No one can tell you when you should retire. The leap into retirement is a personal decision that depends on both finances and the type of lifestyle you wish to lead. Only you are qualified to decide when the time is right to retire and just how your time will be spent after that.
Historically age 65 has been the trigger that initiates thoughts of retirement. And for some people that age is fine. But those who have worked a career that is physically demanding may be ready to call it quits long before 65, while others may feel that their career is far from done at 65. Deciding when to retire isn't as simple as hitting a target age. The right time to retire can and should vary by individual.
Here's how to tell if you are ready to retire:
You and your partner are on the same page. Different people tend to have different visions of what retirement will be, and even married couples should compare notes. Although you have spent time together, retirement brings the possibility that you could be at each other's side 24/7. Spouses need to think about what they will do together as well as apart for the next 20 or more years.
It is possible that you and your spouse will have different ideas about what makes a satisfying retirement. I have no problem filling the hours in the day with blogging, exercise, reading, gardening, puttering around the house, catching a recorded sitcom and taking the occasional mid-afternoon nap. I keep plenty busy, and at the end of the day experience a certain feeling of accomplishment with my lists checked off and progress made. But my wife is not so easily entertained. After years of work, she misses the daily interaction and challenge of keeping an office running smoothly. How partners come to terms with differing wants and needs in retirement is an important ingredient to their future happiness as a retired couple.
You have enough saved. Deciding when you have enough saved to support your retirement is another personal choice. Many financial planning models estimate you will need a significant percentage of your current earnings to support your retired lifestyle. But your costs depend on the kind of lifestyle you live. If you plan to travel lavishly you can burn through cash quickly.
Most retirees will need to live a bit more frugally than they did while working. Fancy dinners, elaborate hotel rooms and extravagant cruises may need to be tempered with a bit of moderation to help your retirement dollars go further. You don't want to deny yourself the pleasures of retirement after all it took you to get there, but you also need to make sure your money lasts the rest of your life.
You know what you will do all day. The point of retirement is to enjoy yourself. But that's not necessarily an easy task in a body that is getting older. You won't necessarily be able to do all you would like to do, but don't use that as an excuse to not do anything. You have the best chance of finding fun if you maintain a positive attitude and a willingness to try new things. While it's easy and safe to do the same thing every day it can also become tedious and boring. If you are not looking forward to something fun in retirement, perhaps you are not quite ready to make the move.
You have a plan for the unexpected. One of the marvels of modern science and technology is the extension of the average life expectancy. But people living longer also means more years of retirement to save up for. Some older retirees are realizing their planning did not account for living to such an advanced age. Savings can dwindle as retirees try to sustain a lifestyle for a period beyond what was initially planned. We don't know what the future holds for the economy, our health or our family, which makes it difficult to plan for every contingency. Perhaps the best we can do is remain watchful and keep an extra stash of cash to cushion any blows.
Dave Bernard is the author of "I Want To Retire! Essential Considerations for the Retiree to Be". Although not yet retired, he focuses on identifying and understanding the essential components of a fulfilling and meaningful retirement. He shares his discoveries and insights on his blog Retirement-Only The Beginning.
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