Financial Dictionary -> General Finance -> Retirement

Retirement is the state of leaving a job or profession, whether from employment or self employment, with the mind of not working for a living for the remainder of one's life, usually using savings or a pension to cover living costs until death. In the United States, the cultural belief about the age of retirement is around 65 years old, although many people have to work well in to old age to sustain living expenses.

Retirement is closely linked savings and pension plans, because these are what help to pay for a living once a normal paycheck ends. In the United States those that pay Social Security, a form of tax that goes towards various benefits will usually receive a pension if various requirements are met. The age at which one must continue work until full social security is paid, has often been 65, but is steadily increasing, and is now at 67 years old.

Those citizens in the armed forces or working directly for the government usually have far better pension plans. For example police officer can retire after just 20 years on the job and receive half their paycheck every month throughout retirement. In the Armed Forces a similar system is in place, where the longer they have served, the better pay grade the reach. Earning accolades like the Medal of Honor also bring several extra benefits.

For the average person the state pension is not adequate. These people normally set up a private pension or retirement savings plans with a financial institution, however some of these systems have failed in recent years due to economic collapse.

There are various online calculators that take your income and expenses into account and can determine a suitable age for retirement, although these obviously can't take into account future inflation and economic issues.