For some people, it can be hard to quit the workforce and go into retirement. They may be afraid of many unknown factors, uncertain of whether they have sufficient savings to live comfortably. Fortunately, there are ways to analyze and assess your readiness for retirement.
1. Your financial plan is concrete
You can opt for a financial planner to review your retirement plan if you want to be certain. You should select a fiduciary for this who is legally obligated to act in your best interests. They can help you navigate and maximize the benefits of Medicare and Social Security and help you determine a long-term plan with a sustainable rate of spending. They can also analyze how your plan would function through stressful economic situations with sophisticated programs to ensure that it will keep you comfortable in sunshine or rain.
2. Your savings are sufficient
The rule for retirement is that you should have 25x your annual expenses in savings, assuming a 4% annual return. You should thoroughly examine all facets of what your living expenses might look like in retirement and operate on a rule of caution. Assuming that your estimate is correct and you withdraw 4% of your savings each year, an annual return rate of 4% will allow you to live off of these savings in perpetuity.
3. Your savings are fully accessible
You should ensure that when you retire that you are eligible for penalty-free withdrawal from your savings plans. If you retire too early, you could lose significant chunks of your retirement savings to these penalties.
4. You have a personal plan for retirement
An issue often faced by new retirees is knowing what to do with the plethora of free time suddenly available to them. By making a personal plan that maintains structure and a sense of purpose in your life, you’ll not only get by in retirement but enjoy it to the fullest. You can consider trying new things like hobbies, spending time with family, volunteering, and social activities.
Once you’ve explored and answered these questions, you’re a lot closer to being primed for retirement. And while retirement and readiness may look different for everyone, it is worthwhile to ask yourself these questions and begin to read the signs in your own life.