Retirement is a great accomplishment in life and for many it marks the end of their working years, allowing them to take pleasure in things that matters while they still can. Yet, few of us can say with any certainty when it is we will be fully ready for retirement. Reaching a certain age or having money in the bank is not enough when it comes to deciding whether retirement might be right for you, it involves a careful assessment of your financial situation, lifestyle preferences, health, and emotional readiness.
This article suggests the key signs that indicate it is time to retire and enjoy life from a different perspective.
1. Financial Readiness
Financial Security: Retirement readiness is more than just having a healthy savings account or a strong retirement fund. Here are ways to help you determine if you can afford to retire:
a) Stable Income Streams
For many people, a major indicator that it is time to retire is having stable sources of income on which they can comfortably rely. This can be pensions, Social Security, annuities and investment income. In a perfect world your living expenses should be covered by these streams of income so that you do not need to tap into the money saved.
b) Debt-Free Living
The other key sign is that you are out of any major debt. In some cases, if you are debt free in the sense that your mortgage is paid off (including other large loans), then it makes a great deal of difference to when and whether you need stop working. For many people, living in retirement is difficult due to the debts that they bring into the period of having only one fixed income.
c) Healthcare Costs
One of the largest expenses in retirement is healthcare. You need to have a good plan around health care including taking out private medical insurance (subject to affordability). Long-term care insurance should be thought about as well as extended care can leave you out of pocket in no time.
d) Emergency Fund
Even if you are retired, unanticipated things can always pop up. A healthy emergency fund is key if you want to cover any unexpected expenses without disrupting your retirement savings. At least six months to a year of living expense is recommended for this fund.
2. Lifestyle Considerations
Financial Planning is only half of the challenge when it comes to retirement planning. The following are questions you can ask yourself to determine whether your lifestyle goals match your readiness for retirement.
a) How do you want to spend your time?
So, one of the key questions that you should ask yourself is how you want to spend your days when you retire. This could be travelling, engaging in new activities and hobbies, volunteering or spending time with family — whatever your goals are, you need to establish the ones that will enhance happiness and resources available to support them.
b) Where will you live?
Another important factor to decide is, where you will live in retirement. Should you move to a smaller home, another city or country, remain in your current house. How much it costs to live in your planned retirement destination will play a big role in your budget.
c) Social Connections
This is difficult because work often provides a sense of social structure and retirement can create a feeling of loneliness if not properly planned. According to Dr Shah of the Mayo Clinic, staying well-connected or developing life outside of work keeps people happy in retirement.
d) Hobbies and Interests
Having hobbies and interests to fill your days is essential for a fulfilling retirement. If you haven’t yet developed these interests, now is the time to start otherwise you will get bored. Consider whether you are excited about the prospect of having more free time to pursue your passions.
3. Health and Wellness
Another part of retirement readiness hinges on how healthy you are. This is your retirement and should be a time when we can enjoy life without the physical demands of work.
Here are things to consider:
a) Physical Health
Have you taken the time and effort necessary to keep your body well? While retirement might reduce stress levels, it also eliminates the routine and structure that work provides which can lead to decline in health. Make sure you have a plan in place to keep physically active and healthy through regular exercise, balanced diet and routine health checks.
b) Mental and Emotional Well-Being
Your retirement may very well generate emotional changes of high magnitude. Others lament the loss of identity or purpose after retiring from a successful career. Check if you are ready to take the next phase in your life. This could mean picking up a new hobby, volunteering for some good causes or working less but staying engaged by doing something part time.
c) Healthcare Access
Access to quality healthcare is essential. Prepare yourself for any health problems that will come your way as you age. From learning the workings of the NHS and selecting private medical insurance to prepare for possible long-term care.
4. Mental and Emotional Prep
Lastly, retirement readiness is not having the money and physical means but also being mentally ready for your new lifestyle. Read our article on Mental Health After 60: What No One Told You!.
Ask yourself:
a) Are you ready to let go of work?
For many people work is often a central part of who they are, not ready to let go of that part of their life. Retirement may mean stepping away from the constant busy work and structure of a job, which is often quite challenging for some people.
b) Do you feel like your life has meaning?
Enjoying a joyful retirement is about being purposeful. Using hobbies, community help, or family to drive your days is just as important. A life without purpose can quickly lead to a boring life.
c) How well do you adapt to change?
There are a considerable number of changes that come with retirement, getting comfortable and used to these is very necessary. This involves restructuring the usual daily routine, learning how to live within possible financial constraints and coping with personal emotions related to this life change.
Conclusion
The decision regarding when you should retire is highly individual and depends largely on many factors. It is not just your finances; but also, the type of lifestyle you may want, health care and well-being just to name a few.
Planning and preparing for retirement in advance allow you to experience all the freedom that comes with being retired leading to an ultimate retired lifestyle.
Ready to take a leap into your exciting and fulfilling retirement? Assess your financial preparedness, visualize the way you want to live and make sure that your health is taken care of.
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