7 Ways to Know If the Time Is Right to Retire

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Retirees riding bikes
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It seems like some people start thinking about retirement about the same time they start working. However, once you hit your 50s and 60s, the dream starts looking more like a reality.

But it’s a big decision. Before you quit the daily grind, you need to be sure you’re ready both financially and psychologically. Here are seven ways to know you’re ready to say goodbye to the boss for good.

1. You’ve calculated your retirement budget

Senior internet
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Stop! You don’t get to retire unless your budget says you can. That means calculating how much income you expect to have in retirement, how much you’ll spend and how long your investments will last. You can play with online retirement calculators to get a picture of different scenarios, but we don’t recommend you rely on them for a final answer. It makes more sense to bring in a professional financial planner who can help crunch the numbers and let you know if you will be able to live comfortably without a job.

For tips, check out: “How to Choose the Perfect Financial Adviser.”

2. You don’t have to file for Social Security early

Uncle Sam cutting Social Security benefits
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When you’re doing those budget calculations for your retirement, do the numbers only work if you take your Social Security benefits early? While there may be some good reasons that some people begin collecting Social Security at age 62 — such as knowing they won’t live long in retirement — you get more money if you wait until your full retirement age. That’s 66 for those born sometime from 1943 through 1954.

Starting early reduces benefits by a fraction of a percent for each month before your full retirement age. For example, claiming benefits at 62 means you lose 25 percent of your monthly retirement benefits — for life. Plus, if you decide you want to go back to work, you could end up owing Uncle Sam if you make too much money while receiving Social Security.

For more on the topic, check out: “12 Ways to Maximize Your Social Security Checks.”

3. Health insurance won’t break the bank

Close up of medical bills.
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If you’re 65 and eligible for Medicare, health care expenses should not be a problem. However, if you plan on retiring early or aren’t eligible for Medicare, you’d better be sure you can pay for health insurance. Without a job providing the benefit, you’ll have to buy a policy for yourself. And at your age, that won’t be cheap.

4. Debt is under control

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It’s not that you can’t retire if you’re in debt. It’s just that debt can make it really hard to do all the great things you had planned for your senior years. Being saddled with debt not only means less money for fun activities like travel, but it could put a crimp in your ability to pay for long-term care if and when the time comes. If you’re healthy, it might be better to work a few more years and get out of debt pronto.

5. Health concerns make it difficult to work

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Speaking of being healthy, sometimes your body will let you know when it’s time to retire. If your job is negatively affecting your health, or you physically can’t do the job anymore, that’s a clear sign you’re ready to retire.

Ideally, the balance in your bank account will agree with your body. If it doesn’t, you may be forced to take Social Security early to get by financially in retirement. Or you could sit down with a scalpel and your budget and cut away all extra expenses. That may mean you can’t retire with the lifestyle you want, but it sure beats sticking with a bad job.

6. You’ve talked to your spouse

African American couple outside.
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Your retirement isn’t just about you. It’s going to affect your spouse, too. So don’t make any decisions without sitting down for a heart-to-heart with your beloved. If you’re not on the same page about when and how to retire, it could make for a nightmare ending to your years together.

(Check out: “10 Hazards of Divorcing When You’re Older.”)

7. There’s so much you can’t wait to do

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Don’t retire if you don’t have any plans for what to do with your free time. Just don’t. Living every day like a lazy Saturday will get old after about a week. Plus, it could be hazardous to your health. Rather than leave the job you love because you’re “supposed” to retire at your age, only quit if you have a long list of activities you wish you were doing instead.

How did you know when you were ready to retire? Tell us in the comments below or on our Facebook page.

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