“Can I retire yet?” It’s a question that many people ask. The answer is deeply personal, quite different for everyone, and depends on many factors. Some drivers include how you will replace the income that you were earning from your career, what you have done to feel as ready as possible for retirement, and how you will handle the new life changes.
In many respects, retirement is the “next chapter in life,” but it can also be a period of uncertainty. As you near the bend, how should you approach that question of “when can I retire?” How can you be sure about when the right time to retire is for you?
It will ultimately hinge on your personal goals, but here are a few things to keep in mind as you think about this question.
Consider the Full Picture
Retiring is more than just a financial decision, as it’s also highly personal. Once you have stepped away from your career, your daily life tends to change heavily. What you do with this newfound free time isn’t a small matter.
Many people have a sense of social connection and community with their workplace. When they leave the workforce, there is the question of how they will maintain that connectivity in retirement. To that end, retirement also has emotional aspects that shouldn’t be neglected.
Some questions to think about are: How will you stay socially active in your retirement? What sort of lifestyle do you want? What activities will you pursue: volunteering, working part-time, spending time with loved ones, traveling?
Of course, looking at the full picture means envisioning the financial aspects of retirement as well. Some questions to consider are: How much have you saved for retirement? Do you have enough money to retire? How much income will you need for your preferred lifestyle? Will your money last as long as you need it to?
Look at “Can I Retire Yet?” From the Money Perspective
While rules of thumb can help you in gauging whether you have enough money, such as the Rule of 25x, these axioms should just be a starting point. The answers to all of these questions ultimately depend on your dreams, hopes, concerns, and personal situation.
Every one of us has to answer the question of “can I retire yet?” insofar as how it applies to us individually.
From the money perspective, here are some overarching questions to ask yourself:
- What do you expect your income to be in retirement?
- Will your expected income and portfolio cover your retirement spending needs and wants?
If you don’t quite have an idea of what your retirement spending might look like, look at your current household expenses. They are a valuable clue-in for what your future spending might be, so you can use them to estimate your retirement expenses.
Some will be lower than what you are paying now. Other expenses may be gone by then, such as the mortgage payment or financial assistance for your kids’ college education.
From there, the timing of when you retire, how you will pay for retirement (income and portfolio), your portfolio holdings (asset allocation and risk profile), and your retirement timeline (how long you expect to live) all come into play. Taxes, healthcare, and investment risks are other factors that can also affect your financial security for and in retirement.
Consider talking to your financial professional about how everything ties together, your current financial progress to date, and what other steps you can take toward reaching your goals. The sooner you do this before retiring, the more capacity you will have to adjust or make course corrections as needed.
Your Readiness for Next Steps
Retirement isn’t only an either-or choice of “working” and “stop working.” If you feel that you aren’t quite ready to call it quits, you might consider a phased transition into this next stage of life.
A practical way to gauge your readiness is to test-drive your expected retirement lifestyle. Take a week or two, and practice living it out. How fulfilled do you feel? Does the change of pace excite you? Worry you?
If you aren’t prepared to take the full step, you can seek out part-time opportunities in your current field of work. Consulting or individual contribution opportunities in your field may be other ways for you to stay plugged in while still slowing down from your prior full-time career.
The Bottom Line on Deciding “When Can You Retire?”
The decision of when it’s right for you to retire shouldn’t be sudden or slapdash. You have spent many years working to reach this point in life. Now it’s a matter of enjoying the fruits of your life’s work and deciding what you will do with your freed-up time in your golden years. Don’t feel as though you need to rush things.
Retirement planning has many nuances and dimensions, not all of which are financial. You want to be sure that you feel as ready as possible when you do retire. Talking to an experienced, knowledgeable financial professional about all of these questions, and your options, can assist in making well-informed and confident choices. They can help you build a personalized financial plan, monitor your progress, make adjustments as needed, and empower you to enjoy the retirement of your dreams.
If you are looking for a financial professional to guide you, many independent and knowledgeable financial professionals are available here at SafeMoney.com. You can get started by visiting our “Find a Financial Professional” section, where you can connect with someone directly to discuss your goals, concerns, and personal situation. Should you need a personal referral, please call us at 877.476.9723.