While your financial situation plays a key role in deciding when you should retire, it is far from the only factor that you need to consider. There are many other practical aspects that should be taken into account before making a decision. While these will vary based on your individual requirements, here are a few general pointers to keep in mind.
Are you ready to give up working?
Take time to think about why you are retiring. For example, having a large enough nest egg to live comfortably is not a reason to retire if your work is what gives your life meaning. Maybe your job is what keeps you going each morning, whether it’s from being involved in the company you have spent a lifetime building, continuing to engage with your colleagues or nurturing younger talent to take your place. Also think about whether you are ready to immediately retire. For some people, gradually easing into retirement by switching to a part-time role or taking on casual employment helps make this transition smoother.
Have a realistic plan
While it is easy to get carried away by that vacation you’ve been dreaming of taking or that boat house you’ve been wanting to buy – it is important to remember that a happy retirement depends on a practical and well thought-through plan. How will you live meaningfully after retirement? This will vary based on individual preferences but may include things like spending more time with your spouse, getting to know your grandkids better, finally pursuing lifelong passions or even giving back to the community.
How will it improve the quality of life?
Another good yardstick when contemplating retirement is the impact it will have on other aspects of your life. For example, will retiring lead to less stress and more time for physical activity, in turn improving your health in the long-term? Will it improve relationships with family, and friendships with other retired friends? Keep in mind that a happy retirement often depends on good health and strong social ties – letting you do all the things you have wanted to, while maintaining healthy relationships with those you love. If retiring now will improve these aspects of life over the long-term, maybe it is time to start enjoying your golden years.
Money isn’t everything – but it is important
While money shouldn’t be your only factor when considering retirement, it is important. Building an adequate nest egg makes all the options mentioned above accessible, while also giving you independence over the decisions that you want to make. As with everything else mentioned, you also need to be practical with your retirement funds and how you will be spending it. Typically, this will be U-shaped. For example, it is likely that your expenses will be high as soon as you retire as you finally splurge on that dream holiday or buy your boat house. Following this, your spending will likely reduce in the middle years before gradually increasing again as your health-related expenses rise in your later years. If you are unsure of how to handle your finances in retirement, seeking professional help is a good idea as a planner can guide you on the best way forward.
Contemplating retirement is no easy task – but taking a practical approach and thinking about how you want to spend your golden years will go a long way in helping you live a happy and fulfilling retirement!