7 surefire signs you’re ready to retire in the US — how many milestones have you hit so far?
Many people nearing retirement age agonize over whether they have the financial resources to make their post-work years happy ones.
Figures from the latest Nationwide Peak Retirement Survey Insights Report shed light on that anxious feeling among their retired peers. Almost a third (32%) report not being financially comfortable; they also carry an average of more than $70,000 in debt, with more than half of that (53%) on credit cards.
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That doesn’t mean, though, that upcoming members of the Retirees Club aren’t ready to take the next step: In fact, they might be in fine shape without realizing it. Here are seven signs that you’re set for retirement, with enough saved, invested and set aside to make things work.
You've conquered your debt
Digging yourself out of debt can feel like a never-ending task.
But if you're not laboring under $70,000 credit card balances at 20% interest or more, and that mortgage is a distant memory, you're saving thousands of dollars a month. Just the minimum payment on a $20,000 credit card balance at 20% runs more than $500 a month.
Think of all the fancy coconut umbrella drinks you could buy with that much money. (We did: At $8 a pop, it’s more than 60.)
You’ve budgeted your retirement
On a basic level, calculate your expenses for food, utilities, travel, rent or mortgage on the outflow side (along with other essentials) versus savings, retirement accounts and the money you anticipate collecting from Social Security on the inflow side.
When in doubt (even a little bit) consult a financial adviser to get granular on your numbers and pinpoint factors you may have missed such as taxes on IRA withdrawals.
Your portfolio is in tip-top shape
Here’s another big advantage of visiting a financial professional: They can give your portfolio a quick tune-up.
Did some of those risky investments from a decade ago pay off? It may be time to convert some or all of that profit into more conservative vehicles such as bonds.
Still tempted to time the market or invest in that sexy-looking, overhyped IPO? An experienced adviser can keep you on track by showing you real numbers that reflect your true preparedness.
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You’re ready to downsize and sell your home
Housing is one of the biggest drains on retirees’ budgets.
Suppose you’ve built up six figures worth of equity in that large home that used to house lots of family. In that case, you’re in an ideal position to sell and pocket some of that equity (without necessarily relocating to a faraway place).
How long will the proceeds last? By a rough measure, expect to spend 55%–80% of your current income annually in retirement, according to Fidelity.
You’ve adjusted your expectations for inflation
While it’s nice to daydream about a return to near-zero inflation rates, that amounts to an unsafe bet — emphasis on bet. As it turns out, the current rate of roughly 3% makes for a wise number to use.
Why? Because 3% also happens to be the average annual rise in prices when factored all the way back to 1914, according to Trading Economics.
You’re no longer caring for kids or family
The higher-ed tuition years in particular can be tough for parents nearing retirement; the average cost of a four-year college is currently $36,436, figures from Education Data Initiative show.
If that obligation is no longer part of the picture, or care for elderly parents has moderated, you may have more money at hand than you realize.
You think about it — a lot
Granted, this is a much more qualitative measure as preparedness goes. But if the numbers check out, your debts are paid and investments are holding steady, your so-called wandering mind may be trying to tell you something.
Even if you enjoy your work, consider a downshift to part-time that allows for travel, passion projects and time with those you love — measures of wealth that will sustain retirement joy in ways your portfolio can’t.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
