How to Retire at 65: Step-by-Step Plan

The age of 65 is the traditional time when people stop working and retire to live off the fruits of their labor. That doesn’t mean 65 is the ideal age for everyone to retire, though. In order to retire at age 65, you’ll want to evaluate your current assets and their income-producing potential, as well as expected post-retirement expenses and life expectancy, healthcare costs and any desired financial legacy. You can increase the likelihood of having a successful retirement plan by working with a financial advisor.

Evaluate Current Assets and Future Income

The average age when people retire is 62, according to the most recent data from a Gallup poll. However, the Social Security Administration reports that the average age at which people begin claiming retirement benefits is very close to 65. For men the precise number is 64.7. For women, it’s 64.6. Based on the Social Security data, if you retire at 65, you’ll have plenty of company.

The process of planning to retire at 65 has a lot of moving parts. However, the basic elements consist of just two moves: assessing your current financial position and estimating your post-retirement financial needs. This step consists of adding up what you own and expect to own, focusing specifically on your assets’ ability to produce post-retirement income. Here are some of the typical sources of income people rely on in retirement:

Social Security benefits
Tax-advantaged retirement savings such as 401(k) and IRA plans
Taxable assets such as stocks and mutual funds
Cash, including bank accounts and certificates of deposit
Home equity
Earnings from a part-time job
Pension plan benefits
Annuities and other insurance products
Inheritances
Rental and royalty income

Most retirees won’t have all these sources. However, nearly all retirees can expect to receive Social Security benefits. About 65 million Americans received Social Security benefits, amounting to nearly nine of 10 people aged 65 or over.

The average monthly Social Security benefit for 2025 is about $1,840. Keep in mind that claiming your benefits earlier will generally net you a lower monthly benefit, while waiting to claim as late as 70 will generally net you more.

How Much Does the Average Person Need to Retire at 65?

One common rule of thumb is that retirees should aim to replace about 70% to 80% of their pre-retirement income to maintain their standard of living. For someone earning the U.S. median household income of approximately $70,000, that would mean needing $49,000 to $56,000 per year in retirement.

To generate that level of income, many advisors recommend saving 8 to 12 times your final salary by retirement age. That means the average person would need somewhere between $560,000 and $840,000 in retirement savings by age 65. This assumes your portfolio is supplemented by Social Security benefits.

Creating a detailed retirement plan and working with a financial advisor can help ensure you’re on track to meet your specific needs by the time you reach 65.

Assess Future Income Needs

Two women enjoying their retirement at 65.

Next you’ll want to create a post-retirement budget. This will let you estimate whether and how comfortably you can actually retire at 65. Planners sometimes recommend using a percentage of pre-retirement income to estimate how much you’ll need after retiring.

However, recommendations vary widely, from as little as 50% to as much as 80%. Much depends on individual circumstances. To get the most accurate projection, consider all the following costs individually and come up with a total for your specific situation.

Housing expenses: This includes utilities, insurance and rent or mortgage.
Healthcare costs: At age 65, you become eligible for Medicare, which will cover the majority of health costs. However, you are still responsible for paying the Part B premium, as well as any deductibles and co-payment.
Other necessary expenses: These include food and transportation.
Debt payments: This may include automobile or student loans.
Family obligations: This could include helping children through college or contributing to the support of a parent.
Federal income taxes: These are due on part-time job earnings and Social Security payments, as well as withdrawals from retirement accounts other than Roth accounts.

Life Expectancy and Lifestyle: Key Factors in Retiring at 65

How long you expect to live after retirement plays a major role in deciding when to retire and how much you’ll need to save. The Social Security Administration offers a free online life expectancy calculator that provides a general estimate based on your age and gender.

For a more personalized estimate, you can use tools like the Wharton Life Expectancy Calculator, which factors in lifestyle habits such as smoking, exercise and seatbelt use. While no calculator can predict the future, these tools help provide a realistic timeframe for planning your retirement income and withdrawals.

Your lifestyle in retirement is equally important. If you plan to travel frequently, pursue hobbies or maintain a higher standard of living, your expenses will likely be greater, and your financial plan should reflect that. Where you choose to live also has a major impact. For instance, according to World Population Review, the cost of living in Hawaii is nearly twice as high as in Mississippi, which could dramatically affect how far your retirement savings go.

Bottom Line

If you’re like most people, you can retire at 65. However, the decision calls for carefully assessing a number of factors, including your expected expenses and ability to produce income post-retirement. Major income factors include your expected Social Security benefit, how much you have saved in retirement and other accounts, the amount of home equity you could tap and whether or not you want to work part-time.

Tips on Retirement

The decision about when to retire is one of the most important and challenging many of us will make. A financial advisor can help you decide on a good time, as well as create a plan for the future.. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Use our free retirement calculator to gauge your progress toward the retirement goals you have set for yourself.