Longevity risk

Research by LIMRA has indicated that those who retire earlier have a longer life expectancy, on average, than those who retire later. If you set your retirement age at 50, for instance, you may be looking at about 35 years of retirement once you remain in good health. Those who retire at 60 tend to have a short life span and, since they worked longer, face far fewer years of that shorter life span in retirement. Your retirement age significantly affects your longevity risk - the risk of outliving your life savings.

Availability of other benefits

If you retire before a stipulated age, you would not be able to receive retirement benefits until you attain your full retirement age. This applies to certain retirement benefits like Social Security, national insurance and annuities, among other benefits. If you set your retirement age before you can receive supplementary income (aside from your company pension), you need to plan how you will address the shortfall until you are eligible for other retirement benefits.

Several individuals stipulate a retirement age for planning purposes without due consideration. The result of this is that they are unable to plan their income properly. Ideally, you should base your retirement age on an amalgam of financial, social and psychological considerations. However, financial considerations usually dominate because your comfort is highly dependent on them.