Retirement is one of life’s major milestones, and while some people dream about it for decades, others aren’t sure when – or if – they should take the plunge. The decision isn’t just about turning 65 and collecting Social Security. A variety of factors come into play, from financial readiness to health and even the state of the economy.
If you’re wondering whether the time is right for you specifically, here are five key areas to consider before saying goodbye to the working world and hello to what will hopefully a retirement full of the three Rs: recreation, rest, and relaxation!
Personal Finance: Can You Afford It?
Let’s start with the big one — money. A comfortable retirement generally hinges on financial security, so it’s important to assess your savings, investments, and income streams. According to the Center for Retirement Research at Boston College, more than 40% of households are at risk of not having enough money in retirement. Before you retire, consider:
- Do you have enough savings to cover your living expenses for 20-30 years?
- Will Social Security and pension income (if applicable) be sufficient?
- Have you accounted for inflation and potential medical costs?
- Do you have an emergency fund for unexpected expenses?
- Did you factor in COLA (Cost of Living Adjustment)?
According to Charles Schwab, a good rule of thumb is the “4% rule,” which suggests withdrawing 4% of your retirement savings annually to make your money last. If you’re unsure, consulting a financial advisor can help you crunch the numbers.
Age: Are You at the Right Stage in Life?
While there’s no official retirement age, certain milestones impact your decision. For example:
- You can start claiming Social Security at 62, but full benefits kick in at 67 (for those born after 1960).
- Medicare eligibility begins at 65, which can significantly lower healthcare costs.
- Some pensions and retirement accounts have early withdrawal penalties before age 59½.
beyond these rules, consider your situation. Some people thrive working into their 70s, while others want to retire early and enjoy more years of leisure. Your ideal retirement age is a mix of financial and personal factors.
Speaking of Social Security, it’s important to go to the website, if you haven’t already, to set up your personal account at www.ssa.gov/myaccount/. It only takes a few minutes to complete the online form, giving you access to your Social Security information, which is housed in a secure, digital form that requires your authentication. You can also call the administration at 1-800-772-1213 for assistance (though the SSA does not provide financial advice).
Many public employees – teachers, for example – must consider some version of the “Rule of 85,” which equals your age plus your years of service to be eligible for full retirement. This may vary from state to state, but in general, the formula of age plus years on the job is an industry standard.
Physical and Mental Health: Are You Ready for a Lifestyle Change?
Your health plays a key role in deciding when to retire. If you’re in great shape and love your job, there may be no rush. However, if work is taking a toll on your body or stress levels are high, it might be time to step away. The National Institute on Aging suggests that keeping physically and socially active can lead to a healthier, happier retirement.
Consider the following questions:
- Are you experiencing work-related stress, exhaustion, or chronic health issues?
- Do you have hobbies or social circles to stay engaged post-retirement?
- Will retirement allow you to improve your well-being?
Remember to include health insurance. This could involve COBRA, Medicare, or the Affordable Healthcare Act and might warrant a fair amount of research before you commit to any of these plans and their accompanying riders and supplements.
And then there’s assisted living, long-term care, and estate planning to consider.
SOURCE: marketwatch.com
The Economy: Is It a Good Time to Retire?
The state of the economy can impact your retirement plans more than you think. If the stock market is volatile or inflation is high, your investments might not stretch as far. The U.S. Bureau of Labor Statistics notes that economic downturns can affect everything from 401(k) balances to job security for older workers.
Before making a move:
- Check how your investments are performing.
- Consider delaying Social Security to increase future benefits.
- Have a backup plan if market conditions worsen.
- Call your financial advisor!
Predicting how the economy will behave isn’t easy, but retiring in a downturn can mean withdrawing from investments at a lower value. March/April 2025 is a perfect example of how market fluctuations can impact so many seniors, especially those who are locked into a fixed-rate investment.
Intangibles: Does Retirement Feel Right?
Beyond the numbers and logistics, retirement is an emotional decision. Some retirees struggle with a loss of identity, while others can’t wait to trade in their work emails for travel itineraries. Ask yourself:
- Do you have a plan for how to spend your days?
- Will you miss the sense of purpose that work provides?
- Are you excited about new opportunities, such as volunteering, traveling, or spending time with family?
Many feel truly ready for retirement, for instance, once grandchildren become part of their lives. The idea of being involved in their upbringing, in some cases daily, gives retirees a wonderful sense of importance and even a newfound sense of self-worth as the responsibilities they once had while on the job are transferred to the health and welfare of little ones.
Some teachers who “retire” often find themselves back in the classroom just months after they clean the whiteboard for what they thought was the last time. Many states are experiencing substitute teacher shortages and, therefore, require only a bachelor’s degree and passing a background check for individuals to be certified. Fully credentialed, retired teachers are paid more, however.
One teacher tells a story about all she encountered in the years leading up to retirement, the actual grief she felt upon retiring, and how she finally took steps to actually enjoy it. To read her story, click here.
The Bottom Line
Retirement isn’t just about hitting a certain age or savings goal, it’s about feeling prepared in all aspects of life. But everyone is different. Two retirees from the same company who are the same age and have similar outside interests might approach retirement completely differently. One might find herself returning to the office once a month for coffee with her former colleagues and volunteering at company functions, while the other might never want to set foot in that office again, not because his departure was negative, but because he is fully ready to embrace the retirement experience. Maybe you fall somewhere in between.
Regardless of your circumstances, it’s OK to ask yourself the original question: How do I know it’s time to retire? Talk to loved ones. Discuss it with friends. Consult your financial advisor. Chances are, they’ll collectively help you answer this essential question.
Because money management plays such an important role in your retirement life stage, it’s never too early to consider what this might look like for you. Joe Duffey at Everest Financial Inc. in Fort Mitchell, KY, brings over 30 years of experience to the financial wellness and retirement planning industry. Visit our website everestfinanical.net or call 859-291-9290 and make an appointment today. Joe and the Everest Financial Inc. staff are here to help you take those first steps to prepare for retirement, implement a plan, and then help you manage it while you travel, relax, and truly enjoy this wonderful time of your life.
Everest Financial also offers FREE informational retirement seminars in the greater Cincinnati area, including:
- “Social Security or Social INsecurity?” – Tuesday, May 6, 6 p.m., or Thursday, May 8, 6 p.m., Covington, KY.
- “Plan Well, Retire Well” – Thursday, May 15, 11:30 a.m. or 6 p.m., LaRosa’s Pizzeria-Boudinot, Cincinnati, OH.
- “Tax Deduction Strategies in Retirement” – Thursday, June 12, 11:30 a.m. or 6 p.m., LaRosa’s Pizzeria-Boudinot, Cincinnati, OH.