We spend decades saving for a financially secure retirement.

So, when the time comes, making the choice can be exciting and a little bit overwhelming. With some serious financial considerations at play, deciding when to retire is a big decision.

When is the best time to retire?

In addition to carefully planning when you will retire, it’s also important to determine the best time of the year to stop working. This decision is based on many factors, as each person's circumstances are different.

The specific date on which you start your retirement could impact several factors that affect your retirement finances. These can include benefits from your former employer, Social Security distributions, and taxes.

Here are seven factors to consider as you plan the best time of the year to start your retirement.

1. Do you have a pension?

If you work for the government or an employer that offers a defined benefit pension plan, it might be smart to retire on the day that follows the anniversary of your first day working there. This way, you’ll receive an extra year-of-service credit toward the calculation of your pension benefits.

2. Have you saved up cash reserves?

Some financial professionals recommend saving enough money in a liquid cash account to cover the first few years of living expenses after you retire. Then you won’t have to tap into your retirement accounts right when you begin your retirement.

However, if you don’t have any cash savings and will need to start withdrawing money from your retirement account as soon as you retire, you may consider retiring either very early or very late in the year. This could allow you to avoid making retirement account withdrawals in a year when you might have earned income that would push you into a higher tax bracket.

3. Are you considering early retirement?

The age of 65 has long been considered the unofficial retirement age, but many people are opting for early retirement. If you plan to retire early, remember that you will be assessed a 10% penalty on withdrawals you make from a traditional IRA or 401(k) before you reach age 59½. Under some specific circumstances, people younger than 59½ are able to make a withdrawal from a retirement account without a penalty.

So, if you will turn 59½ at any time during the year you plan to retire, you should wait until after your birthday to retire and begin taking distributions from these accounts to avoid this early withdrawal penalty.

4. Will you have to take required minimum distributions (RMDs)?

The mandatory age for taking RMDs is age 73.

5. Will you work on a part-time basis after you retire?

Many people today are choosing to earn money as a freelancer or contractor to supplement their retirement savings. If you work part-time and elect to start receiving Social Security benefits before you reach the full retirement age (FRA) — which is between 66 and 67 years old, depending on your birth year — your Social Security benefit amount may be reduced based on your earnings.¹

If you will:

• Be under full retirement age for all of 2025, you are considered retired if your earnings are under the annual limit of $23,400.
• Reach full retirement age in 2025, the earnings limit is higher, at $62,160, and it only applies to what you earned up to the month before you reach full retirement age, not for the full year. For earnings above that limit, $1 in benefits is deducted for every $3 in earnings.²

If you’re retiring before reaching FRA but expect to earn more than $1,580 a month in income, and you will reach FRA sometime during the year you plan to retire, you should probably wait until after your birthday to retire and claim Social Security retirement benefits.

6. Do you have accrued vacation pay?

If you have accrued a significant amount of vacation pay with your employer, find out when they will pay you this money. This pay will be considered earned income and thus subject to the earnings rule explained above. You might want to wait until after you’ve received the funds to retire and apply for Social Security benefits.

7. Will you turn 70 years old during the year?

By waiting until after you reach FRA to begin collecting Social Security benefits, you can increase the amount of your monthly benefit when you do eventually start receiving benefits. But this is only the case up until age 70, at which time the increases stop.

So, if you will celebrate your 70th birthday at any time during the year you plan to retire, you should consider filing for Social Security after your birthday. After you reach 70 years old, you won’t receive any additional benefit to delay retirement and receive Social Security.

Learn more: 7 essential steps for retirement planning

Our take

There are many factors that go into deciding the best time of year to retire. Financial calculators can help bring clarity to the equation.