When Should I Retire?
What’s the right time for retirement? The ideal time to retire depends on a number of factors, and only you will know when you’re ready.
Your reasons for wanting to retire should play a significant role in your decision. Perhaps you wish to leave a stressful job, or maybe you have a hobby you want to pursue full-time. You may simply feel ready for some well-deserved rest and relaxation.
However you plan to spend your days in retirement, consider your individual situation before making the leap. Here are three steps to take as you determine the right time to begin your retirement lifestyle.
Review Your Financial Situation
Before you leave your job for good, it’s critical to honestly evaluate your current financial scenario and to understand what you’ll need in retirement. Calculate the income you can expect from all sources, including Social Security, your retirement accounts, pension and other investments.
Compare that amount with the lifestyle you hope for in retirement. Do you want to travel? Will you be downsizing to a smaller home or moving to a senior living community? Are you planning generous gifts to children and grandchildren? If your expected income doesn’t adequately cover planned expenses, it may be prudent to consider working a little longer.
In addition, take into account any debts you’ll still be paying, along with possible risks — for example, the sudden need to replace a roof if you opt to remain in your current home.
Evaluate Your Personal Readiness
Apart from financial freedom, what are the other ways you know when you’re ready to retire? People retire for a multitude of different reasons, and not everyone thrives in retirement. The worst-case scenario is retiring without an idea of how you’ll spend your days — and ending up bored to tears.
For some people, simply reaching a certain age, typically 65, signals the right time. For others, a health issue or a stressful job might point to the need for a change.
You may know it’s the right time to retire if your priorities have changed; maybe you’re simply not as driven at work as you once were. Or you may be excited by new interests you plan to pursue in retirement, including travel, art, writing, fitness, cooking and more.
Create a Plan
As retirement age approaches, many people worry that they’ll miss the regular paycheck once they say goodbye to their jobs. But many seniors more keenly feel a sense of loss in other areas — including life purpose, social connections and intellectual stimulation.
Before you retire, it’s critical to have a solid financial structure in place to ensure that your needs are met and that you can pursue the lifestyle you want. But it’s just as important to acknowledge that your work provides much more than an income; for many people, it provides a true sense of self. How will you fill that need once you decide the time is right to retire?
Your retirement plan should cover not only your financial security but also your emotional security — including how, where and with whom you’ll spend your time.