5 Signs You Are More Prepared for Retirement Than You Realize

The full retirement age in America is 67 years for those born in 1960 or later. However, you can start collecting your Social Security benefits from 62 and Medicare benefits if you are 65 and older. Some data shows that most people retire at 64 years. However, this can vary by state. For example, people in Washington, D.C., retire at 67 on average. Most retirees in Vermont choose to retire at 65, while in West Virginia, the average retirement age is as low as 61 years. Several factors can affect the retirement age, including financial preparedness, health, cost of living in your state, etc. If you are ready for retirement and can comfortably retire, there is no harm in opting for it earlier than the norm. Likewise, if you prefer working well into your 70s or 80s and can comfortably do so, you can continue working.

It can be confusing to pinpoint whether you are ready to retire. A financial advisor can help you identify the signs. This article also discusses some positive signs indicating you are ready to retire.

How do you know when to retire?

While there is no fixed rule as to when you should retire, there are some factors that can help you assess your situation. You may often follow a set model for investments and savings, such as investing in your company-sponsored 401(k) plan, mutual funds, stocks, bonds, real estate, etc. However, you may not know for sure if the money you have accumulated so far is enough for retirement. Inflation, rising consumer needs, declining health, etc., can also be causes of concern and lead you to believe that you need to earn more and save more.

It may seem like you can never have enough for retirement, and the fear of outliving your savings or needing more money for emergencies can linger in the years before your retirement. But it can help to look for signs you are ready to retire. 

Here are some signs that you are ready to retire:

1. You have no debt, such as a home mortgage, car loan, or credit card debt

Debt can be one of the prime reasons why people postpone their retirement. Entering retirement with debt can be catastrophic for your financial well-being. The burden of paying high-interest rates along with sustaining a limited pool of money can be stressful. Moreover, you risk losing all your savings to interest payments and shrinking your retirement nest egg for the later years of your retirement. Therefore, looking at your debt situation before you retire is essential. Most people may only consider more significant debts like a home mortgage and plan to retire if they have paid it off. But it is equally important to look at the seemingly more minor forms of debt like credit card dues. Your credit card debt can tell you a lot about your financial preparedness. If you depend on your credit card and struggle to clear your dues in most months, you may not be ready for retirement.

It may be advised to start paying attention to your debt situation at least ten years before retirement. If you have any ongoing loans, try to settle them in the years before you retire. This can also be a time to start limiting your credit card usage. Further, you must restrict taking on new debt as you move closer to retirement.

2. You no longer need to support your children financially 

If your children are financially independent or you are financially able to continue supporting your children without negatively impacting your retirement plans or lifestyle, then you may retire. But if supporting your children is causing financial strain and preventing you from living a comfortable retirement or enjoying your golden years, then it may be worth reassessing your financial situation and reconsidering retirement. Ultimately, the decision to retire should be made based on a careful assessment of your financial situation, personal goals, and family obligations.

Supporting your children is an important consideration, especially if your children are at the age where they need massive financial support, such as during college. In addition, your children's health status can also play a significant role in your decision. Physically or mentally challenged kids, children with lifestyle diseases, or those requiring regular health support can be financially dependent on their parents for a long time. In such situations, it is vital to save for the child's needs separately. If you have a large savings pool dedicated to the child, and a separate retirement pool for yourself, you will find it easier to retire. Parents can use dedicated investments for their child's needs, such as 529 accounts for higher education, health insurance for healthcare needs, etc. It is also essential to consult with financial advisors, family members, and other trusted professionals to help you make informed retirement decisions.

3. You have a diversified investment portfolio

Your investment portfolio can be an essential indicator of your retirement readiness. A well-managed investment portfolio can be an important part of your retirement planning strategy. If you are considering retiring soon and wondering, "Am I ready to retire" you must look at some critical factors in your investment portfolio.

You can start by taking a look at your asset allocation. Your portfolio should be diversified across a range of asset classes, including stocks, bonds, real estate, and other investments. This can reduce risk and maximize returns over the long term. The next thing to consider should be your risk appetite. Assess your risk appetite and check if your portfolio is aligned with it. As you near retirement, reduce your risk level to protect your portfolio from potential losses.

The next and perhaps the most important thing to see is if your portfolio is generating returns that are consistent with your retirement goals and expectations. If your portfolio is not meeting your needs, you may need to adjust your investments or seek alternative options. You may also have to postpone your retirement. However, if your investment portfolio is generating good returns and you have saved up a sizeable corpus, you can plan to retire.

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4. You have a plan for your life post-retirement

Your life after your retirement can be full of ups and downs. The transition from working life to retired life can be hard to deal with. A lot of people find the lack of work or purpose demoralizing. This often leads to a decline in their mental health, ultimately impacting their physical well-being. Therefore, having a social life, a part-time job, or a routine after retirement is essential.

