Retirement is something you will most likely experience, whether you like it or not. The demands of aging, health, and several other factors make this decision an almost inevitable one. Surprisingly, many people tend to avoid planning their retirement with excuses, even though it is one they eventually have to do and that is understandably out of the fear of change.

Deciding when and how to retire in advance would not only reduce some of the struggles, stress as well as anxiety that you will unavoidably face, it would also make you prepare more holistically for the time. So, it is best for you to start considering it as early as possible. When should best I retire? What are the things I need to set in place before taking the decision? What factors should be considered before going ahead with it? These and much more are some of the relevant questions you need to ask yourself and answer before taking steps in the direction of retirement.

Deciding If the Timing Is Right

Before you go ahead with the decision to retire, you have to ensure that the timing is right for you. However, you must be mindful of the fact that it will never be perfect. In fact, even if you wait until eternity, the time will never be perfect. So, it only needs to be right, not perfect.

Factors That Impact When to Retire

Savings, Bank Account and Income

When you decide to retire, you will probably have a decrease in income. Therefore, you need to make sure you have as much as possible before going ahead with the decision. You should ask yourself that relevant question whether or not you can afford retirement.

According to research, a lot of Americans who decide to delay their retirement do so after asking the question and realizing that they just do not have enough savings and income to fund the type of retirement they want. The earlier you retire, the fewer years you will spend collecting a paycheck, and the more years you will spend supporting yourself without a paycheck. If you do not have enough savings and income, it’s better to delay the decision.

Retirement under such situations might be hell for you especially if you don’t have loved ones ready to shoulder the responsibilities for you. As such, if you are not there yet, it will make sense if you work a little longer or even work part-time, save, or perhaps make cuts to your anticipated retirement budget.

Health

Another important factor you need to consider before going ahead with the decision to retire is your health. If you have health issues, or maybe you have a short life expectancy in your family, you might be forced into making early retirement. However, if you are in good shape health-wise and you have longevity in your family, you should use it to your advantage. Consider working a little longer which can make you amass more funds towards the day you will eventually retire.

Your Loved Ones

Before you go ahead with the decision to retire, you should consider how it will affect your loved ones and what they think about it, especially your spouse if you have one. Regularly, we come across many couples who develop differences over retirement plans, dreams, and expectations. Perhaps, one wants to continue working while the other feels it is time to stop. Or even imagine a situation where, for instance, the husband wants to move to the beach, but the wife wants to stay close to the kids. Make sure you reach an agreement with your loved ones on how and when to retire. Consider making your retirement plans together so that you can get rid of any differences that may arise. Plan the entire retirement as a team with your family, not as an individual.

Pension Benefits

Pension benefits must be factored into consideration before going into retirement. Usually, your state retirement benefits are based on a formula which includes your age, service credits as well as final compensation. You should use your pension benefits to your advantage. Altering your retirement age by probably just a year or two might make a huge difference in your retirement benefits. If you decide to retire early, your pension benefits will be lower as it is expected that you should receive them for a longer period. Remember, once you make the decision to retire and you lock in your benefits, your monthly payment is determined forever. So, think thoroughly on this before going ahead with it.

Social Security Benefits

If you are qualified for Social Security, the age you apply for benefits will equally affect how much you will be entitled to get. Retiring at 60, for instance, would mean a permanent reduction of more than 30 percent in your Social Security benefits compared to what they would have been if you decide to wait until your full retirement age. This is how all benefits work with retirement anyway – retiring early reduces them while retiring late increases them. Therefore, you should wait until full retirement age as this may increase the monthly Social Security benefits you will be getting. This is another thing you should consider before deciding whether or not the time is right for you to retire.

Health Care Benefits

Recent estimates and studies by Fidelity and others suggest that a 65-year old couple retiring today will need between $200,000 and $400,000 to cover health care and dental financing throughout retirement and this is in addition to what Medicare already covers. However, Medicare does not apply until age 65 which means if you retire before that, you may have to cover some or all of your health insurance costs by yourself. You should have a strategy to cover these expenses. Such a plan could manifest through savings, private insurance or even a Medicare supplement policy. This is a very vital point you should consider when deciding the time for you to retire.

Loving Your Job

How well do you like your job? How well can you cope without it? These are some of the relevant questions you have to ask yourself to know when best to get retired. It has been established that many people continue working beyond the typical retirement age only because they love and have an unquenchable passion for what they do even though they are financially buoyant enough to afford retirement. This is because beyond the financial benefits they get from their job, they see it as a means of self and social identity that defines their values and ideas correctly. It is most common among educators like lecturers, teachers, etc. Therefore, you need to make sure you are emotionally ready to leave your passion. You should figure out something else that you can do to keep yourself engaged and challenged after you bid farewell to your job.

Making the Decision

Once you have ascertained and concluded the time is right for you to retire, the next thing is to go ahead with the decision. As easy as this may sound, however, you might feel a bit nervous when it is time for you to do it. Have I made the right judgement? Should I have waited a little longer? These and much more are some of the relevant questions that will continually pop up in your mind.

First, you need to trust your guts. Sometimes, our subconscious mind knows more than enough about the right thing for us to do. You should never ignore it.

Also, you might consider seeing a trusted financial advice expert. You get to outline your plans and decide together with him whether or not you should go ahead with the decision or make certain reconsiderations. He might help you find blind spots to particular issues you are probably not addressing.

Finally, you also need to analyze and anticipate the worst case scenario. Ask yourself the worst that could happen if things don’t go as planned. Imagine your life if your retirement plans do not pan out and try to create alternatives or countermeasures to such scenarios.

Conclusion: How to Know When to Retire

Knowing when best to retire is never an easy thing, but you still have to retire anyway, irrespective of your desire. However, you can guide yourself prudently towards making the right decision and knowing that time by taking into considerations some relevant factors. Ask yourself questions, provide solutions to them, plan and take the step, and hopefully, you will look back afterward and realize you did the right thing at the right time.