When is the “Right Time” to Retire?

Most of us dream of retirement, but those dreams start to feel like a looming reality in our late fifties and into our sixties. At that point, you might begin to feel a bit of anxiety, because you’re not sure when is the exact “right” time to retire. This list is by no means a complete list of all the things you should consider, but it will definitely cover the highlights and point you in the right direction.

You’ve paid off your debts. While many people do retire successfully while still carrying some debt, it certainly poses a risk. Revolving payments eat up part of your monthly budget, leaving less room for “surprise” expenses when they happen (and they will happen). If you can pay off debts by working just another year or two, it might make sense to delay retirement just a bit longer. This will also mean you have a bit more money for fun things, like travel.

You don’t have to claim Social Security early. Sometimes people need to retire early, or it makes sense according to their financial situation. However, since you lose about 25 percent of your monthly benefits by taking them early (at age 62), it’s best (in most cases) not to retire until you’ve reached full retirement age. Or, if you have enough retirement income that you can wait to file your claim, you might be safe to retire now.

You have some form of reliable, and affordable, health insurance. You’ll reach Medicare eligibility at age 65. If you want to retire before that age, you will need a form of health insurance that you can count upon, and that you can afford. This might be a retiree healthcare plan from your former employer, or a plan that you purchase yourself.

Your spouse is on board. If both of you agree that it’s time to retire, you’re more likely to be happy with the decision. If your spouse disagrees, he or she might have an important reason for feeling that way.

You have a plan. If you’re not sure what you will do all day once you retire, you might not be ready! The happiest retirees are those who have a list of things they want to do or accomplish, so make sure you have some personal plans before you take the leap.

You’ve run the numbers, and they make sense. Meeting with a financial professional can help you understand your retirement budget, and plan for any unexpected expenses that might (and probably will) come your way.

You’ve hedged against the risks. Any major life change brings some risk. Before you give up paid employment, consider all of the risks and make a plan to address them. Often this will mean investigating options such as long term care insurance, life insurance, and so on. Call us to discuss your insurance needs, and we’ll help you cover all of your bases so that you can retire securely.