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When should I retire? is a brutally hard question to answer because it’s going to be different for everyone. Perhaps you’ve had it with work, maybe you want to retire earlier than your plan permits? Or even want to retire later than the suggested age of 65.
My advice is to start thinking about it as soon as possible so you can plan accordingly. As with everything in life, it can throw you a curveball every now and then and you want to be as prepared as possible in the event that happens.
Obviously, as you are well aware, the earlier you start saving the better, compound interest will take care of the rest. If you’re a millennial in your twenties or early thirties you have lots more time to save and plan. The longer you wait, the more pressure there is to adjust for financial shortfalls.
Time is your friend.
Here are 5 things to consider for when you should retire.
1) Your Health
Everyone is different and lady luck (genetics) will play a role as well. Its best to plan for the long haul and what that means is your going to live longer than you think. Let’s say you are lucky and retire at 55 (remember that commercial freedom 55) well you might live to 90 or 100. That’s another 45 years. The ladies will in most cases live longer than the men so you need to plan for that as well.
So what Mike?
Well if you only have savings for 20 years past your retirement date what are you going to do for the other 25 years for money? What if you need special long term care for Alzheimer’s, Parkinson’s or some other ailment that is too much for your loved ones to care for you. That means going to a home or care facility = more money.
I’m not trying to scare you it’s just that it is a reality and something you need to plan for. Plan for the worst and hopefully the worst won’t happen.
2) Your Financial Situation Compared to What You Plan to Do
If you are like most Americans, the latest studies suggest that less than 20% have money saved for retirement. An even worse statistic is most have NOTHING saved for retirement. That’s a terrifying statistic and it has to change.
So what’s your situation? if you are in that “I haven’t started to save yet”. There are some serious changes that need to be made. You need to make more money now as a side gig or side hustle. You may need to work longer than you had originally planned.
The idea I really like is to start downsizing now. In another post, I talked about how we’ve made changes
1) we sold our second car saving nearly $700 a month,
2) no more eating out for lunch saving another $200 a month and
3) cutting back on coffee saving another $100 a month You can read the post here if you are interested.
Ok, so if you need more make changes, make them. If you’ve got a good plan in terms of retirement savings then you need to figure out how long that will last vs. what you want to do when retired. If you have grand plans to travel and live abroad then you need to figure out the cost of that and factor in the style of living you want when away. For example, my days of staying in hostels are over so I need to plan for more expenses.
We have great friends that are far more financially well off than we are (millionaires) we won’t be able to live the lifestyle they can afford that’s just reality, so we need to adjust our plans accordingly. It doesn’t me we won’t vacation with them it will just have to be on a different level and they are more than willing to adjust their expectations as well.
On the flip side, we know folks who may have to work for the first 20 years that we will be retired due to their financial situation, so it works both ways.
Point is there are many ways to adjust your living now so that you are more prepared to live the retirement life you want in the future.
3) Your activity level
Admittedly, we’re not very active people. We love the outdoors but are not “outdoorsy” in the sense we love to camp or live off the land.
When should I retire? really means thinking about maintaining a healthy lifestyle while retired. It could mean getting in the best shape of your life because now you actually have the time with no kids around (as much) or the 9-5 grind. I’m not saying join the gym or run a marathon, but I am saying find or start thinking about activities you might want to do.
For me personally, I had to stop playing golf when we had kids. It was just too time-consuming, expensive and if you don’t play you can’t get better so I figured what’s the point. If I want to enjoy it, I’ll need to play more and that can only happen when I have more time. Retirement will allow me to do that.
We live in a city that is filled with parks, bike paths and hiking trails minutes from the city. If you are just looking for a stroll in the woods we have that here. Now its the middle of winter here and it was -40 Celsius with the wind chill. Yes, we don’t plan to be here in the winter when we are retired.
The flip side is if you are a bit of a couch potato the older you get the faster you will start falling apart, so it will be important to ensure that you are doing something. I’m not exercising guru, but being active is simply better for your health. Being healthier means enjoying your time retired more.
4) What Do You Want to Do When You Retire?
When asking when should I retire? I think its really important to figure out what you want to do.
Make a plan do you want to do, it really means considering all the other items we’ve discussed here. When to retire means thinking about the amount of time we will have in retirement, our health in terms of if how long we’ll be healthy to do the things we want to do and how long we’ll be able to do those things.
My grandfather played golf into his 80s so hopefully, those genes are in my blood.
Another really important thing to consider is does your partner want to do the same things as you?
My wife is more of a beach person and I’m a little adventurous. She’s an introvert and I’m an extrovert so I suspect that as we get older our views on what retirement goals are will be somewhat different. That’s ok, you just need to be aware so can plan your retirement accordingly.
You’ll need to start having those conversations now so that you can adjust accordingly.
As an example, my wife has zero interest in going to Ireland and Scotland. It was really important to me to visit as most of my family is from either Ireland or Scotland. My wife and I decided that I’m going to visit both this summer with some friends to celebrate our 50th birthdays. She’s super cool with this, as she has no interest, but knows its important to me, its just a way to avoid conflict later down the road.
I always want to remind people that you could live another 40+ years after you retire… that’s a long freaking time. for some a second life, a new chapter, time to do what you want and not do it for “the man”
5) Should I Keep Working When I’m retired?
It may sound strange but some folks get into retirement and realize very quickly that they miss work. Remember work gives you a social network, goals, structure and a paycheck.
Some people ease into retirement by simply working less, if you can do it great. Remember you will have worked for 30-40 years, with that you have great experience and wisdom when it comes to your specific expertise. The younger generation needs to learn, who better than to learn from someone who has the life/work experiences that you have. You have a lot to offer to an organization.
For some, perhaps it’s a complete 180 and changing the type of work that you did.
I’ve worked in government for nearly 22 years now. I’d love to try something different, I’ve always been an entrepreneur at heart and would love to start building little businesses now so that I can continue them into retirement.
This blog is part of that plan.
Either way, whether you want to be a Walmart greeter or continue working in our current field of work well past your retirement date, you will need to ensure that you have a plan for when you should retire.
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My review of their Launch your Blog Course is here.
All the resources I recommend can be found on the Resources Page. I wouldn’t recommend them if I didn’t use them myself.
If you have any questions don’t hesitate to drop me a line at theteam@wickedretirement.com