You’ve been counting down the days for years. You’re ready for no more alarm clocks, no more commutes, and no more Monday meetings. Retirement sounds amazing, and you’ve earned it! But wanting to retire and actually being ready to retire are two different things. Here’s how to tell that you’re financially and emotionally prepared before you hand in your notice.
Your Numbers Need To Add Up
The first thing you need to do is figure out whether your savings can support the life you want. A rule of thumb is that you’ll need roughly 70–80% of your pre-retirement income each year, though your actual number depends on your lifestyle, health, and plans. Add up your Social Security, any pension, and your retirement accounts, then compare that total to your expected monthly expenses.
If there’s a gap, you’ve got some planning to do before you walk out the door. In that case, consider a CFP® to enhance your retirement planning process. A Certified Financial Planner® can look at your full economic picture—including taxes, Social Security timing, investment drawdown strategies, and estate planning—and help you build a plan that holds up. You don’t have to figure this out alone.
Mind Your Debt
Carrying significant debt into retirement puts pressure on a fixed income. High-interest credit card debt and car payments, for example, will eat into your monthly budget. Ideally, you want to head into retirement with your major debts paid off or at least manageable. If you’re still carrying a mortgage, factor that payment into your retirement budget.
Don’t Forget About Healthcare
If you’re retiring before 65, you’re retiring before Medicare kicks in. That means you need a plan to cover your health insurance, and it’s not cheap. Even after 65, Medicare doesn’t cover everything. Dental, vision, and long-term care are all out of pocket unless you have supplemental coverage. Healthcare costs are one of the biggest expenses retirees face, so you want a clear plan in place before you stop working.
Consider the Emotional Side
Most people home in on their financials before retiring, but in doing so, they neglect the emotional toll the transition can take. Many retirees experience something described as the shock of retirement, that unexpected loss of identity, structure, and purpose that comes when a decades-long career suddenly stops. That’s why having a plan for how you’ll spend your time, stay socially connected, and find meaning in your days is just as important as having savings.
The Finish Line Is Closer Than You Think
Knowing you want to retire is the easy part. Knowing when you’re ready takes a little more work, but it’s absolutely worth it. You can tell what’s best for your situation by running your numbers, addressing your gaps, and getting a plan in place for both your finances and your daily life. When you do retire, you want to enjoy it fully, not spend it worrying about whether you made the right call.
