The itch to retire comes to everyone at a different time in their life – but how do you really know when it is the *right* time? Retirement readiness is more than checking things off a list, here are a few things to consider:
Part Time Work – For some, the initial bliss of retiring quickly fades. For others, the need to have an income, however modest it may be, is still present. Whatever the reason may be, consider whether the next phase in your life includes part-time work.
Health Care – It is startling to report that less than 50% of the population retires at the time they planned. Make sure that whether you choose to retire or not, your health is prioritised such that your future plans ensure more positive than negative impacts on your physical and mental health.
Retirement Budget – For most of us, the budget we live on whilst working will not be the same as when we are retired. Create a more restrictive budget for the following six months and test out how financially sound this plan is for you.
Bandwagon Mentality – It can be all too easy to fall into a mindset that you are ready to retire, simply because you are of a certain age or because all your co-workers and friends are retiring. Sit down and ask yourself why you feel the way you do and what is more important to you right now. Do what is right for yourself, and not what everyone else is doing.
Dependents – We live in an economy where it is common for many parents to still be financially stabilising their children or other dependents. If you are in this position, create a plan that either allows you to continue to help your dependents once you are retired or slowly cut back how much you are assisting your dependents through a transitional phase.
Assets – If your home is paid off, you luckily have no worries about paying for accommodation on a month-to-month basis. Rather, it might become a worry to pay maintenance, taxes, or repair fees for a property that you could easily carry while working. Consider whether it is financially worth keeping the property or renting out part of the property, or even downsizing altogether to live off the proceeds.
Strength of Your Portfolio – The younger you are, the more likely you can withstand risks in a market downturn. When you are older, it becomes more difficult to withstand long periods of financial loss on your return to investment. Diversify your portfolio and invest as many tax-deferred or tax-free investments as you can.
While this guide can lead you down the correct direction in knowing whether you are ready to retire, ultimately only you can arrive to this conclusion.