After many years of hard work, you may be starting to count down until retirement. You might have already started planning out how you would like to spend your days. Your retirement possibilities are completely wide open and up to you. According to a survey from Transamerica Center for Retirement Studies, the top retirement concern for 44% of American workers 60 or older is outliving their investments and savings. Here are some signs that can help you identify if you are ready to retire.
• You are at your Full Retirement Age
For those people born between 1943 and 1954, your full retirement age is 66. After 1954, it increases 2 months per year until 1960 and after, when it stays stagnant at age 67. You can start claiming benefits at age 62, but your monthly benefit will be reduced by 30%. If you wait until you are 70 to start your benefits, you’ll get getting 132% of the monthly benefit you would’ve collected at your full retirement age. If you are trying to figure out the best plan for your Social Security, we can put you through our Social Security Analysis.
• All of your debts are paid off
If you have all your debts paid off, you are in a good spot to think about retiring. However, if you still have debt; whether it is your mortgage, car payment, or credit card debt, you might need to wait a bit before retiring. When you’re on a fixed income, it can put stress on your finances to have large payment for a mortgage or car loan. It would also make it harder to deal with any financial emergencies that may arise. To make your retirement as stress-free as possible, try to pay down as much as you can, if not all, of your debts.
• You are not supporting any children or parents
If you still have kids that live with you, or you are paying for their college education, you might need to hold off on retirement. The same goes for if you are financially responsible for an elderly parent.
47% of 40 to 50 year olds have a parent 65 or older and are either financially supporting an adult child (18 or older) or are raising a young child, according to the Pew Research Center. 15% of middle aged adults are providing financial support to an aging parent AND a child.
• You have compared your expenses vs. income
This is something many people forget about. It is important to crunch the numbers to make sure you can live happily on your retirement income. A good way to start is by added up all your necessary monthly costs, such as mortgage/rent, utilities, and groceries. Then add your “wants”, like entertainment, shopping, travel, and dining out. Now that you have your monthly expenses calculated, you need to figure out if you have enough retirement savings to cover them. Do this by adding up your Social Security payments, any retirement account distributions and/or pensions, and any other sources of income. If you need help figuring how to make your retirement income work best for you, we can help with that. You can also get access to our retirement strategy analysis workbook which helps put things in order. Then we go through an income for life calculator to see exactly how much income you will receive, as well as how much you will receive if only one spouse is living.
• You have revisited your investment portfolio
You will be relying on your investment portfolio after retirement. Now is the time to do a portfolio checkup. You want to make sure you have enough money set aside to create the income needed to cover all of your expenses so you can live the retirement lifestyle you want to live. We can help look at how you are currently invested, and if we need to, show you different options so you can have enough income. Keep in mind, the strategies you followed the last 35 years accumulating is much different from the next 35 years when you will be distributing.
• You have coordinated with your spouse
Retirement will have a major impact on your spouse as well. It should be a household choice, so be sure to include your spouse in the decision-making process. You will want to make sure that the income reduction won’t put strain on your spouse. If they will need to work longer to cover living expenses, it might not be fair for you to retire so soon. If your spouse is planning on working for years, you might get lonely retiring earlier. If you and your spouse are emotionally and financially ready for retirement, you will likely enjoy a satisfying retirement together.
These are just a few signs you are ready for retirement. There are many other factors to consider, like where you plan on living, whether or not your friends will be retired at the same time, and how you’ll spend your days. Before you make any quick moves, you’ll have to consult a financial planner. If you need help with or have any questions about the steps mentioned in this article, our retirement planning professionals can help you. If you’d like to set up an appointment, you can call us at 952-657-7470 or simply email email@example.com.
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