Are you ready to retire? That’s a question more and more baby boomers are asking themselves. Every day, 10,000 boomers reach retirement age, and the “leading edge” of the boomer wave is now well into their 70s. For those boomers not yet retired, the question looms large in their thinking: am I ready to retire? And how will I know?
Ready to Retire? Conventional Wisdom Says It’s All About the Money
Conventional wisdom says you’re “ready” to retire when you have enough money saved and enough income guaranteed to allow you to live the lifestyle you’ve chosen. But is that really all there is? If you’ve been reading the AgingOptions blog or listening to Rajiv Nagaich on the radio, you know the answer. “Having plenty of money is absolutely no guarantee that you’ll be able to live how you want to live in retirement,” Rajiv says. “Anyone who thinks money is the be-all and end-all of retirement is kidding themselves!” Fortunately, other writers may be finally coming around to our point of view.
As an example, we offer this just-published article from the USNews website, written by columnist Rodney Brooks, who writes and speaks about retirement and personal finance. Brooks’ recent column is called “Signs You’re Ready to Retire.” At first, we figured it was one more column equating financial preparedness and retirement preparedness, but fortunately we were wrong, at least partially. “Sometimes,” says Brooks, “your emotions can be more of an obstacle to retirement than your finances.” He goes on to say, “It can be difficult to figure out when you are truly ready to retire. Some people aim for a certain retirement age, perhaps 62 or 65, while others set a financial goal, such as $1 million in a retirement account. There are signs and targets that can signal that you are prepared to retire, but they’re not all about your age and how much money you’ve saved.” We say “Amen” to that.
Being Ready to Retire Does Involve Money – but There’s a Lot More
Brooks’ column lists a total of six indicators of retirement preparedness, half of which (we couldn’t help noticing) deal with money. But in his list of six key factors that indicate you might be ready to hang up the full-time job, Brooks at least includes some other non-financial issues that people need to address but too often ignore. We’ll share his list and at the end we’ll add a few more “readiness indicators” of our own. Let’s look at Brooks’ “money questions” first. He says you may be ready to retire when:
- You Are Financially Prepared. According to Brooks, this means having a realistic assessment of living costs and sources of income. “Retirement planning is not about saving to hit a magic number, it is about income,” says retirement researcher Jamie Hopkins. If you’re facing retirement age without sufficient assets to maintain a comfortable lifestyle, your best bet may be to keep working. “Working a bit longer is typically the single best way you can improve your retirement income security,” Hopkins says. “Working just six months longer can be like saving an additional 1 to 2 percent of your income for 30 years.”
- You Have Eliminated Debt. “Outstanding debt makes it especially difficult to retire because you have to pay for past as well as future expenses,” says Brooks. Cutting debt means all your retirement income goes toward today’s expenses.
- You Have an Emergency Plan. Besides covering everyday bills, you will also need a strategy for emergency expenses. As one financial planner told USNews, “If you have a plan, you won’t panic when events occur. You should have a plan for when the market crashes, a plan for when a spouse passes or when a catastrophic event happens.”
Ready to Retire? What About These Non-Financial Indicators?
So much for Rodney Brooks’ “money questions.” As you think through your retirement readiness, here are three more big issues that go far beyond finances. You may be ready to retire, says Brooks, when:
- You Have Health Insurance. We’re pretty sure everyone knows this, but it’s worth repeating: if you currently receive workplace health insurance, it’s going to go away (typically) when you retire. From 65 on you’ll qualify for Medicare. Before age 65, you’ll need to purchase other health insurance. Whatever you do, if you’re not on a workplace plan, don’t miss the mandatory Medicare sign-up period around your 65th birthday. You could end up paying an ugly premium for the rest of your life.
- You Have a Social Network. If your job defines you, you need to process the fact that your workplace identity is about to disappear. “If you socialize primarily with people you work with, you will need to form a new community,” says Brooks. “A big part of your life is coming to an end.” Isolation can trigger a whole host of emotional and physical health problems, so getting and staying connected is absolutely essential.
- You Have Something Else to Do. Preparing yourself emotionally for retirement can take months or years, but that prep time is important. As one planner told Brooks, deciding when you’re ready for retirement is first emotional and psychological, then financial. You can “practice retirement” by volunteering and by plugging into activities in your community, church or senior center. If this need is starting to weigh on your mind, we suggest this recent article from our blog on ways to prepare for your “Second Act” when you retire. Whatever you do, you’ve got to find meaning apart from your job.
Ready to Retire? Here’s the Rest of the Story
While Brooks’ column makes some good points, we think some key elements are missing. For example, he doesn’t mention the need for a realistic housing strategy that will safely meet your needs for years to come. He also overlooks the critical area of family communications, and he says nothing about putting the right legal tools to work to protect your assets. Here at AgingOptions, our approach to retirement planning is called LifePlanning because it combines all the essential elements of secure retirement living: finances, medical coverage, housing choices, legal protection and family communication. If your desire is to protect your assets, avoid burdening your loved ones, and live your life as you want to, a LifePlan is your answer.
We cordially invite you to invest just a few hours and find out more. Join Rajiv Nagaich for a free, information-packed LifePlanning Seminar. You’ll find a complete calendar of currently scheduled seminar dates and locations here on our Live Events page. You can register online for the date that works for you, or give us a call. Are you ready to retire? We predict you’ll be far better equipped to answer that question once you’ve experienced the power of an AgingOptions LifePlan. Age on!
(originally reported at https://money.usnews.com)