There’s a pretty good chance that your parents and grandparents retired just because they turned 65. Today’s retirement is a bit more complicated than that. While age is still an important factor, your ability to connect your financial resources to your lifestyle goals is what will truly determine if you’re ready to retire.

Here are three important markers to cross before you crack open your nest egg:

#1 You’re Financially Ready

The most common question we field from our clients is, “How much do I need to retire?” While there’s no magic number to hit, a few key checkpoints are:

  • You have a spending plan. Many clients who are preparing to retire tell us they’ve never kept a budget before. Most people today consider budgets a 4-letter word! But, usually, it just takes a tweak of perspective. If you have just split your needs and wants, we can make it a whole lot more manageable. The needs are the “got to have” costs to live. Wants are everything else: the fun stuff, the way you plan to make your retirement mean something. A plan to prevent you from running out of money is a whole lot easier to build when you separate these. This is useful because when hard times hit, you can more easily cut back on the wants.
  • Your consumer debts are paid. No, you don’t necessarily need to pay off a fixed-rate mortgage before you retire. But try to reduce or eliminate credit card balances and any other loans that are charging you interest. Car loans and other major purchases also warrant a closer look.
  • Your age, retirement accounts, and Social Security plan are all in-sync. If you’re planning on retiring early, be sure that your retirement accounts won’t charge you early withdrawal penalties you’re not prepared for. Also, keep in mind that the earlier you take Social Security the smaller your payments will be. There are various income strategies around Social Security, such as postponing benefits for one spouse while deferring the other to age 70. But how do you know you can afford to live without Social Security until age 70 to maximize your benefits?
  • You and your spouse have a health care plan. Medicare insures individuals, not families. If only the retiree is 65, the younger spouse will need to buy healthcare insurance elsewhere.
  • You have a plan for your investments. You want to make sure you have a plan for your assets with the goal of doubling during retirement to keep pace with inflation and tax bite, while at the same time have a strategy that would help you manage a major market downturn in the first 5-7 years of starting your income draw from investments. This highlights the need to have a clear idea of what to draw from first when it comes to your investments and retirement accounts.

#2 You’re Emotionally Ready

We spend so much of our lives working that our jobs become a large part of our identities. Rediscovering who we are once we stop working can be a major retirement challenge. To prepare for this emotional transition:

  • Talk to your spouse ahead of time. Don’t wait until your last day of work to discuss how both of you feel about retirement. What do each of you imagine life will be like? What are the things you’re excited to do? What are you afraid of? What can each of you do to make this new phase of life as fulfilling as possible?
  • Make a list. What are the things you’re passionate about? Something you’ve always wished you knew more about? A skill you’d like to develop? A cause that’s important to you? An ambitious business idea that was too ambitious for your former employer?
  • Check that your estate plan is in order. It’s understandable that many people avoid this part of their retirement planning. But putting together a legacy that could impact your family and community for generations can have tremendous emotional benefits. The peace of mind that comes from knowing the people you care about are taken care of can empower you to worry a little less and enjoy your retirement more.

#3 You’re Ready to Do New Things

Ideally, the financial piece of this conversation with your spouse and a retirement professional should make you feel free enough to create a new retirement schedule based on the emotional piece. Plan your days around the people and passions that get you out of bed in the morning. Some ideas:

  • Work at something you love. Take a part-time job at a company that interests you. Turn that crazy idea you couldn’t sell to your old boss into your own business. Consult. Teach. Volunteer.
  • Keep learning. Brush up your high school French by enrolling in an online course. Learn some basic web design so you can showcase your photography portfolio or create an online store for your crafts. Sign up for cooking classes and get some new meals in your weekly rotation.
  • Get better at having fun. What’s the best way to lower your handicap or perfect your backhand? Take lessons from a pro. The second best? Organize weekly games with friends and family.
  • Travel. Planning out a big vacation can be a fun project for couples to do together. And while you’re looking forward to that dream trip, take a few weekend jaunts out of town. Stay at the new bed and breakfast you keep hearing about. Visit your Grandkids.  Go on the road with a favorite sports team and enjoy the local flavor in a different city.

If you’re nearing retirement and struggling with the financial worries about having enough or the quality of life issues, working through the retirement planning process and using Return on Life tools with us might provide some clarity. Let’s discuss how we can help get you ready for the best retirement possible with the money you have. To book a free 15-minute call to see if we can help, click here.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

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