The bars should be adjusted so that you’re comfortable. But, before you do anything, keep in mind that it’s not always easy to raise or lower bicycle handlebars, especially if you want a significant change. Depending on the bike, special tools and parts may be required.
As for what height is correct, don’t assume that the higher the bars are, the more comfortable you’ll be, because that’s usually not the case. In fact, if the handlebars are too high, most of your body weight gets shifted to the seat, which usually causes saddle soreness. Worse, high bars can spur lower-back pain because jolts from bumps come up through the rear wheel and pound your posterior and back.
Ideally, the correct handlebar height results in a comfortable riding position that balances pressure on the body’s contact points so no one part suffers. Your hands, arms, shoulders, back and neck should feel relaxed and natural when you’re riding. What’s right for you also depends on the bike and how you ride.
To evaluate handlebar height, lean your bike against a wall and place a yardstick on the seat (if the seat’s not level, make sure the yardstick is) so that the end of the ruler extends over the bars. You can then see how high the handlebars are in relationship to the seat height, which is a good way to judge bar position.
Most recreational cyclists prefer a bar position that is about the same height or slightly higher than the saddle. But, folks who ride more, maintain a faster pace, and are more flexible, generally like having their handlebars below the height of the seat.
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