3 Signs You’re Ready for Retirement — and 3 Signs That You’re Not
Don’t quit your day job until you’ve considered the following indicators for retirement.
Even if you’re working in your dream job, you’ve probably fantasized about retirement and what you’d like to accomplish after your career. If you’re getting closer to retirement — either based on your age or by reaching your financial goals — it’s important to make a plan for how you’ll get there.
Generally speaking, there are no do-overs for retirement. If you want to get it right the first time, it’s important to identify the signs that you might be ready for retirement — and also recognize if you’re not.
Ready for Retirement Sign 1: You are financially prepared
Because debt will strain your savings after you’ve retired, it’s helpful to first pay off credit card balances, car loans and other high-interest debt. Although paying off debt might require more years in the workforce, getting rid of payments will improve your long-term financial situation. Additionally, having greater savings might allow you to delay tapping into Social Security until you can claim the full benefits at age 67.
Ready for Retirement Sign 2: Your healthcare is covered
Healthcare is a major out-of-pocket expense and after retiring, you’ll likely lose your employer-sponsored benefits. Retiring at the age of 65 or older will allow you to qualify for Medicare. But if you’re younger than 65, you’ll need to consider other options, such as COBRA provisions, joining a health plan through your spouse’s employer or using your home state’s health insurance exchange.
Ready for Retirement Sign 3: You have a new plan
Some people who retire early don’t prepare a roadmap for how they’ll spend their time and they become bored or restless only a few months into their retirement. That’s why it’s important to have a good picture of what your day-to-day life will look like in retirement. If you know exactly what your goals are after retirement — whether it’s volunteering, golfing or spending time with family and friends — it will help make the transition easier.
Not Ready for Retirement Sign 1: You don’t have a long-term financial plan
Many people overestimate how long their savings will last and underestimate the spending level they’ll need to maintain in the years to come.
Because of expanding lifespans, inflation and the potential for diminishing investment returns, it’s critical to map out the percentage of your assets you can comfortably spend each year. If your financials come up short, it might be wise to stay in the workforce longer.
Not Ready for Retirement Sign 2: You still love your job
You shouldn’t feel obligated to retire simply because you’ve hit the full retirement age to collect Social Security benefits. If you’re still passionate about your job, that’s a good reason to keep doing it. Aside from the financial benefits, your career can help give you a sense of purpose and engage your mind as you age.
Not Ready for Retirement Sign 3: You lack a social network outside of work
It’s important to meet your social needs at all stages of your life. For many people, the workplace becomes their dominant social network and abruptly losing it can be devastating. If you have a strong social network through friends, family or professional connections, it will be easier to make a smooth transition into retirement. But if you currently lack this network, delaying retirement will give you additional time to bolster your social connections.
Regardless of where you are in your career, retirement is a major life change that requires careful planning. Starting with your preparations early will help you make a successful transition.
Malcolm Hong is Zions Bank’s Public Relations officer for Idaho.