When is the Right Time to Retire?

The right time to retire is an individual decision for every person. One of my clients worked as a bookkeeper until she was 87 years old. She loved working and only retired when she developed some cognitive impairment. She told everyone she met, “Work as long as you can.” On the other hand, some people stop working as early as their 50s. Their philosophy is to retire as soon as financially possible.

According to the U. S. Census Bureau the average age for retirement is about 63. No matter what age you begin retirement, it is a major transition which will create a significant change in your lifestyle. Like any big decision, there are certain questions you should ask yourself to ensure a successful one.

Questions to Ask Before Retiring

Have I saved enough? There are many online retirement calculators available to help you determine what your financial future will look like when you stop working. In general, expect to spend about 80% of your pre-retirement income in retirement. Most private investment firms offer a complimentary retirement portfolio analysis. If you have a pension with a defined benefit then contact your plan’s manager, well in advance of your expected retirement date, to determine the your benefit amount. You can start collecting social security benefits at age 62 but your monthly benefit will be permanently reduced by 30% over your lifetime. Medicare benefits do not start until the age of 65. Therefore, if you retire earlier,  research the monthly cost of health insurance from the Affordable Care Act or a private insurer to factor these expenses in your overall retirement.

What do I want my retirement to look like? It may sound tempting to stop work completely and have time to catch up on reading, play tennis or golf daily, or finally have that long, leisurely lunch with friends. This relaxed lifestyle might be satisfying for a few weeks, but most people quickly become bored with no structure or plan in place. Switching to a part-time schedule or providing consulting services is a good way to ease into retirement. If part-time work is not an option, then plan activities which will bring meaning and value to your life: travel, volunteer activities, spending time with family, providing care for grandchildren, or teaching a class.

Where will I live? According to U. S. Census Bureau migration statistics, the most popular states that draw relocating retirees are Florida, Arizona, and South Carolina. However, while the fantasy for many people is to retire to another location, especially to a state with warmer weather, most Americans age in place. Evaluate your current living situation to determine if it is the right location for you as you age. Is it too big and expensive to take keep up? Are there stairs? Will you be able to remain in your home if you become disabled and need the aid of a cane, walker, or wheelchair? Is it time to relocate near an adult child?






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