To get the most out of retirement, it’s crucial to plan for that event, and to choose the timing well. Retirement planning involves financial planning, without a doubt, but that’s not all that you’ll want to consider. Here are more specifics (and even more specifics).
First, do you have a solid, well-formed financial plan? Do you know how much money you will need each month to cover basic expenses, such as mortgage or rent, utilities and food? What else is important to you? Have you budgeted for those extra costs? Are you facing any challenges meeting your expenses now? When you total up your financial wants and needs, will your retirement income cover them comfortably?
Even if you can comfortably meet your expenses, take a close look at your debt. Are there credit cards that you can pay off? A car loan? Can you pay down your mortgage, even if you can’t pay it off entirely? When you’re on a fixed income, unexpected expenses can be especially challenging, so you want to create as much of a financial cushion as possible. Have you reviewed your portfolio to assess your risk tolerance now that you’re considering retirement?
Are you still caring for children or grandchildren, or are you taking care of aging parents? Will your retirement income cover those expenses?
If part of your plan includes continuing to work part time—and if that income is important for the success of your plan – have you found that job? Also be strategic about the age in which you’ll be signing up for Social Security. The earliest possible age is 62, with benefits increasing as you wait, up until age 70 (at which point there are no more financial advantages in waiting). Here are more details about the benefits of retiring at each of those ages. And, if you wait until you’re 65, you qualify for Medicare.
Perhaps you have significant authority in your career, with people valuing your knowledge and company contributions. If so, when you introduce yourself, you probably focus on what you do for a living and work still feels important to you.
How will you feel when that ends? How will you identify yourself? Where will you get your sense of purpose? Do you have key work goals that you haven’t yet met? If so, how would that affect you if you retired before they were fulfilled? If these questions are too hard to answer or they cause you to feel uneasy, then you may not be ready to retire.
If your social network largely comes from the workplace, be sure to have a plan in place about how you’ll spend your time. When you’re working, it probably seems as though you don’t have enough time for your hobbies. But, when you retire, it may feel as though you have too much free time—and isolation or boredom can lead to depression. How will this lifestyle change affect your spouse and your relationship with him or her? Are there places where you can volunteer? New hobbies that you’ve never had time to explore?
Plan carefully for your specific situation—and then enjoy!