s important to make sure you’re financially and emotionally prepared. Everyone’s situation is different, but here are the top signs that you’re on track to retire comfortably before you’re 65.

Debt comes in many forms, ranging from mortgages to auto loans to credit cards. If you still have debt, you might not be as ready to retire as you think. This is because having debt adds to your monthly expenses and cuts into your retirement funds.

Before deciding to retire, make sure you’re out of debt. “Being completely out of debt, including your house, will lower your expenses and save you money,” said Jay Zigmont, PhD, CFP, founder of Childfree Wealth.

James Allen, CPA, CFP, and CFEI, and the founder of Billpin.com, added, “If major debts like credit cards, car loans, or even a mortgage are reduced or eliminated, it puts [retirees] in a better position for retirement. Too much debt can really strain savings once regular paychecks stop.”

You may be on track to retire if you have your finances in order and your financial situation is stable. This means you can reliably pay your bills and handle any unexpected expenses that might come your way. “This means having a grasp on how taxes, inflation, and healthcare costs may impact [your] savings down the road,” said Allen.

Consider your retirement income and any other investment or savings you might have. Then, make some projections about your future expenses. If the numbers line up, you might be ready to retire as planned. If they don’t, you may need to hold off for a while.

Retirement comes with many costs, including both planned ones and unexpected ones. Some people don’t account for all of these expenses, though, which can lead to financial instability and stress down the road. That’s why it’s important to make a retirement plan and adjust it as you approach retirement age.

“Mapping out a detailed monthly budget for retirement helps tremendously, too,” said Allen. People who are retiring should also “know where income will come from and what everyday costs will be. This takes tax implications into account as well.”

But it’s not just about the present — the future matters, too. “Looking even further down the road, [retirees] likely have a plan for how long savings will last and what spending level is sustainable for decades to come. This includes knowing a safe percentage to withdraw each year,” added Allen.

Having savings, investments, and other assets can help significantly if you’re on the road to retirement. But inflation can erode your purchasing power and decrease the value of some of these assets. Even with a solid retirement budget, you may need to make adjustments as you go along.

To protect your assets, Allen suggested regularly rebalancing and adjusting your investments and savings. If you haven’t already done it, diversify your portfolio now and avoid high-risk investments.

As people live longer, there’s a greater need for long-term care. But this can be expensive and, if you’re not prepared for it, it can put a major strain on your finances.

Zigmont suggested that people who are on track for retirement already have a solid plan for long-term care. “In your mid-40s, you should try to create a plan for long-term care, either paying out of pocket or insurance.”

If you’ve already done this, you could very well be on track for early retirement. But make sure you have a plan for healthcare coverage, too. “If you don’t have adequate healthcare coverage, it would be wise to put off retirement until you can find affordable coverage that meets your needs,” said Lucas Noble, a certified financial advisor and the founder of Noble Financial Group.

Another sign that you’re ready to retire is that you “have already planned for big future costs like home repairs or a new car,” said Allen. “Addressing those expensive projects before retirement means they won’t take such a chunk out of savings later on.”

“Determining whether it’s a good idea to retire early depends on several factors, including your financial preparedness,” said Noble. “While there is no one-size-fits-all answer, a general rule of thumb is to aim for saving between 75-100% of your gross income before considering early retirement. If your savings for retirement are way off the mark, it might be a good idea to hold off on retiring until you’ve built up a more substantial nest egg.”

Ben Skilling, SVP and Director of Financial Planning at UMB Bank, advised, “You have 10x your salary saved for retirement. Ideally, you should have been contributing consistently to your employer-sponsored 401(k) retirement plan, individual retirement account (IRA), or health savings account (HSA) early on to create this large sum of savings.”

If you started saving — and investing — for retirement early, chances are you’re in a better position to retire by the time you’re 65 years old. Otherwise, it might be wiser to wait a couple more years and focus on building up your retirement fund before leaving the workforce.

Along with having a significant amount in savings and other investments, another sign that you’re on track to retire is that you’ve maxed out your retirement accounts.

“Maxing out your 401(k) ($22,500 plus a $7,500 catch-up over 50) will give you a good retirement fund to start with,” said Zigmont.

No matter how financially prepared you are, it’s important to be emotionally ready as well. “On the emotional side, someone on track feels excitement rather than worry about retirement,” said Allen. “They see it as an adventurous new chapter, not a source of stress.”

One way to make sure you’re emotionally prepared is to start planning what you want your life to be like after you retire. This could mean establishing a social life, creating a new routine, or finding a new hobby to pursue. Whatever you choose to do, having a solid lifestyle plan in place can go a long way to ensuring your retirement years are all you want them to be.