"When can I retire?" It's a question on many people's minds. Nearly every working professional looks forward to retirement. This change in lifestyle means your focus can shift from earning an income to reaping the benefits of all your hard labor. It means trading in boardrooms, spreadsheets, and presentations for golf courses and beach condos. It means exploring your interests and rediscovering your passions without worrying about the money you're earning.
Retirement is an undeniably enriching phase of life. But in order to maximize these years, it’s imperative to strategize in terms of finances, living situations, and other priorities and create a solid retirement plan. Here re are some questions to help you decide what the right retirement age and year are for you—and when you can start reaping the benefits of all your hard work and years of service.
Questions to Ask Yourself Before You Retire
1. What Is My Life Expectancy?
When planning for retirement, you should start by thinking about how long you expect to live and how long you'd like to be using your retirement benefits. Remember that you can begin collecting your Social Security benefits at age 62, but if you wait until full retirement age, 66, you'll collect more per month and year. If you wait past full retirement age up to 70, you'll collect even more.
Of course, multiple factors will contribute to your lifespan, such as healthcare, genetics, exercise, nutrition, crime rates, pre-existing conditions, gender, and accidents or injuries—and it’s impossible to predict longevity. But according to Geoba.se, statistics point to Americans reaching the age of 79 on average, a figure you should keep in mind when working on your retirement calculations. Your own family history should plan a factor in your retirement planning as well.
“It sounds morbid, but this is a pretty important choice on my retirement plan calculations. It affects how long you should wait until drawing Social Security. If you receive a pension or annuity, it can affect if you choose one with a better survivor benefit,” said Micah Fraim, a CPA in Roanoke, Va. “And how much of a nest egg you need to store up is largely predicated on the number of years you will live in retirement. A life expectancy of 95 years old is going to require quite a lot more savings than a life expectancy of 60.”
2. For What Expenses Do I Need to Plan?
As of 2018, the estimated average that retirees in the United States receive in their social security check each month is $1,406.91. Without an income to augment this, Social Security alone is not enough to cover your expenses throughout the retirement years.
For this reason, it’s crucial to maintain a budget, so you can live in comfort while funding those dreams that carried you through the nine-to-five grind. So, take into account all your living expenses such as mortgage, home repairs, utilities, health insurance and care, groceries, vehicles, insurance, and emergencies when calculating your necessary retirement income. Be sure to consider unexpected expenses as well. For example, about 20% of all Medicare beneficiaries have a Medicare supplement plan to pay for care not covered by health insurance, so think about whether you might need that as well. Then calculate your retirement savings, 401k or IRA, and investments after tax deductions. This can help you function within your means during your retirement years.
3. What Are My Goals During Retirement?
Retirement benefits extend beyond being about to use your Social Security benefits and retirement savings. Being retired is an important milestone and rite-of-passage—you spend decades working and earning money to reach this phase of life, so you might as well enjoy it. Think about your main goals and objectives for this next chapter, and prioritize how you want to spend all this newfound free time as an important part of your retirement planning.
Is your goal to become a traveler and explore different corners of the world? Are you making lists of potential places to retire? Are you interested in learning new hobbies, volunteering in the community, or expanding your social circles? Do you want to move closer to your children and grandchildren?
Now that your focus doesn’t need to be career-oriented, turn your attention toward whatever you’re passionate about and create a plan for how to structure these “golden years.” You may even want to get a part-time job to stay busy and do something you haven't been able to do in the past.
4. What In My Lifestyle Can Be Simplified?
One of the most liberating parts of retirement is embracing minimalism, which gives you the space, freedom, and bandwidth to keep life more simple. You don’t need to purge yourself of everything, but make time to declutter your home and either donate, sell or discard those possessions you no longer need. As a general rule, if the item has no practical function or sentimental value, then it’s not serving a useful purpose anymore.
In addition, to sorting through clutter, you might also want to consider downsizing to a house with less square-footage and a minimal yard. Retirement should not be devoted to home maintenance and lawn upkeep. Not to mention, downsizing can reduce overall housing costs.
When Can I Retire?
Answering these questions thoroughly and realistically can provide a framework to help determine your retirement age and timeline. The goal is to approach these years without the stress of finances looming overhead, so you can pursue the areas of interest that you never made time for. So plan for success and prepare for a future that’s enjoyable, laidback, and full of adventure, too!