5 Signs You Are Ready to Retire
There are roughly 16% of people residing in the United States who are 65 years of age or older and able to retire. The average age of retirement is around 65 for men and 63 for women. Factors that can affect someone’s retirement age can include health, savings, the ability to receive Medicare and Social Security, to name a few.
In the United States, one isn’t able to receive full benefits of Social Security until they are at the age of 65 and the same goes for Medicare unless the individual has a qualifying physical condition, of course.
Many of the working force is eager to retire, while others aren’t in any sort of rush as they assume they will be bored or because they love their job too much. Whether you are coming up to retirement and don’t want to wait another day, or you are only considering it, here are the five signs you are ready to retire.
Your Home is Paid Off
Many people choose to buy themselves a home somewhere along the way, but with that home comes a mortgage. Paying off a house can be done in multiple ways which could include a monthly payment, biweekly, choosing a higher required payment in order to pay off the home quickly and more.
Owning has its benefits such as renovations to have your vision come to life, no landlord to give rules and a big one, not having to pay once you are retired. However, most homeowners won’t be able to retire if they still have a mortgage payment, unless their retirement savings allows for it.
No more mortgage payments can be a sure sign of someone’s readiness for retirement. Retirees will have quite a bit of free time on their hands; use the extra funds to travel, help pay for grandkids’ tuition, or invest in dividend-paying stocks. The extra money can also be used as a safety net, especially at the beginning when all of this is still new.
You Have Savings
We are taught at an early age about retirement savings plans. Once someone starts their career journey they search for a company that offers pension plans or a retirement savings plan because it is “safe.” It is a sense of security knowing that even if you don’t manage to save money on your own, the company that has employed you for all these years will have a retirement plan ready for the day of retirement.
There is no set amount of money that should be saved but it is important to remember you don’t need millions sitting in an untouched account in order to comfortably retire. The average middle-class couple will need roughly $625,000 in order to retire with an eased mind. However if someone has lived a lavish lifestyle, they may want to be sitting on more funds, which is understandable. Talking to a financial advisor can help determine an ideal number to have saved for retirement. Once that dollar amount is reached, it can be time to start planning for retirement.
You Have Hit Retirement Age
Some individuals have the benefit of retiring early while others have to wait until they turn the qualifying age and sometimes even longer than that. Circumstances that allow you to retire early include:
- High paying job has allowed for more than average saving plan
- Standard of living
- Employer offers a great pension plan that allows you to retire early
If you are someone who needs to wait until retirement age to qualify you will want to know the following important information that pertains to benefits offered and the age of eligibility.
- Like many people in the United States, retiring comfortably may mean you are relying on Social Security benefits. However, you won’t qualify for the full amount until at least age 66-67. Although it is possible to receive these benefits early, it will not be the full amount.
- In order to enroll in Medicare benefits, the retiree needs to be at least 65 years old. It is important to note the SSA requires individuals to register 3 months before they turn 65 to avoid any delays or a late enrollment penalty.
Parents work to provide a life for their children but eventually, the financial responsibility that comes along with parenting dwindles down as they go into adulthood; for the most part. It is also possible for people to have children later in life, and once the average retirement age comes around, kids are still living at home dependent on their parent’s income. If you are somebody that has children who are not financially stable and independent just yet, look at your savings and possibly speak to a financial advisor, they can guide you along and assist with the decision to retire or not.
Now, once children are stable financially and have moved out, it can be just the sign you could retire. Children don’t necessarily have to be moved out in order for their parents to retire; there are a number of multigenerational families living under one roof, so long as everyone is financially stable and not relying on anyone looking to retire.
Passed The Test
Anyone who is planning to retire should test drive their realistic retirement budget. A solid plan to have is to determine a retirement budget and live off of just that for about 6 months before making the decision. If you were able to live comfortably, take comfort in knowing it is probably safe to stop working. Here are some numbers to look at to help better plan a retirement budget.
However, as mentioned above, not having a mortgage is a great sign to retire, so you may not have to factor in any housing cost unless you rent of course.
If you own a car and are still driving it is important to factor in the cost of upkeep such as gas, insurance, repairs and general maintenance.
Health Care- $499/month
Insurance premiums average out to be $4,000 or higher per year for those aged over 65.
Personal Insurance- $237/month
Cash Contributions- $200/month
This is usually in form of donating to a charity or something similar.
It has been found that retirees spend almost as much on entertainment as those between the ages of 25-34. This is probably due to the increase of free time and the ability to get out and enjoy oneself.
This is just a guide that can be used as a reference when making a budget for yourself, or you and your partner. There are a number of ways to lower costs that include limiting the number of times you go out for dinner in a week, or spending less on gas because you aren’t traveling as much.
Contemplating retirement when having these 5 signs could mean it is time to say goodbye to the workforce and go enjoy your newfound freedom! Sleep in a couple of times a week, go on vacation, or spend your days sitting outside enjoying the beautiful weather with your loved one.