NFL quarterback Tom Brady is taking some heat about his decision to retire from playing football. It's not because the 45-year-old hasn't put in an illustrious, Hall of Fame-worthy career. Rather, it's because fans doubt whether he really means it.
Year after year, Brady publicly considered retirement before choosing against it. Last year, the quarterback actually said he had decided to retire -- but he then changed his mind.
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Brady's not alone. A lot of people have trouble making the decision to retire. Giving up something that has been a core part of your life for decades is difficult. And unlike Brady, most regular folks don't have media companies lining up to give them a lucrative second career.
But if you want to retire and never look back, you can put yourself in a better position to do it if you have the right plan in place. Here are three steps to take to get it done.
1. Know what you have
The first step in making a smart retirement plan is to know what financial resources you already have. For most people, that includes things like:
- What your bank account balances are
- What you have in retirement plans like 401(k)s at work and IRAs of your own
- What you have invested on your own
- The net equity in your home, if you own one
- How much in Social Security benefits you'll be eligible to receive
Also, if you still have some time before you want to retire, you'll want to know how much you expect to save and how big a return you expect on your investments between now and your anticipated retirement date. The more you can set aside, the more you'll have when it's time to call it quits.
Even those who have ample financial resources still worry about what could happen if they run out of money. That's why it's important not just to know what you have but also put those resources into the context of what your spending will actually look like in retirement.
2. Know what you need
Everyone's retirement is different. Some people have aspirations for a lavish retirement lifestyle, complete with extensive travel and luxuries that they denied themselves during their careers. Others just want to live simply but have the time to do the things that are most important to them.
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Predicting expenses can be tough, especially if you're still years away from retiring. Unanticipated costs like unforeseen medical expenses are contingencies that you'll want to consider.
However, if you can build yourself a budget based on your current spending habits and your anticipated lifestyle changes, it's a good starting point to balance your needs against your savings. And by building in some space for flexibility, you'll have the confidence to move on without second-guessing yourself, even if financial markets don't cooperate.
3. Know what you want
It might surprise you to learn that a lot of people regret their decision to retire. In fact, early retirees often feel the most pressure to go back to work -- and it's not just about money.
Many people get their sense of purpose from their profession. It's easy to weave your social life into your career as well, with people you see at work every day making natural friends.
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Retiring can mean giving up a big chunk of that purpose and social engagement. That's doubly true for those who retire early while most of their peers are still hard at work. It's easy for those dreams of having all the time you wanted to do fun things with those close to you to turn into loneliness and disappointment as you realize what you've lost.
There are several things you can do to anticipate a difficult transition and avoid regret:
- You might be able to ease into retirement by cutting back from full-time to part-time status, or shedding a portion of your job responsibilities.
- A flexible work schedule that gives you a weekday off can give you insight into what it's like not to be working when most people are.
- Taking a sabbatical or extended leave of anywhere from six weeks to six months or more can act as a trial run for your retirement lifestyle.
Based on your experience, you can then make smart adjustments to your plan that will make you happier in the long run.
Learn more and retire happy
This broad three-step plan doesn't provide all the details of retiring successfully, but it's a good start. Consulting a more complete retirement guide can help you fill in the blanks.
You wouldn't stand a chance of matching up to Tom Brady on the football field. But if you get your retirement right the first time, you'll always be able to say that you beat him when it really counted.
