What is Retirement?


What is Retirement?

As defined in the Oxford Languages Dictionary:

  • Retirement is the act of ceasing work or leaving one’s job.
  • A life stage in an individual’s life after leaving one’s job to cease working permanently.
  • The time jury spends away from the courtroom to decide on their verdict
  • In seclusion; a secluded place (Example: He is in retirement in Utah.)

As defined in Merriam-Webster Dictionary:

  • The age when one retires. (Example: He will be reaching retirement by August.)
  • Synonyms for Retirement: pullout, evacuation, withdrawal, pullback, fallback

Why is it called Retirement?

It is called retirement because the word “retire” and “retirement” are derived from the French word “retirer” (pronounced as re·ti·ré) which means, “to withdraw.”

Retirement-related Terms

  • Retirement Accounting -- Retirement accounting is a system businesses use to record the “retirement” of no longer used assets. These assets include machinery,  buildings, vehicles, land, computer hardware and software, and other fixed assets.
  • Individual Retirement Account - An Individual Retirement Account (IRA) is a long-term savings account for retirement that allows an individual to save money with tax benefits.
  • Retirement Plan - A retirement plan is a type of investment designed to prepare for an individual’s needs post-retirement. The plan ideally creates a steady flow of regular income for a retiree, in what is known as a pension. Hence, a retirement plan is also popularly called a pension plan.
  • Retirement Benefit - A retirement benefit is remuneration payable to an employee under a pension scheme upon retiring, or early withdrawal from service. Retirement benefits can come in the form of monthly pensions, lump sum or gratuities, increases on the retirement plan while contributions are still ongoing, and benefits payable to beneficiaries after the member’s death.  
  • Qualified Retirement Savings Contribution Credit - The Qualified Retirement Savings Contribution Credit, also known as “saver’s credit,” allows lower- and moderate-income individuals to reduce their tax obligations by contributing to their retirement plan provided the plan is qualified under this program. This tax break is on top of the tax exemptions also enjoyed for retirement plans. The qualified retirement plans include 401(k) plans, 403(b) plans, 457 plans, traditional IRAs, and Roth IRAs.
  • Retirement calculators - A retirement calculator helps with planning for retirement by computing for the required savings to attain the retirement financial goal.
  • Retirement annuity - A retirement annuity is an investment that offers a lifetime guarantee of monthly or annual income paid to the retiree until death. There are two kinds of retirement annuities. The immediate annuity is when the retiree pays the insurer a lump sum after which monthly or annual payments are immediately issued. The deferred annuity is more long-term, wherein the retiree collects payments after a specified date. The investment can thus accrue interest as a fixed annuity or earn from market gains as a variable annuity.

What is the purpose of retirement?

The purpose of retirement is to cease actively working for years or decades to rest and be financially supported by a retirement plan such as a 401k plan or an IRA. Retirement is an opportunity to lessen stress and improve health conditions while pursuing other interests. 

Retirement Age

What is the Retirement Age?

The retirement age in the US on average is 64. Mandatory retirement at a certain age was obliterated by an amendment in the Age Discrimination in Employment Act (ADEA) in 1986. Thus, there is no fixed age for an employee to retire, except for occupations that require high physical fitness, such as the military and airline pilots. 

What is the full retirement age for social security?

The full retirement age for social security is 66, for individuals born between 1943 to 1954. This means at age 66, these individuals can get full social security benefits. The full retirement age gradually increases for individuals born from 1955 to 1960 until they reach 67. Individuals born from 1960 onwards get their full social security benefits at age 67.

Retirees can get social security benefits starting at age 62, though these wouldn’t be the entire social security benefits.

What is considered early retirement age?

It is considered early retirement age if the retiree is any age below 65. However, retirees can be eligible for social security benefits only from age 62 and above.

Do you have to take benefits once you reach retirement age?

No, you do not have to take benefits once you reach retirement age. Retirees have the option to wait until age 70 to receive delayed retirement credits. By then, retirement credits will be valued higher. 

How much does retirement cost?

Retirement costs for people aged 65 and older were an average of $52,141 in 2021, according to the Bureau of Labor Statistics. This figure is $14,000 less than the general population spending average, which is $66,928.

What are the three types of retirement?

The three types of retirement are:

Traditional Retirement

  • Work stoppage upon retirement age of 65
  • Receives monthly special security payments dependent on the number of years worked.
  • If a had retiree put in place a retirement plan existing for more than 5 years, a retiree can start distributions upon retirement at 65, without tax penalties.


  • Usually retires from working full-time, but continues to work as a consultant or similar capacity on a part-time basis

Temporary Retirement

  • Individuals take a break from full-time work but come back after a few months

How much can you withdraw after retirement?

  • You can withdraw up to 4% of retirement portfolio value on year one of retirement.

    Example: Portfolio value of $ 1 million = $40,000 withdrawable amount
  • By year two, the retirement amount can be adjusted according to the then-current inflation rate. Example: If the inflation rate is 3% withdrawable amount would be $40,000 x 1.03 = $41,200)

  • If prices went down by 3%, the withdrawable amount will be less than the previous year. Example: $40,000 x 0.97 = $38,800.

How much per month do you get when you retire?

You can get this much per month when you retire in social security benefits, assuming you have consistently worked and earned at the maximum taxable level since the age of 22:

Age of Retirement

Social Security Monthly Benefit

  • 62
  • $2,572
  • 65
  • $3,279
  • 66
  • $3,506
  • 70
  • $4,555

Is a retiree’s post-retirement income taxable?

Yes, a retiree’s post-retirement income is taxable but subject to a few considerations, namely:

  • Filing status - For 2022, if a retiree files for income tax jointly with a spouse who is 65 and older, filed income is taxable if it exceeds $28,700 ($27,300 if the spouse is below 65)
  • Annual Income - the following income levels are taxable:

Filing status

Taxable income

Single filers

Above $25,000

Married couples that file separately and lived apart for the whole year

Above $25,000

Married couple filing jointly

Above $32,000

  • Income Sources - up to 85% of Social Security benefits can be taxable depending on filing status and total annual income. Example: Social Security and Medicare are taxable if a retiree is employed/self-employed despite receiving Social Security benefits.

Can a retiree still contribute to a retirement plan after age 72?

A retiree can still contribute to a retirement plan after age 72 even when distributions are already in place. The age of 72 is when required minimum distributions (RMD) are mandatory for traditional 401k plans and IRAs, but not for Roth 401k plans and Roth IRAs. 

Can a US retiree receive social security benefits if living overseas?

A US retiree can receive Social Security benefits while living overseas if Social Security credits were earned working in the US. If a retiree worked outside the US, the retiree might not have enough Social Security credits to qualify for Social Security retirement or disability benefits. The retiree will need to check if the country worked in has a retirement benefit agreement with the United States.


Retirement has been identified as the act of ceasing work or leaving one's job. This is a phase that is characterized as supposedly less stressful and an opportunity for the retiree to focus on personal interests. Social Security benefits and monthly pensions from a retirement plan will supposedly sustain the retiree's day-to-day upkeep. Thus, planning for one's retirement is vital to ensure that when the time comes for giving up active employment, retirement will serve as a relaxing life phase.

Retirement can also be less stress-free with a diversified retirement portfolio. Investing in a Gold IRA with Augusta Precious Metals is an excellent option for portfolio diversification.

About the author 

Mary Ann Recinto

Leave a Reply

Your email address will not be published. Required fields are marked

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}
Subscribe to get the latest updates