Retirement can lead to decreased social interaction and a feeling of isolation. Maintaining a social life can help retirees stay connected with friends and family, combat loneliness, and improve their overall well-being. Retirement can disrupt the routine that you may have established over the course of your career. A routine can help you maintain a sense of structure and purpose and make the retirement transition easier.

You can also consider getting a part-time job and looking at opportunities in the areas of your interest. A part-time job can provide you with a sense of purpose, structure, and fulfillment. It can also help you stay financially secure, especially when facing financial challenges. A routine, a part-time job, and a social life can help you stay active and engaged, which can help maintain physical and mental health.

5. Your spouse is on board with your decision to retire

Retirement preparedness for couples depends on their joint finances and readiness to transition into retirement. Retirement may put you into a lower income group and impact your lifestyle to some extent. This can be a change not only for you but also for your spouse. Therefore, it is essential to discuss these things with your partner. Both spouses need to be on the same page regarding financial planning, as this can help ensure that your retirement goals are aligned and you are prepared. If your spouse also works, they would have to assess similar financial parameters as mentioned above to see if they are ready to retire. It is also important to note that both spouses do not necessarily have to retire at the same time. One partner can continue to work while the other retires. However, you must discuss these things beforehand.

Retirement is also a significant life transition, and having the emotional support of a spouse can make the process much easier. Having a partner who understands your reasons for retiring and supports your decision can help reduce stress and anxiety and provide a sense of security and comfort. Retirement can change the dynamics of a relationship, as couples spend more time together and may need to adjust to new routines and activities. Having a spouse who agrees with your retirement decisions can foster a positive relationship dynamic and facilitate a smooth transition to this new phase of life.

It is crucial to have open and honest communication with your spouse about your retirement plans and to work together to ensure a successful transition to retirement.

Emotional and health-related signs that indicate you are ready to retire

Apart from the financial signs, you must also look at mental and health-related indications that may suggest it is time for you to retire. Here are three signs you're ready to retire:

1. You feel burnt out

After years and years of work, there is bound to come a time when you may feel burnt out. While many people love their jobs, some may find them taxing. If you have hit your threshold and find it hard to continue the same drill day after day, you may consider retirement. It is important to note how you feel mentally and take signs of burnout seriously. If you feel disinterested in work, find it hard to get out of bed for work, and find it challenging to contribute to your work as you did before, retirement may be a good choice.

2. Your health is declining

If you are physically unable to work anymore, it may be wise to retire. As you grow old, your reflexes may slow, your ability to put in as many hours may be impacted, and you may feel physically ill. Some common signs can include aches and pains, falling sick often, and inability to sit or stand for long hours. If you need to be physically active in your job and find it hard to do so, you may consider retiring.

3. You want a change of routine

You can consider retirement if you feel like you have worked enough and now need to travel, spend time with your friends and family, or pursue hobbies you never had time for. Retirement can be the perfect time to change your routine and spend time leisurely.

However, it is essential to note that before you make retirement decisions based on any of these three factors, you must consider your financial health and be confident of your financial preparedness. If you do not have enough funds saved up for your retirement, it may not be a good idea to retire. In such a case, you can consider a short sabbatical and get back to work. Or lower your workload and work part-time for a while.

To conclude

There may be several signs that suggest you may be more prepared for retirement than you realize. Having a clear understanding of your retirement goals, being proactive about saving and investing, not having debt, maintaining good health and wellness, and having a solid retirement plan in place can all be signs of your retirement preparedness. The age at which you retire is unique to you and your situation. Some people retire in their 40s and 50s, while others work in their 70s and 80s. Ultimately, it is all about what you want and how well you save and invest your money in the early years of your career. Therefore, remember to prioritize your retirement planning.  

It is never too late to start planning for retirement, and by taking action now, you can improve your chances of achieving the retirement lifestyle you desire. Use the free advisor match service to connect with financial advisors in your area who can help you determine your retirement preparedness. All you have to do is answer a few simple questions based on your financial needs, and the match tool will help connect you with 1-3 advisors best suited to meet your financial requirements.

If you're looking for retirement planning approaches that fit your specific financial situation, visit Dash Investments or email me directly at dash@dashinvestments.com.

About Dash Investments

Dash Investments is privately owned by Jonathan Dash and is an independent investment advisory firm, managing private client accounts for individuals and families across America. As a Registered Investment Advisor (RIA) firm with the SEC, they are fiduciaries who put clients’ interests ahead of everything else.

Dash Investments offers a full range of investment advisory and financial services, which are tailored to each client’s unique needs providing institutional-caliber money management services that are based upon a solid, proven research approach. In addition, each client receives comprehensive financial planning to ensure they are moving toward their financial goals.

CEO & Chief Investment Officer Jonathan Dash has been profiled by The Wall Street Journal, Barron’s, and CNBC as a leader in the investment industry with a track record of creating value for his firm’s clients.