How Do I Know When I’m Ready to Retire?
If you’re deep into your working years, you may be wondering how to tell when it’s time to retire. How do you know if you’re ready, both financially and mentally? Let’s take a look at what you should consider before making the big decision.
Do You Actually Want to Retire?
First things first — there’s no rule that says you have to retire in the traditional sense. If you still enjoy your work, or if stopping altogether might cause financial strain, retirement might not be right for you yet. Plus, retirement today is much more involved and expensive than it used to be, requiring much more saving and investing during your working years. Gone are the days when people could expect a pension after working for the same company for decades.
That said, even if you plan to keep working, it’s still wise to think ahead if you’d eventually like to stop working altogether. Ask yourself whether you’re retiring from something, like a job you dislike, or retiring to something new. If the thought of leaving your job excites you only because you want to escape, it could be worth exploring a career change or taking a sabbatical first. Sometimes stepping away for a few months can help you gain a fresh perspective or uncover a new passion. If you want to continue working during retirement, consider an “encore career” in a field that excites you — perhaps for less income but more personal fulfillment. The idea of “retirement” doesn’t have to mean doing nothing; it can simply be a shift toward something more meaningful.
Financial Considerations for Retirement
You can’t expect to reduce your work hours or stop working entirely without putting some serious financial plans in place. That’s where a Childfree Wealth Specialist® can help.
Retirement planning is all about the numbers. You’ll need to calculate a savings goal based on your monthly expenses (or projected expenses in retirement) and how long you expect to live. Social Security benefits can supplement your income once you retire, but keep in mind that the amount varies based on when you decide to retire. The longer you work, the higher your payments will be — but don’t expect Social Security to cover all your costs.
In addition to Social Security, you might be eligible for a pension if you’ve worked in a field or for an employer that offers one. These two factors can impact how much you need to save. However, there’s no one-size-fits-all answer for how much you should be saving. That’s where personalized planning comes in.
At Childfree Wealth®, we use financial planning software to simulate various scenarios and help you determine how much you should save and invest, plus what your retirement might look like. A lot depends on the lifestyle you hope to live during retirement. Do you plan to work part-time, or will you take on more expensive endeavors like traveling the world? Or, are you planning to live more frugally by downsizing your home and cutting back on expenses? Your health will also play a significant role in your retirement plan, especially if you’re Childfree. It’s crucial to plan for long-term care, as you won’t have children to rely on in later years.
A Childfree Wealth Specialist® can help you navigate all these factors and answer the critical question, “Am I ready to retire?”