After years of hard work, you’re certainly entitled to a happy retirement.
Right?
You may already be daydreaming about it.
Travel the world, volunteer for your favorite charity, go fishing every day, or just spend more time with the grandkids.
The post-retirement possibilities are practically endless.
But being ready to retire means more than being ready to stop waking up at 6:00 a.m. to put in long hours at a job you’re not thrilled about.
It’s not that simple.
In a 2016 survey, Transamerica Center for Retirement Studies stated that more than half (51%) of American workers say their top retirement concern is outliving their investments and savings.
What it really takes to retire is a solid grasp of your budget, investments, spending plan for your life savings, debt that’s under control and a plan you’re excited about for how you’ll spend your days.
With that in mind, here are seven signs you’re not ready to retire:
1. You’re struggling to pay your bills.
If you are struggling to pay your bills now, your struggles will only increase when all you have is 75% of what you currently make. As you grow older you’ll spend less, but take into account that some expenses might increase during your retirement, expenses like healthcare costs.
2. You have lots of debt.
It’s tough to decide when you’re facing a choice between putting money in your retirement account and paying down your debt. Depending on your situation, reduce or eliminate credit card payments and car loans. Paying off your mortgage or downsizing will also help in the long run. Having large amounts of debt will severely strain your savings once you retire,
3. You haven’t tackled major expenses.
Don’t wait until you’ve retired to address major, foreseeable expenses such as replacing your roof, repaving your driveway, purchasing a vacation home or buying a new car.
4. You don’t know what you’ll get from Social Security.
While you might not be relying on Social Security to meet most of your expenses, you shouldn’t ignore it, either. The Social Security Administration offers a handy tool to help you estimate how much your potential monthly payments will be. If you start claiming Social Security early, at age 62, your monthly checks will be 30% smaller than if you wait until you reach your full retirement age. Working those three or four extra years will give you a bigger payment each month just for waiting, and you might further increase your payment by adding more high-earning years to your benefit calculation.
5. You don’t have a monthly financial plan.
Once you retire, paychecks will stop but the bills will keep showing up. You will need to map out your monthly cash flow before you retire. Knowing what your likely expenses will be means knowing how much income you’ll need.
6. You don’t have a long-term financial plan.
You need to know how long your savings will last and what spending level you can maintain through your retirement years. Although no one knows for sure how long they’ll live, planning for 30 years or more is recommended. It’s estimated that, for a couple retiring at age 65, there’s a 50% chance that at least one will be live to age 92 and a 25% probability at least one will be alive at age 97!
7. The Bottom Line
The big BOLD sign that you’re not OK to retire is when you can’t answer the question, ‘Am I OK to retire?’ Retirement is a major life transition that requires ample preparation and planning. So, before you make any sudden moves, work through the timing and any changes that will be needed. If you feel (or know) that you’re not fully prepared, start by taking a good look at your situation.
This may seem like a no-brainer, but many soon-to-be retirees simply forget to crunch the numbers.
So, before you ditch your career, figure out whether you can live comfortably on your post-retirement income.
If you’re not able to figure things out on your own, consider the services of a financial advisor.
Until next time…..
I look forward to hearing from you!!
Althea
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