Retirement is one of the most challenging topics for many people. Some people have to forcefully retire because of an illness, job loss, or other reasons. On the other hand, some people even fear thinking about retiring. It is either because they love what they do or aren’t ready to face the unknown.
What’s more difficult is deciding what the right time to retire is. Some people plan out their retirement according to age (usually above 60), while others set a financial goal. However, it is imperative to ensure that you have enough to support yourself and your family before giving up your paycheck. Read the seven signs given below to make your retirement assessment easier.
You have enough financial support
Financial support is the first thing you need to think about before retiring. Ask yourself whether you have enough money saved? And will you be able to live comfortably with that amount? Figuring out finances can be a hassle. You must understand that you cannot live on social security alone. You need to have some extra source of income to ensure you can sufficiently fulfill all your needs.
Consider hiring a financial planner. Financial advisors are highly qualified professionals who can help you set realistic goals, save time, minimize self-bias, and reduce stress. However, no one can tell you a fixed amount you need to retire. Your expenses will also highly rely on where and how you live. For instance, many say that retirement in Australia is pretty costly because prices are skyrocketing compared to other countries. Still, no financial advisor can tell you exactly how much do you need to retire in Australia or any other country for that reason. However, they can give you a pretty close estimate that can help you decide whether you should quit now or later.
You don’t owe anyone anything
Paying debts can become a nightmare without a steady stream of income. So, if you have any unpaid mortgages, loans, credit lines, credit card balances, or any other debt, know that it is not a good time to retire.
Your savings and money post-retirement should only cater to your personal needs and requirements and not pay off your debts. Some finance experts also call retiring with debt a ‘financial sin.’ By paying off debt before retirement, you can reduce the amount of interest paid overtime. You can also enhance your credit score and remove the emotional/mental burden off you. And most importantly, you will be able to focus on your savings solely for retirement purposes. It is always helpful to have a pre-plan and remain organized whenever you plan to retire.
You can cover your healthcare
It is astonishing how costly healthcare has become. It would be almost impossible for an average person to afford primary treatment without external help or some healthcare program. Medicare usually begins at the age of 65 and above. So, if you are planning to retire before that, you must look for ways to cover your healthcare.
If you get healthcare benefits through your spouse’s or a family member’s employment, then that is a sign that you can retire early. Similarly, you can also retire if you have health insurance to conveniently pay out of your savings. Several private health insurance schemes offer tax-free distributions to provide pocket-friendly medical plans.
You have a plan for emergencies
Emergencies can strike at any time. As much as we don’t like thinking about something wrong, we must always remain prepared.
An emergency fund is crucial because it will help you deal with unanticipated circumstances in the best way possible. You might need a sudden car repair, home repair, or pay major dental expenses. Sometimes people need to travel or pay a bigger-than-expected tax bill unexpectedly. There could be several other reasons, and therefore, you must have a plan to cope with emergencies. Planning such scenarios will help avoid panicking and stressing out later if anything happens.
You have a social life
Having friends or family or both is highly essential when you retire. Even if you want to spend your retirement years alone, there will come the point when you start feeling lonely and isolated.
Often, people make their job their identity. Their social life lies within office boundaries. If you are also like them, make sure you find a new social circle before quitting. Otherwise, you might feel lonely and alone. Keep in mind that you will no longer get the chance to meet, have lunch, or converse with your colleagues once you retire. If you can live with that fact, then that is a sign that you are ready to retire.
You have a hobby
As mentioned above, retirement isn’t easy for many people, especially workaholics. You must pick a hobby to keep yourself entertained if you consider retiring. Having a hobby will help you feel less stressed about leaving your job and keep you busy.
Some hobbies you can look into are joining a book club, volunteering in your local community festivals, or gardening. You can also look into learning photography, pottery, and woodworking. If you are into sports, you can join some local sports clubs and play for charities.
You know about your tax bills
The last and the most crucial thing to understand before making your retirement decision are your taxes. You must account for taxes and figure out how much savings you will have after tax deductions. If the excess income is sufficient for you to enjoy your past years, nothing should stop you from quitting your job.
Every city and country has a differing set of tax rules for seniors and retired individuals. Some are also more favorable than others, hence, do your research and then choose.
Retirement can be a daunting yet exciting thought. The thrill about not having to work anymore and just sitting back and relaxing is indeed exhilarating. However, the transition from a workaholic individual with a strict routine to a freebie isn’t going to be easy. You must make sure that you are both physically and mentally prepared to retire before you take any step. If you are not, you might affect both your health and peace of mind. Therefore, review the signs mentioned above, think carefully, and decide.
Jason is the Marketing Manager at a local advertising company in Australia. He moved to Australia 10 years back for his passion for advertising. Jason recently joined BFA as a volunteer writer and contributes by sharing his valuable experience and knowledge.
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