How Do I Know When It’s Time To Retire


It Takes Everything To Get Yourself Out Of Bed On Monday Mornings

Am I Ready For Retirement?

You dont want to go to work. You feel tired and lethargic, and the thought of getting out of bed on Monday mornings makes you want to throw up. It feels like your job is sucking all the energy out of your life.

And while it may be true that some aspects of your job are drainingperhaps youre working long hours or dealing with unreasonable friendsits important not to blame everything on your job or employer.

It could be that youre just tired of the grind and ready to move on.

You Have Varied Sources Of Income

A part-time job, freelance career and even rental income can really take the weight off budget and cash flow constraints. The ability to tap more than one source of income in retirement can mean the difference between a stressful and carefree retirement. The trick of course is layering each source to make your annual income and taxes as smooth and efficient as possible.

What Would You Advise Boomers Thinking About Retirement To Consider

Have a plan. A plan that includes both lifestyle issues and money issues. Too often the retirement plan focuses on the financial issues. remember that retirement is about more than just money. You can have all the money in the world but if you dont know how to spend it or have good people around you or you dont have your health, what good is the money? Remember the point of money is to buy you a life and that retirement is really about living the golden years.

Related article:Three steps to a great retirement plan

Jim Yih is a Fee Only Advisor, Best Selling Author, and Financial Speaker on wealth, retirement and personal finance. Currently, Jim specializes in putting Financial Education programs into the workplace.

For more information you can follow him on Twitter or visit his other websites and Clearpoint Benefit Solutions.

You May Like: Safe Withdrawal Rate In Retirement

You’ve Hit Full Retirement Age

If you were born between 1943 and 1954, your full retirement age for Social Security purposes is 66. If you’re born after 1959, youll have to wait until youre 67. Between those dates, it’s 66 and some months. Although you can start claiming Social Security benefits as early as 62, your benefits will be much higher if you wait until full retirement age. If you start your retirement benefits at 62, your monthly payment is reduced by a whopping 25%.

On the other hand, if you wait even longer to claim Social Securitythe maximum age of delay is 70you’ll receive as much as 132% of the monthly benefit you would have collected at your full retirement age.

If you start collecting Social Security early, it will also lower any survivor benefits your spouse is entitled to after you pass. If your spouse outlives you for many years, this could be a serious financial hit.

No 2 I Considered The Worst Case Scenarios And Created Backup Plans For My Backup Plans

When Do You Know It

Some of my worst case scenarios include:

  • Massive stock market drop early in retirement
  • Lack of meaning in my life

And one my biggest:

  • Boredom

The worst case scenarios are not that bad once you start thinking about them. If the market tanked, I’d step up my side-hustles or go back to full-time work for a year. If I was bored, I’d hire a life coach.

Perhaps my ultimate worst case scenario is this:

Don’t Miss: Employer Retirement Plans Small Business

You Are Looking For A Change Of Pace

Theres no denying that retirement comes with countless perks but, do you have a plan for how you will spend all this newfound freedom and extra time? Whether you want to travel, volunteer, or spend more time with family, it is crucial to consider what will make you happy during this next phase of life. Here at Seafields at Kiawah Island, we offer an endless array of top-tier amenities and luxurious services that are created to enrich our residents lives. With speaker series, musical performances, wine tastings, and more, an exciting new lifestyle awaits you at Seafields on the one and only, Kiawah Island.

Early Retirement: Before Age 65

Let’s be honest, leaving your job can have some nice perks. By the time some workers reach their 50s and early 60s, they’re starting to feel burned out, so retiring before the traditional age of 65 can feel invigorating. Men retire at an average age of 64.6 years, while for women, the average retirement age is 62.3 years. So whether it’s traveling, taking up new hobbies, or simply finding a part-time job with less stress, it’s your opportunity to recharge.

Though some research does show that working for longer keeps you healthier and happier, there’s also evidence of the opposing view. The National Bureau of Economic Research, for example, found that “retirement improves both health and life satisfaction,” in part by factoring in the number of people who are forced to retire due to health issues. However, there’s a major caveat here. Relatively few people have the financial resources to support an extended retirement.

Recommended Reading: Retirement Plans For Small Nonprofits

How Much Do I Need To Retire

To calculate how much you’ll need annually in retirement, consider both “needs” and “wants,” says Bobbi Rebell, a financial planner and host of the Financial Grownup podcast. Include costs such as housing, food, and health insurance, plus discretionary spending, like travel, hobbies, and gifts. If you plan to move to a new city, factor in the increase, or decrease, in cost of living.

Then use a calculator to figure out how much you could be getting in annual Social Security benefits. According to SmartAsset’s Social Security calculator, a 35-year-old today whose annual income is $65,000 could begin claiming about $44,000 a year in Social Security if they retire at age 66 . Keep in mind, Social Security income may be subject to federal and state income taxes as well.

