May 7 / Jay Zigmont, PhD, MBA, CFP®

How do I know when I'm ready to retire?

If you're deep in the throes of your working years, you might be wondering how to tell when it's time to retire. How do you know you're ready, financially and otherwise? Let's look at what to consider when deciding.

Do you actually want to retire?

There is no rule saying you must retire in a traditional sense. If you enjoy your work or would encounter financial difficulties if you stopped working altogether, you might decide not to retire at all. And retirement is a much more involved (and expensive) prospect than it used to be, and requires a lot more saving and investing during your working years. Gone are the days when you could spend your entire career with one company and retire with a pension and a gold watch. That said, it still pays to plan if you're eventually hoping to stop working. 

Think about whether you'd be retiring from your job, or retiring to something else. If you dislike your job and the attraction of retiring is to be able to stop doing it, you might consider changing jobs or even careers. You could take some time off work, maybe a six-month sabbatical, and return with a new perspective or a new idea for what you want to do. If you want to continue working in "retirement," you could focus on an encore career in a different field, and perhaps for less income but more enjoyment. Having something new (be it a new career, a hobby, or something else) to retire to could change your perspective on "retirement."

Financial considerations for retirement 

You can't expect to work less or stop working altogether without making some concrete plans for your finances and ensuring you won't run out of money. This is where a Childfree Wealth Specialist® can help. 

Retirement and paying for it is a numbers game, and you can calculate a savings goal based on your monthly expenses (or anticipated monthly expenses in retirement) and how long you expect to live. Social Security will pay you benefits in retirement if you've worked and paid into it, but the amount you receive varies based on when you retire (the longer you can hold out, the higher your payments will be). Note that you can't expect Social Security to pay you as much as you were making when you were working. You might also get a pension from your working years, depending on your field and your employer. These two factors can impact how much you need to save for retirement. 

Our Childfree Wealth Specialists® will use financial planning software to run simulations to determine the best moves to make in the run up to retirement, in terms of saving and investing, and how much money you can expect to need to fund your post-working life plans. A lot will also depend on you, and how you're hoping to live in retirement. Will you work part time? Are you hoping for a retirement consisting of traveling the world and other expensive pursuits? Or will you downsize your home and live more cheaply? Your health also plays a role here, and especially if you're Childfree, it's crucial to plan for long-term care. A Childfree Wealth Specialists® can help you address all these factors and decide how to approach retirement and perhaps offer concrete answers to the question, "Am I ready to retire?" 
Jay Zigmont, PhD, MBA, CFP® is the Founder of Childfree Wealth®, a life and financial planning firm dedicated to helping Childfree and Permanently Childless people. Dr. Jay is a CERTIFIED FINANCIAL PLANNER™, Childfree Wealth Specialist, and author of the book “Portraits of Childfree Wealth.” Dr. Jay is the co-host of Childfree Wealth Podcast. His Ph.D. is in Adult Learning from the University of Connecticut.

He has been featured in Fortune, Forbes, MarketWatch, Wall Street Journal, New York Times, Business Insider, CNBC, and many other publications.