You've been working for a majority of your adult life and you're now at that point where you're seriously considering retirement. Deciding to hang up the work suit, or boots, is a big life decision, because after all, you've held a job for what is likely close to 40 years.
The decision to enter the post-working years is firmly up to you, and for most jobs, you can make it whenever you want. You will want to avoid rushing into a life-altering choice, however.
Take the necessary time to contemplate everything before deciding to retire. Your age is also a factor to take into consideration, especially when it comes to accessing 401(k) and Individual Retirement Account funds.
Use the time when you're at home to answer any questions you may have retirement, and answer some important questions.
How are my finances?
Your finances have to be in order before you contemplate retirement. You don't want to stop working and find yourself short on money one year, or maybe even months, later.
The financial question is particularly important depending on the age at which you are retiring. For instance, once you are 65, you will receive monthly Social Security checks. Designed as a safety net for those in their post-working years, this money is helpful. Unfortunately, these checks may not be large enough for you to live on.
As such, you have to ask yourself what your income will be every month. Keep in mind that if you retire before you're in your 50s, you won't be able to touch your 401(k) or IRA. You will have to map out your finances until you can access that money.
Part of the financial question revolves around your current situation and further questions, such as:
- Do you have a mortgage?
- Any credit card debt?
- What will health care cost?
- How much in property taxes will you pay?
It's important to tally up the projected costs to all these questions and any more that might pop up along the way. You will get a better handle on what your monthly expenses will be and if your current savings can hold you over until you can pull from your 401(k) or IRA.
Retirement isn't always about the money. For some, it represents the last chance they have to explore and have experiences they may have missed out on while young and before work and family time took precedence.
Decide how you want to spend your retirement years because while the time off will no doubt feel great at first, over time you may find yourself bored. According to Forbes contributor Larry Light, the average individual spends roughly 2,000 hours every year working. If you factor in time spent commuting, you typically spend 2,700 hours involved with work in some way or form.
In the midst of retirement, ask yourself how you will spend that time. You can use it to get back into the gym, travel the world or relax on the golf course. Whatever you decide, be sure to take into account the financial aspect of your decision because retirement adventures will cost money.
"Ask yourself how you will spend that time."
Finances are especially important to consider if you're serious about moving. Maybe you want to live closer to family members, or you would rather live some place that is always warm. Whatever you decide, focus on yourself first to make sure you'll find the new location comforting.
Can you afford to retire?
If, after examining your finances and mapping out a general retirement plan you still aren't sure, then you might have to ask the most important question: Can I afford to retire?
Not everyone is able to retire before he or she is 60, and this is OK. In fact, as highlighted by SmartAsset, every state has an average retirement age that will vary. By recognizing that you may need to work a few extra years, you can use this time to build up your savings and retirement accounts even more to ensure that when the time finally does come, you can comfortably enjoy your post-working life.
A new area has opened up opportunities to earn extra income, whether you're near retirement or you are retired. The gig economy, in which individuals might drive for a ride-sharing company or rent out their house or apartment, represents an easy way to make extra money.
In fact, the gig economy is attracting older individuals in greater numbers for a variety of reasons. Driving for a few hours every week will put some money in your pocket that can go toward a retirement account. Likewise, if you are retired and you find yourself bored, driving can pass the time.
Retirement is a big decision, and as such, you will want to ask yourself plenty of questions, particularly regarding your finances, over whether you can comfortably live the rest of your life not working.
For more information about smart ways to manage your finances, contact Landmark Bank.
Back to Blog