Are you ready to retire? Everyone’s retirement timeline is different. Some want to retire as early as possible whereas others never feel the desire to hang up their hat. But these two groups do share a common goal: to live retirement on their own terms and know they’ll be financially able to do so.
Let’s say you wanted to retire tomorrow—could you? These 5 signs can help you decide if retirement is within reach.
You’ve Got Your Finances Squared Away
First things first: you need to make sure that your finances are prepared for retirement. At this point, you should have ample savings and your investments should be meeting or exceeding what you expected.
Social security can also have a big impact on your finances depending on your retirement age and when you plan to claim benefits. You can take social security as early as 62, but your benefit will be reduced by about 30%. However, if you’re able to wait until your full retirement age, you’ll be able to collect 100%, and even more so if you collect late at age 70. The best time to claim social security benefits is different for everyone based on where they are at in their financial journey.
Don’t forget about the retirement accounts you’ve saved long and hard for. Today, could you withdraw from your accounts without a penalty? There’s nothing worse than saving for retirement for 40 years only to have to pay a penalty to use the funds.
It’s important to get clear on your goal retirement number and build a plan with your spouse. Decide together what you’re comfortable with and work with your financial advisor to come up with an amount of how much you need in a week, month, and year to live your life.
That’s right, you can’t get away from budgeting even in retirement! Budgeting is perhaps even more important in this stage in life as you are living on fixed incomes, pensions, and withdrawals from your retirement accounts.
You Have A Robust Healthcare Plan
Retirees spend a lot of money (and time) on healthcare (about 15% of their budget), so it’s vital to make a plan early on before you’re eligible for Medicare at 65.
If you currently receive health insurance through your or your spouse’s job, you’ll need to purchase another form of insurance before you retire. COBRA can extend your benefits after you leave your job, but on average it’s more expensive than purchasing private health insurance. You also need to consider the expenses of supplemental plans or policies to fill the gaps. If long-term care insurance is on the table, that’s another major expense.
If you have a health savings account, you can use those tax-free distributions to pay for qualified medical expenses at any age. HSA’s give you more flexibility in your healthcare plan.
A robust plan doesn’t just mean health coverage—it’s also about long-term health maintenance. Regular exercise, eating well, challenging your mind, and being part of a strong community all affect your long-term health and wellness.
You’ve Strategically Planned Your Giving
What does charitable giving mean to you? Charitable giving plays an important role in each stage of your financial life—career, retirement, and estate plan. Set a comfortable budget and focus your efforts on organizations and movements that you’re passionate about.
When you’re close to retirement, it’s important to focus on financially smart ways to give. These include donor-advised funds, qualified charitable distributions, and appreciated assets. Utilizing these strategies may actually allow you to give more than you originally thought possible.
Make charitable giving a lasting part of your life that will impact you and your loved ones now and help establish your legacy.
You’re Excited About Your Lifestyle
If you’re not excited about your retirement lifestyle, it’s not time for retirement. It can be hard to create a new routine after 40+ years working in a fast-paced career, so take the time to make fruitful and fulfilling plans for your newly discovered time.
Distinguish between lifestyle and bucket list. Once you’ve moved near your family or bought the boat you’ve always dreamed of, what happens next? It’s at this point where your long-term vision for your life takes shape and comes alive.
Create a sustainable routine that fills your cup. This could mean volunteering regularly, mentoring, spending time with grandkids, or taking up a passion project. Whatever it is, make sure it still lights that fire within you.
You Have A Written Retirement Financial Plan
Your financial plan charts the course for your financial future. Having a written plan can help ensure you make choices aligned with your present and future goals.
Make sure that you don’t leave any element out of your plan. Take into account your goals and vision for how you want to live out your golden years. It’s possible that these things have changed over the years, so work on your plan with your spouse to ensure that you’re both on the same page.
Deciding on whether or not to retire can feel like you're walking straight toward a foggy abyss of uncertainty, but it doesn’t have to be that way.At Step by Step, we specialize in helping you live out your dream retirement. Take the next step to a clear retirement future and schedule your strategy session.