If that person figures they’ll need a pretax total of $80,000 a year during retirement, Social Security will cover about half of their annual expenses. The other $36,000 will probably come from their investment portfolio.

According to the 4% rule, that person will need at least a $900,000 portfolio before leaving work. The rule says to have enough money socked away to start withdrawing 4% from your portfolio during your first year of retirement, increasing the withdrawal each year to cover inflation for 30 years. However, it’s not a hard-and-fast rule.

Read more: 7 signs you might not have enough money to retire

You’re No Longer Supporting Kids Or Parents

NBA Legends And Players Share The Moment They Knew It Was Time To Retire

Are your kids all grown up, out of the house, and earning their own income? That makes it a lot easier for you to retire.

However, if you’re still supporting your kids or helping them out regularly, you may want to put your retirement plans on hold for a while. You might also hold on if you have elderly parents who need your financial supportor may need it down the line.

“Supporting aging parents or kids at home is becoming more expensive as college and housing costs continue to rise. There is no way a couple can downsize and start minimizing their expenses if they have a household to take care of,” says Carlos Dias Jr., founder and managing partner of Dias Wealth LLC in Lake Mary, Fla.

Don’t Miss: Retiring With A Pension And Social Security

Emotional Signs You Need To Retire

Trying to determine when youre truly ready to retire can be difficult. Sure, many individuals dream of a life of leisure and traveling the world, spending time with family and picking up new hobbies without the stress of a job weighing them down. But, are you emotionally ready for such a large change? Making the leap into retirement has its perks less stress, better health, more family involvement but they might come with some emotional strings attached. So, what are the psychological effects of retirement? And how do you know when youre emotionally ready to retire?

When Should I Retire

Besides blown out knees, neuropathy, sciatica and other stuff renders office life less enjoyable for older folks, theres another good reason why most people retire in their sixties and early seventies. Its around this age that the government provides certain benefits to help older people pay their bills. For most people, it would be impossible to make ends meet otherwise.

The term retirement age that you often read about is currently 65 This is because our government provides a small safety net for retirees in the form of CPP and OAS, funds that arent available until you reach a certain birthday. The Canada Pension Plan considers normal retirement age to be 65, though you can collect a reduced benefit at 60 65 is the earliest you’re eligible for Old Age Security . How much CPP youre entitled to depends on how much youve paid into the system over the years, but the current average CPP payment is $673.10 per month, and basic OAS is $586.66 a month, for a combined $15,116 per year.

If you hoped to gross $50,000 a year, youd need to bring in approximately $35,000 annually to add to your benefits. For financial planning purposes, plan on living 20 years past retirement at 70. So youd have to have at your disposal $700,000. If you imagine a retirement in which you plan on crashing on your kids pull-out sofa and eating lots of packaged ramen, or alternately chartering lots of yachts in Bimini, adjust your annual needs accordingly.

Don’t Miss: Non Qualified Retirement Plan Examples

Taking Stock Of Your Finances

Savings and pensions and debt, oh my! Probably the first thing that springs to mind when you start to think about retirement is the money, right? Well, thats because it is perhaps the most important factor in planning your retirement. Its basic if youre no longer working you need to replace that income stream to simply keep living life, let alone fulfill any kind of retirement dream.

So, to get your retirement planning off the ground, youll need to take stock of your retirement income options.

There are 3 main retirement income streams:

What Are The Signs You Need To Retire

8 Signs It

The obvious signs of being ready to retire include being financially prepared and eliminating any debt youve incurred, but what about the emotional signs? Some of the top emotional signs you might be ready to retire include:

  • Becoming resentful of your work, or daydreaming about retirement during work hours to the extent that it distracts you from getting your work finished.
  • No longer identifying who you are with what you do .
  • No longer feeling excitement when presented with opportunities for career advancement.
  • Being jealous of your retired friends and counting down the days to your own retirement.
  • Your list of retirement pros outweighs the cons.

Even if you check off all those boxes, its important not to retire until you have a plan. Adjusting to retirement isnt always easy, and it helps to know exactly what you plan to do with your spare time. It can also be important to have a supportive social network in place, especially if youre an extroverted individual.

Don’t Miss: Federal Government Employee Retirement Benefits

At A Certain Point You Do Have To Draw On Your Rrsp So How Does That Factor In

The rules are that you must start drawing income from your RRSPs by December 31 in the year in which you turn 71. you can draw it sooner but not later. My suggesting has always been to start a withdrawal strategy as soon as you retire. Ive seen too many people wait to convert their RRSPs to income at 71 usually for 2 reasons: They did not need the money or they did not want to pay the tax. For a lot of people, waiting till 71 to use your RRSPs for income defeats the purpose of the RRSP and thats to make your retirement the golden years. Sometimes the withdrawal strategy is because of lifestyle but sometimes it based soley on a tax strategy.

