Photo by Aarón Blanco Tejedor on Unsplash
Not too early, not too late, find the time that’s just right for you.
A retirement decision is serious business. Once you cut the cord, it’s not so easy to splice it back together. In as little as a year or two, your skills will be outdated. Technology will pass you by. Your resume will have a gaping hole that’s hard to explain.
33% percent of all retirees go back to work because they retired on a whim, miscalculated their financial needs, or just got bored. They usually can’t return to their prior profession and end up taking whatever job they can get.
One out of every three retired before they were ready!
Be honest with yourself
Why do we flub it up so much? Because we shamelessly lie to ourselves. We’re masters of self-coercion. If we want a puppy, diamond earrings, a swimming pool, or an early retirement, we’ll dismiss the naysayers and convince ourselves that our lives would be immensely improved without the stress of a toxic job. “It’ll do wonders for my health,” we say. “We can make it work, we’ll figure it out.”
By the time we realize the mistake, it’s too late for a do-over.
It doesn’t have to end that way for you. A few honest answers will tell you whether you’re ready to retire or not. And if not, it will help you pinpoint the time that’s just right.
Ask yourself:
1. Do I look at Mondays with anticipation or dread?
Anticipation and dread are powerful emotions and strong indicators of satisfaction. According to a Pew Research report, 69% of working Americans are generally satisfied with their jobs while 30% view their work as “just a job to get them by.”
Some portion of that latter 30% look at Mondays with loathing. If you’re one of them, it’s a clear indication that you’re dissatisfied, and something needs to change. Retiring though, may not be your best option.
A friend of mine in his late 50s hated his job so desperately that he cleared out his office one Sunday night, gave a 2-week retirement notice, and took a 2-week vacation. “It got so bad I couldn’t take another day,” he told me. His retirement didn’t last a year and he’s back in the workforce now.
Dread is a terrible reason to retire.
Most of the successful retirees I know considered their options carefully, planned appropriately, and exited gracefully. That’s the way your retirement should be done.
2. If I didn’t need to work for money, what would I be doing right now?
My definition of retirement is “not having to work for money.” When you don’t need to work a traditional job to pay your bills, it means you have the power to do anything you want, and the freedom to stop doing it when you choose.
Many retirees busy themselves with activities that might be considered work, such as volunteering, consulting, writing, acting, or more. They might make money, or they might not — it doesn’t matter. They’ll do several things at once, swapping new pursuits in and out at will.
What would you be doing right now?
If you can’t answer that question quickly, you’re not ready.
“You need three hobbies to retire,” is a commonly quoted maxim. Simply put, you need meaningful activities to keep you engaged. Consider what interests you. Think about the skills you had long ago. Who and what do you care about?
3. Do I have enough money to last me for the rest of my life? And if not, where will I get the rest?
Face it, you need money in retirement just like you need it now. Usually, it comes from Social Security, pensions, investments, and savings, but some people own rental homes, have side hustles, or take on part-time jobs.
How much do you need? You can go dizzy calculating inflation, investment returns, and Social Security options. Or you can look up the answers that others have calculated.
So, do you have enough?
If so, you can be on your way to retirement whenever you like.
If not, but you’re still determined to retire, you might consider moving where the cost of living is dramatically lower. You’d be surprised to know that some exotic dream vacation destinations are home to millions of Americans living on very small budgets.
No matter what else you do, make sure you have enough money. Returning to the workforce a year or two after you retire is hard enough, but returning at the age of 80 is impossible.
4. Are my expenses flexible so I can cut back if I need to?
The Great Recession of 2008 began with a stock market drop of over 50% and took almost five years to recover. The unemployment rate skyrocketed while home values plummeted. Those who lost their jobs — or those with no jobs (such as retired folks) — were living off investments that had lost as much as half their value.
In the deepest depths of the drop, mortgage, auto loan, and credit card payments still cost the same. Bankruptcy was the only way out for many.
Fixed payments are the nemesis of a financially safe retirement. When times are good you can spend like a drunken sailor if you like, but when times are hard you need to be able to cut back.
If you have little debt and the ability to trim your monthly expenditures by 40% or more when you’re in a pinch, you’re in a terrific position to retire. If not, you need to make some adjustments.
5. Is my partner in agreement with my decision to retire?
I read a story about a couple who retired together with dreams of a wonderful life after work. “We’ll travel the world,” she said. “I’ll spend my days in my workshop,” he said. They ended up fighting like hyenas.
Dreams are the spice that makes retirement so alluring. But if your retirement depends upon someone else, you need to do two things before you retire: Talk and agree.
You don’t have to agree on everything, but you do need to be pointing in the same general direction. You don’t have to retire at the same time, but you still need a long-term plan. Talk to your spouse, your partner, your daughter, or anyone who will be a significant part of your retirement life — and agree on a plan.
When you do, you’ll be ready.
6. Why am I retiring?
The reason you’re retiring is important. I have a neighbor named Tony who retired early at the age of 62. “I’m sick of the grind and I don’t need any more money,” he told me. Tony dedicated his first few months to the sport of extreme relaxation. He watched TV and played golf. After six months he’d put on about 20 pounds. He drove his wife crazy as he wandered the house underfoot. Nine months in, the company called for some advice and Tony took his old job back.
Escaping from a nasty work environment is great if you’re landing in another job. It’s fine to escape into retirement too if you have a plan. But jumping blindly into retirement almost always turns out badly.
What are your reasons? If “escaping work” tops the list, you’ll need to do more homework. “I’m going to sleep in ‘till noon,” is not a plan but “I’m going to take a trip to Europe, learn to cook, and ride my bicycle,” is a great plan.
Take a few minutes and jot down some activities for your first 2 months of retirement. That’s all the planning you need. With that, you’ll be ready to hit the ground running and never look back.
7. What do my working friends say? What do my retired friends say?
It’s always a good idea to talk to friends and family about your retirement plans. Test your ideas on them. Share your thoughts with people who are already retired and see what they think.
If everyone you talk to is giving you the side-eye, you might want to tap the brakes. When you look at it from the outside, retirement is a glamorous fantasy of unbridled freedom. But it’s not all rainbows and butterflies. Filling up 50 hours a week with worthwhile activities is challenging. That’s why so many retirees return to work.
Listen to your friends. Just as I’ve asked you for honest answers, demand honesty from them. If they say you’re ready then you probably are.
Well, what have you decided? Are you ready?
If you’re like most people, you probably haven’t thought through these questions from an unbiased and brutally honest perspective. If you have, and you’re ready to retire, then congratulations. If not, don’t worry — you have plenty of time to work it out. And you will, now that you know what to ask yourself.
Best wishes on your future. You’ll find retirement years to be the best years of your life!