Attention, Retirees: Always Consider The Month You're Planning To Retire

Getting to retirement is quite the accomplishment. Naturally, everyone ages as the years pass by, but saving diligently to hit your financial goals, waiting until the perfect moment to begin drawing Social Security checks, and more can be a tall order. There's plenty standing between savers and their ability to ultimately meet their goals. Importantly, one of those potential pitfalls lies in the exact execution of your retirement timeline. For many, targeting retirement centers on a specific year on the calendar, or a predetermined birthday (perhaps full retirement age, at 67 or the average age at which Americans retire: 62).

There's more to the picture than this, though. Selecting the month you'll retire, not just the year, gives you more agency in managing your tax burden, finalizing repayments on any debt obligations you may still have, and topping up savings for the transition. There are benefits to retiring early in the year, and plenty of reasons to delay your exit until the very end. Among the most prominent factors is your birthday. Depending on when this falls, you may be better served in one way or another as a matter of principle. With these features of the changeover in mind, selecting your best egress option from the working life can come with a little more clarity and the precise blend of benefits that best suit your needs and plan.

As a concrete starting point, it's a good idea to consider when your birthday falls in the year. This is particularly important for people nearing retirement soon, as your age in years and months may factor into determining full retirement age. Paired with the age you plan to retire, waiting until your birthday happens will give you a boost to your Social Security benefits. If you'll turn 67 next year and anticipate retiring and taking your full benefit, you'll want to wait until your birthday passes to begin drawing checks — this might be January, or it could be October.

The same is true for both early- and late-benefit takers. Waiting until you turn 70 will give you the maximum benefit, but there's no additional value in continuing to wait after your 70^th birthday. Therefore, if you're still working, you'll want to start taking your checks right after you hit that milestone, at the very least.

Plenty of considerations involved in specific retirement setting are actually more generalized. But this aspect of the plan is rock solid, and can help you formulate the most beneficial, definite retirement date. Getting past your birthday in the given year you're planning to retire is almost always going to be a major boost to your finances. Whether you're angling for early retirement and want to start taking Social Security benefits at 62 and double down on your hobbies while you're still relatively young, or you're waiting to max out retirement assets, a date after your birthday will help accomplish the task.

The primary question that soon-to-be retirees have to ask surrounds an early-year retirement or a decision to wait until near the end of the year, mid-year retirement is also an option, smoothing out some of the features on either end. Beyond the immutable property of where your birthday falls, a retirement can benefit greatly from either approach, but there are naturally tradeoffs to consider, too.

Retiring early in the year allows you to minimize the salary figure you'll receive for the year, radically reducing your tax burden in the process. You may also consider retiring early in the year if your company pays year-end bonuses in the first quarter of the following calendar year. Leaving the workforce at the beginning of the year also functions as a means to "complete" the previous year of work, potentially delivering one more high-earning year to your Social Security record before you set sail into the future.

A late retirement provides some opposing benefits. An additional year of work gives you one more year of full salary earnings to continue saving or paying off crucial debts so that you don't carry them into retirement. There's also the built-in benefit of avoiding your initiation of withdrawals from your savings portfolio. The longer you leave these funds to accumulate the more potent they'll be in delivering solid financial stability in retirement. An extra year without touching your retirement accounts can be a big deal. An end-of-year bonus paid in December is another great reason to stay on throughout the year, leaving the workforce with a heap of additional cash just in time for the year-end holidays.