Insights

Ten signs you might be ready to retire.

Deciding when you’re ready to retire is a big decision, and it’s not just about reaching a certain age or financial milestone. Here are ten signs you might be ready.

  1. Financial Security: You have enough savings, investments, and other sources of income to support your desired lifestyle throughout retirement. You’ve carefully considered your retirement budget and have a plan in place to cover your expenses. Pro tip: A good rule of thumb is you will need 80% of what you earned before retiring (excluding any savings you were doing, such as putting money into your 401K account). Example, if you earn $200,000 a year, put $30,000 into your 401K and $4,850 into your HSA, then you’ll need about $125,150/year in your first years of retirement when you are most active (80% of $200,000 is $160,000 minus $34,850 equals $125,150).
  2. Manageable Debt: Ideally, you’ve paid off major debts like car loans, credit cards, college loans, and HELOCs… or you have a plan in place to pay them completely off during retirement. If you have a mortgage, the payments can easily be covered by whatever income sources you have or regular withdrawals from your investment accounts. High levels of debt can be disastrous and eat into your retirement savings and limit your financial flexibility.
  3. Responsible for others: If you are financially responsible for someone else such as an aging parent or child with special needs, you have the additional financial resources to care for them long-term. Willing and able adult children must be off your payroll. No more subsidizing their rent, car insurance, cell phones or letting them live at home without contributing their fair share.
  4. Healthcare Coverage: You’ve researched and secured adequate healthcare coverage for retirement, whether through Medicare, a private insurance plan, or other means. You’ve factored in potential healthcare costs into your retirement budget. Obtaining health insurance before you are eligible for Medicare at 65 can be surprisingly expensive. Pro tip: For those in California, spend time on Covered California to understand what your various options are and exactly how much it might cost.
  5. On the Same Page: It’s critical you and your soulmate are on the same page as to what retired life will look like for each of you as well as your life together. As much as you may love one another, you are not meant to spend each waking minute together. Having your own goals, hobbies, and friends is healthy. Doing trips apart is perfectly fine as well. Just be sure to talk about the costs and financial commitments of them – open communication can prevent possible flare-ups when plans for a $10,000 fishing trip to Alaska with the boys is revealed.
  6. Social Connections: You have a strong social network outside of work, whether it’s family, friends, or community groups. Retiring can sometimes lead to feelings of isolation, so having a supportive social circle can be important for your well-being.
  7. Purposeful Retirement: You have a sense of purpose or meaning in retirement, whether it’s pursuing new passions, volunteering, traveling, spending time with loved ones, or other activities that bring you joy and fulfillment.
  8. Emotional Readiness: You feel mentally and emotionally prepared to leave the workforce. You’ve thought about how you’ll spend your time in retirement and have interests, hobbies, or activities to keep you engaged and fulfilled.
  9. Health Considerations: You’ve assessed your health and any potential health issues that may impact your ability to enjoy retirement. While no one can predict the future, being aware of any health concerns can help you plan accordingly.
  10. Financial and Estate Planning: You’ve consulted with financial advisors and estate planners to ensure your retirement plan aligns with your long-term financial goals and that your estate is in order.

Ultimately, retirement readiness is a personal decision that involves a combination of financial preparedness, emotional readiness, and lifestyle considerations. It’s important to take the time to carefully evaluate your situation and make a plan that reflects your goals and priorities for retirement. If you’re unsure, consider speaking with a financial advisor or retirement planner who can help you assess your readiness and develop a strategy for a fulfilling retirement. For more tips read Retirement Checklists: Goals for Every Stage of Your Financial Life.

The information provided in this article is for general informational purposes only and does not constitute legal, tax, insurance, or financial advice.