Consider finances, emotions before deciding to retire
Though many workers look forward to retirement and the change of pace it typically brings, deciding when to pull the trigger can be quite the stressful endeavor.
Before you choose to retire, take time to think about whether you’re really ready.
FINANCIALLY READY? Though you may be itching to leave your job and enjoy a more relaxed lifestyle, your plan could backfire if you’re not financially prepared for what lies ahead.
The Economic Policy Institute reports that more than 40% of Baby Boomers nearing retirement have absolutely no savings. And of those who have begun building a nest egg, households ages 56 to 61 have a median savings balance of just $17,000.
Contrary to what you may have been led to believe, Social Security is only designed to replace about 40% of the typical worker’s preretirement income. Furthermore, the average current recipient collects just $1,360 a month, or $16,320 per year, in benefits.
But according to the latest projections, the average healthy 65-year-old couple today will spend at least $400,000 on health care costs throughout retirement. Over a 20-year period, that’s $20,000 per couple, or $10,000 per individual, per year.
If you’re counting on Social Security in the absence of additional savings or income, that leaves you with a mere $6,320 per year, or $527 a month, to cover your remaining bills once medical care is accounted for. And that’s just not enough.
EMOTIONALLY READY? Don’t discount the mental upheaval once you leave your career.
Though many seniors look forward to the downtime they’ve been missing during their working years, you may come to find that your newly unstructured existence throws you for an emotional loop.
Before you decide to retire, figure out how you’ll spend your days and whether you’re likely to have the income to support the lifestyle you’re hoping for. If you’re the type of person who needs constant stimulation, you may come to find that you’re just not ready for your career to end.