For some people, deciding when to retire may not seem obvious. Many fear they'll regret their decision financially, while others find it hard to let go of their career. Compound that with the fact that Americans are less secure about retirement than in times past, and it can be hard to decide the optimal time to retire. But there are a few signs it's time to turn in that final resignation letter, and here are five to get you thinking.
1. You have enough money
The median savings of those 10 years from retirement is $12,000, according to a report from the National Institute on Retirement Security. A third of those ages 55-64 haven't saved a dime.
You'll want to crunch all your projected retirement assets -- namely, the anticipated value of your investments, as well as Social Security income -- and make sure you have enough to retire on. If it's enough to comfortably live your desired lifestyle, perhaps you're set. Some retirees may also hold part-time jobs to help pay some of their expenses, so think about that option as well. Remember to factor in expenses such as debt, groceries, health care, housing, travel, utilities, and anything else you anticipate spending money on once you're out of the workforce. Don't assume you'll have enough without having spoken to a financial advisor or having done some math.
2. Your kids have flown the nest
Children are expensive, especially if they go to college. And even with their college degrees, more than a third end up moving back in with Mom and Dad. They're usually saddled with debt, too, which can keep you from cutting the financial umbilical cord.
If your children are fully independent, that's a good sign you're ready to retire. Also, be sure that you won't need to take care of any grandchildren, either.
3. You've lived on a retirement budget for six months
One way to test whether you'll be able to afford living on your retirement budget is to try it, but don't just do it for one month; run a trial for six months. Most retirement articles and website calculators recommend that you have about 70%-80% of your current income during retirement. Keep in mind, though, that some costs will fall as you retire. For example, you may not need as much gas if you drive less after retiring, or you may save money on work clothes. Retirees can take advantage of many senior discounts on travel, lodging, and other leisure activities as well. You may also have finished paying your mortgage, or perhaps you'll move to a smaller place.
4. You feel ready
Money isn't the only aspect of retirement. Remember, you're walking away from your career.
According to a Gallup report, 30% of full-time workers in America are engaged and inspired at work, meaning they actually like their job. If you fall into this category, you should do some soul searching and make sure you're ready to move on not only financially, but also mentally. To help with that, think about spending more time your children and grandchildren, or you might want to join a community or club that can keep you engaged. No matter what you choose, make sure you have a plan for what you want to do next.
5. You're ready to see the world
America has become the top workaholic nation, at least among its developed peers. While others around the world, most notably in Europe, have plenty of leisure time, Americans routinely put in long hours with relatively little vacation time. Nobody wants to fly halfway around the world and come back within a week or two, but it's often hard to get away for longer.
If you're ready to see the world and are no longer financially dependent on your job, maybe you'll want to travel. That may mean selling your home and retiring elsewhere, or simply visiting other cities or countries.
Adequate savings are the most obvious sign you're ready to retire. Also, be sure your children are independent and that you've tested your retirement budget before quitting work.
Importantly, keep in mind there's more than money involved in this decision. Make sure you're emotionally ready to wind up your career. And finally, if you're ready to see the world and can realistically do it, then take advantage of retirement.
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