Retirement is a huge step in your life. After working for 40+ years, saving up money, and looking forward to the day when you can finally leave your career behind you, the transition can be very difficult.
It’s important to assess a few different metrics that can help determine whether you’re ready to retire. Many people focus mainly on money to make this decision. While that’s a good idea, you should also consider some other key indicators that will help guide your decision.
In this article, we’re looking at three of the biggest signs that will help you decide whether you’re ready for retirement.
Do you have enough money saved up?
As we mentioned, many people focus mainly on whether they have enough money saved to retire. This is probably a good place to start, because if you don’t have enough money saved up yet, you may need to spend some more time in the working world, putting away extra cash in preparation to leave your job behind. Or, you may have to consider looking into side work and other forms of employment (more on that further down).
The average retirement income varies significantly by geographic location, personal financial profile, standard of living, pre-retirement income, medical costs, and many other expenses. However, it’s safe to say that your retirement income should be about the same as or close to your income during your working years.
If your retirement income giving your current savings (basically the amount you can withdraw each month sustainably) is much, much lower than your current income, it may be a sign you should put off retiring a little longer.
Other financial vehicles, like annuities and reverse mortgages, can help with covering retirement expenses if you don’t have enough saved up. However, it’s important to know that these can come with some significant drawbacks as well. Ultimately, it’s important to save as much as you can ahead of time to ensure you have the funds you need to retire comfortably.
- Takeaway: You’re financially ready to retire if you have enough money saved up to continue living at essentially the same standard of living.
Do you have a plan for your retirement?
Another part of retirement that you should consider is how you plan on spending your time. Too many retirees leave their jobs only to realize they don’t know how they want to fill their days. The solution is to think ahead of time of activities you’ll want to do once you’re no longer working.
Maybe that means traveling somewhere you’ve always wanted to go but never had the time. Or perhaps it’s moving closer to your children and grandchildren to spend more time with them. Maybe you’ve always wanted to pick up a musical instrument but were always too distracted with work. These are the sorts of things to plan for when assessing whether you’re ready to retire.
- Takeaway: You’re ready to retire if you have plans for how you want to spend your time, like learning a new skill or craft, or spending more time with family and friends.
Do you want to stop working?
Lastly, it’s a simple question, but one that some retirees forget to stop and ask: do you actually want to stop working? Some people work well into their 70’s and even 80’s because they simply love what they do. Others find it fulfilling to leave their careers but continue working in some other way, like as a mentor or consultant. An encore career can mean working fewer hours but still supplementing your retirement savings with a fresh income stream – a win-win.
Others may find it satisfying to do side-gigs like driving for a rideshare app or freelancing online. So, even if you’re not sure if you’re ready to fully stop working at all, there are still plenty of ways to continue to feel productive, bring meaning to your life, and do good work for others, too.
That said, you may just want to leave work and never work another day in your life. That’s totally valid too, and if that’s how you feel, then you’re definitely ready to make the jump.
- Takeaway: You’re ready to retire if you have a plan to work in some other way, like as a mentor or doing a side-gig, or you simply prefer to stop working altogether and enjoy retirement.
Knowing you’re ready to retire may seem tough, but by asking yourself these questions, you’re already on the road to making the right decision.
