2015-01-07
When Can You Consider that You are Ready for Retirement?

My recommendation is that you have the answers to at least the following two questions:

1. What will you do with all of your extra time?
My clients routinely tell me that they do not miss work, but that they miss the camaraderie and often miss having someplace to go and something to do. I am not retired myself, so I cannot speak from experience, but from observing family, friends and clients who have retired, the grass is not always greener on the leisure side of life. So, the C.P.A. is putting a social issue first in importance of the answers you need to have – be sure you have a good idea of what you will do. Whether that is working on having a scratch handicap in golf, volunteering at a food bank or having a part-time job, without a purpose in life, retirement will not be as fun on the inside as it looked from the outside.

2. Does your long-term financial plan work?
You really need to prepare a financial plan to ensure that the assumptions you are working with regarding retirement will work and allow you to live in the manner to which you have become accustomed. You need a conservative plan that has conservative assumptions on the rates of return that you will earn on your investments and liberal assumptions as to what you might spend in retirement. Consider your lifestyle – you don’t want to have to become housebound in retirement and no longer enjoy life. That certainly doesn’t mean you should be traveling the world if you don’t want to, but you need to be sure that you have enough retirement savings to allow you to live a comfortable life however you define that. Be sure that your financial plan considers the following items: getting rid of debt, creating an emergency fund, when to take social security benefits and expenses of growing old and needing help in taking care of yourself.

If you find that your plan does not currently work, work with a financial planner to determine the goals you need to put into place so that it will work by the time you reach retirement age. We would be happy to help you with this plan!