Retire in 2027 or Stay on the Job for Another Year? How to Choose

Record 401(k) balances may look reassuring, but inflation is still a concern. Use this decision guide to judge whether you are really prepared for what comes next.

Are you ready to leave work in 2027, or would it make sense to stay employed for another year? That question may be on your mind as 2026 comes to a close. The backdrop has been uneasy: inflation is running at 3.7%, gas prices are above $4 a gallon and the stock market has been unpredictable. At the same time, 401(k) balances have reached record levels, and there are more 401(k) millionaires than ever.

If you have been working steadily and saving, you may feel prepared. You have the money and the means, so why wait? But retirement readiness involves far more than the balance shown in your accounts.

"It's a conversation we're having a lot right now with consumer sentiment so low and what's happening out in the world," said Kelli Smith, a financial planner at Edelman Financial Engines. "Can you really afford to retire next year, and how do you feel about it?"

From just $107.88 $24.99 for Kiplinger Personal Finance

Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

To help you decide, we've put together a choose-your-own-path guide. Read on to see which option may fit you best.

Retire in 2027? Work One More Year?

Retire in 2027 if you know exactly what your retirement expenses will be each month: If retirement is only months away, a rough estimate of your spending is not enough. You should know precisely how much you will spend and have a plan in place. "Is your plan thorough?" Smith asks. "Can it support your lifestyle, healthcare and income taxes in retirement?"

Work one more year if you don't have a retirement budget: If you are relying on an estimate or planning to improvise, spend another year working and build a detailed budget. To be extra prepared, Smith suggests following that budget while you are still employed. That will show whether your estimate is realistic, and it also gives you more time to save.

Retire in 2027 if you're comfortable with the amount you saved: Most Americans believe they need more than $1 million to retire comfortably, but the right number depends on your own circumstances. Some people need more, others less. Whatever your target, reaching it removes one major retirement obstacle.

Work one more year if you are unsure about your number: If you are still uneasy about your retirement savings, another year of work can strengthen your confidence. It gives you 12 more months to maximize retirement contributions, pay down high-interest debt and save more. "A penny saved is a penny earned," Smith says. "Use the year to feel more comfortable."

Get expert retirement strategies and lifestyle insights delivered to your inbox. Subscribe to our free newsletter, Retirement Tips.

Retire in 2027 if you have a withdrawal strategy: Do you know how much you plan to take out regularly, and does that plan account for inflation and market declines, especially early in retirement? If so, you can check off another sign of readiness. A tax-smart withdrawal plan can help your money last longer and give you confidence to spend.

Work one more year if you plan to figure it out as you go: If you do not yet have a plan for how you will use your money in retirement, another year may help. Going without a strategy can raise the risk of running out of money too soon, especially when markets are weak. To build a framework, review common approaches such as the 4% rule, the bucket approach, guardrails and the pay yourself first strategy.

Retire in 2027 if you know what you'll do with your free time: Retirement is not just about finances; it also affects your emotional well-being. Satisfied retirees usually have a passion, activity or role that gives them purpose and a sense of community. That could be volunteer work, a part-time job or more time with friends and family. If you already know what will fill that space, or at least have ideas to explore, that is a strong sign you may be ready.

"It comes down to defining a lifestyle, not a number," says Michele Havens, head of U.S. wealth management at BMO. "We ask clients to think about their value and purpose more than their savings."

Work one more year if you don't know what you'll do in retirement: You may be certain you want to stop working, but if you have not really thought through how you will spend your days, take time to do that. Stay employed for another year and sketch out what retirement would actually look like for you, including everyday routines, not just trips and hobbies. What would a normal Tuesday look like?

Choosing between retiring in 2027 and working one more year does not have to be a final decision made right away. Use the coming months to sharpen your plan, build confidence and picture what life after work will really be like. When the financial and emotional pieces line up, you will know it is time.