When planning for your future, one of the most important questions you’ll have to address is when you should retire. Figuring that out is not as simple as it may seem. Several factors may influence your decision, and remember, what works for someone else might not work for you.
What Do You Want Your Retirement to Look Like?
Think about what aspects of your lifestyle you want to keep the same in retirement and which you’d like to change. You may want to stay where you are, or you may dream of downsizing or moving to another state to be closer to loved ones. Those decisions will impact your total living costs.
Some people dream of retiring and never having to work again. They want to relax, travel, pursue hobbies and spend time with their grandchildren.
For others, that sounds like a recipe for boredom. Some individuals prefer to retire from their current job and pursue a new career in a different field. They may be willing to accept a pay cut if they have the opportunity to pursue a lifelong passion.
Some individuals retire from a stressful career and want to have a simple, low-stress job afterward. That can provide an opportunity to get out of the house and spend time with other people, have a sense of purpose and earn a paycheck, even if it’s a modest one.
How Can Other Family Members Influence Your Decision?
If your kids will be attending college in the coming years, that may impact your ability to retire. If you haven’t set aside as much money as you’d like for your children’s education, you may decide to focus on that and retire after they’ve finished college. If your children have already graduated and moved out on their own, that won’t be an issue.
If you’re married, consider your age and your spouse’s age. If there is a significant age gap, that may impact your decision. If one person is home alone all day while the other is working, that can lead to loneliness. In addition, the individual who is still working may have to shoulder a heavier financial burden without the other spouse’s salary.
When Can You Afford to Retire?
Once you’ve got a handle on the type of retirement you want, you’ll have to figure out how much it will cost. If you’ll have your mortgage paid off before you retire, that’s a major expense that you won’t have to worry about. If not, carefully consider how much money you’ll need and make sure you’ll have enough.
The age when you’re eligible for full Social Security benefits depends on when you were born. You may be able to start collecting benefits before that age, but they’ll be less than the total amount you’re eligible for. It’s generally better to wait until full retirement age, if possible.
Consider how much you’ve already saved for retirement. A financial advisor can discuss your goals and where you currently stand and help you adjust your strategy, if necessary.