Related article: Developing a RRSP withdrawal strategy

Spending Time With Family Is A Priority

Its important to understand that retirement is a decision that affects not only you, but also your entire family. Your career can be incredibly time-consuming, requiring you to work hours on end each week. Unfortunately, this often leads to more time spent at the office and less at home with your loved ones. Perhaps your family has just welcomed the first grandchild, or you simply want to cherish more quality time with your spouse. If you find yourself longing for more time with your family and feel as if youre missing out, then it might be worth considering retirement.

You May Like: How Much Do I Need In My 401k To Retire

Work Is No Longer On Your Mind Adventure Is

If your job has lost its meaning and you constantly find yourself questioning why you arent doing something enjoyable instead, its a clear sign you need to stop working if you can afford to.

Wes Moss, chief investment strategist at Capital Investment Advisors, recommends paying attention to your sense of adventure if it feels unfulfilled.

Molly is in her early 60s and is the head of tech support for a multi-state accounting firm, he said. Due to the nature of her job, her employer required her to be in the office full-time. This was hard on her as five days a week, her commute to and fro was two hours. She was getting to the point where she could financially retire but was nervous to pull the trigger.

When working from home in the pandemic eliminated her commute, she realized that life was tremendously better. This summer, when her employer wanted her to come back to the office for at least three days a week, she realized it was time to go. She couldnt bear the thought of commuting. And she also realized that she wanted to head to the National Parks, see her sisters family in Boulder and visit her brother in Los Angeles. She quit her job as she didnt want work to get in the way. Now she has a bunch of travel plans and is more excited than shes been in years.

You Are Emotionally Burnt Out

How Much Money Do I Need to Retire?

The first sign that its time to retire is when your work starts to drain energy and vitality.

Are you feeling exhausted and run down, like you cant keep going, like youre under constant unrelenting stress? Are youre not enjoying your work anymore and find yourself dreading going to the office each day?

It may be time to call it quits because youre likely suffering from an emotional burnout. And youre not the only one. In fact, a significant 52% of the respondents in Indeeds survey are feeling burned out:

Emotional burnout is one of the biggest signs that its time for you to pack up your desk, say goodbye to your coworkers, and retire.

Retirement is a wonderful time for some R& R and adventures, so even if youre not completely burned out emotionally, dont wait until rock bottom happens to make the decision to retire.

Recommended Reading: Individual Retirement Annuity Vs Ira

You Are Ready To Relax

If you have you found yourself wanting to revisit leisure activities that motivate, inspire, relax or entertain you, then this is a good indicator you are ready to relax.

Whether it is a hobby or volunteer work, once you retire, having a new plan in place to keep yourself busy is key. Consider starting a to-do list and fill your days with things you have always wanted to do such as go fishing or start a vegetable garden.

Planning For Your Best Retirement Outcome

Even when youre making an active choice to leave work for good, there are still ways to prepare for your retirement and make the change of pace and focus a positive one. With the right planning, life after work can be rich and challenging – in all the right ways.

So how do you know if youre ready?

Also Check: Non Taxable Non Retirement Account

Timing Is Everything When It Comes To Retiring Comfortably

After years of hard work, you’re certainly entitled to a happy retirement. You may have already started daydreaming about it, at least a little. Will you travel the world, volunteer for your favorite charity, go fishing, or spend more time with the grandkids? The possibilities are endless.

Even so, many workers are a little afraid of retirement. They’ve heard too many horror stories about people who retire too soon and find their income and lifestyle severely restricted. According to the 20th Annual Transamerica Retirement Survey of Workers, published in 2020, outliving savings and investments is the most frequently cited retirement fear among American workers40% said this is their top concern. Add to that the economic fallout from the ongoing COVID-19 pandemic, which has added another layer of complexity for many aspiring retirees.

So how do you know when the timing is right? Here are six signs that indicate you’re ready to retire if you want to.

People Are Living Longer What Might You Caution People To Really Look At When It Comes To Savings To Make Sure They Are On Firm Footing

Working Days to Retire

Its really about the assumptions in a retirement plan. If you think about there retirement planning calculators, you INPUT a bunch of number and magically you get the RESULTS. for example, You need 2.8 million dollars in order to retire. When it comes to these calculators, its important to understand, the OUTPUT is only as good as the INPUT. And a lot of the INPUT is a set of ASSUMPTIONS . If you dont like the output then you need to revisit the INPUT.

I tell people all the time When it comes to understanding your retirement plan, spend more time understanding the assumptions than the results. Its the assumptions that determine the results. In terms of key assumptions, its important tolook at things like:

  • life expectancy

Related article:What are the key assumptions of a retirement plan?

You May Like: Best Investment For Retirement In India

Share post:


More like this

What Is An Orp Retirement Plan

Saving For...

What Type Of Retirement Plan Is Tiaa Cref

How Can...

Del Webb Retirement Communities North Carolina

Clayton 55...