How Do I Know Whether I’m Retirement Ready?
5 MIN. READ
Unless you’re part of an elite few, you can’t expect to retire on a whim. Retiring takes preparation and perfect timing. That means starting the planning process early to determine whether you’re financially, physically and psychologically ready to embark on this major journey. Once you consider these three factors, you’ll be set to begin the process for what can be some of your most joyous and carefree years of life.
Being financially ready
It’s at the top of the list, and with good reason. Being financially prepared is perhaps the most important considerations in retirement. Only with financial stability can you retire with peace of mind, without worrying about returning to the workforce for support.
Achieving financial readiness requires careful, long-term planning1. Some steps you can take to ensure you’re ready include:
- Working with an investment professional, like Financial & Tax Architects. A professional planner can help you look at your situation objectively and give you a clear picture of the progress of your retirement plan. They can look at the retirement vehicles you have and determine the amount of monthly disbursement you’ll need to afford retirement.
- Taking advantage of savings plan extras. Many employers offer a match on retirement plans like 401(k)s. Walking away from such opportunities is like leaving free money on the table. If you can, contribute the full amount of any match your employer offers.
- Never skipping a payment to yourself. Timing your payroll disbursement to cover expenses is important. Making a disbursement to yourself on a timely schedule is equally important. Otherwise, you’ll be in an endless cycle of earning to meet bills, with not much left for your future.
Being physically ready
When we talk about physical readiness, we’re not talking about your annual physical exam (although that is, of course, important). Instead, physical readiness involves the following:
- Where do you want to live? Some people look forward to downsizing in their later years. Others contemplate relocating to be closer to family or moving in with a friend. You might even decide to live in your current home and pay it off to eliminate a hefty payment from your future monthly costs. Whatever you decide is up to you, as long as you give ample thought to it early on so you can plan accordingly.
- How accessible are medical services? As we get older, ready access to healthcare becomes increasingly important. Make sure you’re close to doctors, urgent care facilities and pharmacies so you’re not struggling to get the help you need when you need it.
- Are the living conditions realistic? You may love your current home and want to remain there. Or, you may dream of moving to Florida beaches or Colorado mountains. Wherever it is you want to be, consider whether your choice is realistic, safe and convenient for you now, in five years and beyond. Will you still be able to perform the necessary work (maintenance, gardening, etc.)? Will you be able to handle the routine nuances of your home (climbing stairs, driving in the snow, etc.)?
Being psychologically ready
This aspect is often one that people don’t think about. However, being psychologically ready2 to retire is supremely important to finding happiness. To ensure your psychological readiness, ask:
- Are you really ready to stop working? Will the loss of work mean freedom or devastation for you? Lifelong workers may find the transition challenging, often seeking a solution in part-time work. Consider your personality and how you believe you’ll adjust to the change so you can plan accordingly.
- Have you planned what to do with your time? You might be certain that you’re ready to walk away from work forever. But think about how you’ll spend this abundance of time and how you’ll adjust to this new way of life. You don’t want to feel a loss of purpose, so what can you engage in? Volunteer work and social activities with other retirees are popular choices. As you make your decisions, don’t forget about the affordability of your new hobbies either. Will these pastimes fit within your financial plan for retirement?
- Have you planned for changes in your relationship with the one(s) you live with? Between the steady thrum of work and daily life, you may see your partner in small stretches. It’s important to mentally prepare yourself to spend more time with them as you near retirement, sometimes all day, every day. Consider activities you can do together and some you can do alone to make sure you’re getting some me-time.
Work with the experts
Retirement is a fun prospect to think about, but it can be nerve-wracking if you try to tackle it alone. Retirement quizzes3 offer some solace to those trying to get a quick idea of their retirement readiness and timing, or you might consider a retirement class. But if you’re looking for an accurate picture of your personal situation, working with a professional who has the knowledge to evaluate your overall standing will deliver you the most value in the long run.
At Financial & Tax Architects, our aim is to provide clients with a worry-free retirement. Contact us today at (314) 858-1122 for a complimentary discovery call to bring you closer to your retirement dreams.