While some are counting down the days until they can officially retire others want to hang on a little bit longer before making the transition. These signs tell you it’s officially time to take it easy.
You’ve evaluated your Social Security options
Navigating Social Security can seem complex, but learning about the program before you retire can help you make a decision that’s best for you. If you take your benefit at your full retirement age (FRA), which is either 66, 67, or somewhere in between, you will receive your standard benefit. You can take Social Security as soon as age 62, but your benefit will be reduced for every month that you start it early. You can also delay it to age 70, and you’ll get a bigger benefit for every month past your FRA that you wait.
You’ve created a budget
Your budget will take into account your income in retirement and your expenses. Your income will come from Social Security, a pension, or investments like dividend-paying stocks, and your expenses will include things like your mortgage, healthcare, or a car loan.
You’ve saved enough (or have a plan for addressing shortfalls)
Another way to make up for shortfalls in retirement is with retirement savings. For instance, if your income in retirement will be $30,000 a year, but your expenses are $50,000, you’ll need another $20,000 annually from your savings. Experts agree that taking no more than about 4% each year from your retirement assets is a good way of ensuring that you don’t run out of money. In this scenario, generating $20,000 a year from savings would require a balance of $500,000.
You’ve thought about what life in retirement looks like and are emotionally ready
You may have given a lot of consideration to the financial aspects of retirement, but how much have you thought about the emotional side? Depending on how old you were when you started working, you could spend anywhere from 30 to 40 years of your life working 40 hours or more a week.