Financial Tip

Your Retirement Readiness Checklist

Your Retirement Readiness Checklist

Who doesn’t dream of waking up every day and feeling like it’s the weekend? While it is true that the desire to retire eventually may not be universal, it’s almost certain that deciding whether or not we want to retire is easier than deciding if we are ready to retire.

Retirement is an important and complex decision, and those who aren’t looking for a second career in our golden years only get one chance to get it right. While it’s a good idea to consult with a professional before determining your retirement readiness, it is still a good idea to do a little self-diagnosis, like taking your temperature before visiting the doctor.

Do I have sufficient assets in place?

The question of whether you have enough money in place to require and maintain your current lifestyle is more complicated than just glancing at a brokerage or bank statement and seeing a big number.

Consider whether you have each of the following as part of your retirement readiness checklist:

  • A pension or other sources of reliable monthly income
  • IRA, 401(k), or other pools of retirement savings worth at least eight years of pre-retirement income
  • Liquid assets like checking and savings balances to cover near-term expenses (<1 year)
  • The possibility of delaying social security income to grow your lifetime benefits
  • Health insurance benefits OR additional investments to cover health needs
  • Permanent life insurance and long-term care provisions

Double-check your retirement budget and take it for a practice run

Having reliable income and money set aside is only half the equation. Your budget can make or break retirement, so it’s worth checking your budgetary readiness before deciding when – and how – to retire.

Is your budget built to accomplish the following?

  • No consumer debt like credit cards, auto, or boat loans
  • No personal student loans or cosigned loans for children
  • Either no mortgage or a mortgage used as part of a dedicated financial plan

If these costs are all under control, it’s worth taking your budget for a test drive by living this way for at least six months before you actually retire. If all goes well, you are probably in the clear, at least from an expense management standpoint.

What about non-financial issues?

For most of us, the decision to retire is about more than money. For this reason, it’s worth asking yourself a few additional questions before talking to HR and filing your retirement papers, selling the family business, or otherwise wrapping up your working career.

  • Is my spouse ready for me to retire?
  • Have I considered what I would find satisfying every day after retirement?
  • Where do I want to live? Will this decision impact my relationships with family and friends?

Between the financial and non-financial implications of retirement, there are many variables to track. The earlier the planning process begins, the better, as it’s usually easier to make thoughtful decisions when your time horizon is still long enough to take your time and consult an expert. Whether retirement is years into the future or right around the corner, it’s worth talking to a financial planner to ensure you’re on the right track for a secure and rewarding retirement.

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