When it comes to retirement, many of us are champing at the bit and can't wait to say sayonara to our workplaces. Go ahead and look forward to your retirement, but hold off on actually retiring until you're sure you're ready.

Here's a quick review of five questions to ask yourself to help determine how ready you are to retire.

The word ready with a question mark printed on asphalt, with two feet in shoes showing, facing the word

Image source: Getty Images.

Step 1: Have you paid off your debts?

You don't have to retire debt-free, but in general, the less debt you're carrying in retirement, the better. It's especially important to pay off any credit card debt as soon as possible, as it tends to have very steep interest rates.

Even a low-interest rate mortgage can add to your financial worries in retirement, though, which is why many people aim to pay off their home loan before retiring. If your debt load is substantial, don't let yourself get too discouraged. It may not be easy, but you can pay off that debt.

One good move to try is simply calling your credit card companies and asking if they will lower your interest rates. Many will agree to do so, in order to keep you around. If you've been a loyal and good customer, remind them of that -- and the fact that you can always transfer the debt to another lender with better terms.

Step 2: Do you have a plan for a successful retirement?

Do you have a plan for how you will retire with sufficient income, or are you just winging it and hoping for the best? Spend some time thinking about how much money you'll need for retirement and how you'll amass that sum. Here's how much you might amass over various periods:

Growing at 8% for

$10,000 invested annually

$15,000 invested annually

$20,000 invested annually

3 years




5 years




10 years




15 years




20 years




25 years


$1.2 million

$1.6 million

Source: Calculations by author.

It's also helpful to take advantage of retirement accounts available to you, such as traditional and Roth IRAs and traditional and Roth 401(k) plans at work. And aim to not cash out 401(k) accounts when you change jobs or borrow from them if you can avoid doing so.

Consider all the possible retirement income sources you might have or might want to arrange to have. For example, an immediate annuity (as opposed to a variable or indexed annuity) is well worth considering, as it can provide relatively guaranteed income for a long time or for the rest of your life.

Dividend-paying stocks can be another great source of income. A portfolio with $300,000 in healthy dividend payers with an average yield of 4% will generate $12,000 per year. That sum is likely to rise over time, too, as the underlying companies increase their payouts.

A stethoscope sitting on a bed of $100 bills

Image source: Getty Images.

Step 3: Have you included healthcare in your plans?

Be sure to include healthcare costs in your thinking and planning, as they're likely to be substantial. Know that 44% of retirees found that healthcare expenses in retirement were somewhat higher (27%) or much higher (17%) than they expected, per the 2018 Retirement Confidence Survey. And how high were they? Well, a 65-year-old couple retiring today can expect to spend an average of $280,000 out of pocket on healthcare expenses over the course of their retirement, per Fidelity Investments. 

You might rightly be thinking that Medicare will take care of much of your healthcare, but as the Fidelity number above shows, it won't pay for everything. Be sure to read up on Medicare, too, lest it cost you more than it has to. Your Part B premiums (which cover medical services, but not hospital services), for example, can rise by 10% for each year that you were eligible for Medicare but didn't enroll. The no-penalty enrollment period for most people is any time within the three months leading up to your 65th birthday, during the month of your birthday, or within the three months that follow.

Step 4: Have you prepared in non-financial ways?

Be sure to plan and prepare for your golden years in non-financial ways, too. For example, know that many retirees find themselves bored, restless, or lonely. The routine of working is more important to some of us than we realize, so keep that in mind and consider how you might deal with it -- maybe by working a part-time job while retired or by taking up new interests. No matter how old you are, you might look into developing some hobbies and friendships that you can carry into later years. Being social in retirement has been shown to be very valuable, keeping you mentally and physically healthier.

It's also smart to tend to your health in retirement, as doing so can improve your financial condition, too. The healthier you are, the less you'll likely spend on healthcare now and in retirement. You'll also be better able to enjoy retirement by being active, traveling, and so on.

Step 5: Do you have a sound Social Security plan?

Finally, read up on Social Security and on strategies to maximize your Social Security benefits. You can get an idea of how much income to expect from the program by visiting the Social Security website at www.ssa.gov. For context, know that the average Social Security retirement benefit was recently $1,415 per month, or about $17,000 per year, while the recent maximum monthly Social Security benefit for those retiring at their full retirement age was recently $2,788. (That's about $33,500 for the whole year.)

Some of the best strategies to maximize benefits are for married couples. For example, the spouse with the lower expected benefits might start collecting early, so that the other spouse can delay starting to collect, making those ultimate benefits heftier. Also, when one spouse dies, the other can collect the bigger benefits.

If any of this seems confusing or overwhelming, consider consulting a financial adviser. There's no shame in that, and a good adviser can probably save you more than he or she charges you. Advisers designated as fee-only (you might find some via www.napfa.org) won't be looking to earn commissions from selling you products.

Your retirement may be glorious -- and it's more likely to be so if you plan and prepare now, no matter how old you are.