Thursday, April 23, 2015

When will you know you are ready for retirement?

I retired at 60, I should not have, it took me another 7 years to realize that I did not want to work any more. When I was working, I loved every minute of the 40 years I worked so it was hard to retire. 

When I retired for the first time I realized I had made a mistake, and because there was a shortage of specialists in my field I was hired back to work within a few days of leaving. Not everyone is as fortunate.

So for the next few years I played at being retired, quit work  a couple of times and again was asked to come back, which I did, but last year I finally made the decision to retire at the age of 67. 

So should your retire at age 60 or age 65 or later or earlier?  The answer depends on where you find yourself financially, emotionally, and heath-wise come age 65 or so.

When we're young, we traded time for money and hoped to stash away enough money to later have the ability to reverse the process and trade money for time. Ideally, we'd each have a few decades of independence before the grim reaper—or assisted living facility—comes knocking.

Statistics published on the Social Security website note that: "A man reaching age 65 today can expect to live, on average, until age 84. A woman turning age 65 today can expect to live, on average, until age 86."

Should you retire at age 65? What's so magic about age 65 anyway? Nothing! It was the retirement age the government used when setting up Social Security in the 1930's. Since then Social Security's full retirement age has moved to 68 in the US and 67 in Canada  to compensate  for increasing life expectancies. Should Washington or Ottawa get serious about fixing Social Security, the age is likely to be pushed back further.

Keep age in perspective. It's only one barometer; there other factors much more important for deciding if and when to retire. Poor health may make the decision for you. But if you're healthy, the most important factor is whether you have enough acorns stashed away to support yourself and your spouse for the rest of your lives. When you run the numbers—there are countless financial calculators available for doing just that—be optimistic and assume you'll live long past age 84 or 86.

If you do have enough to make it and you enjoy your job, consider working a few extra years. That extra money is icing on the cake. Think of it this way: if you're lucky enough to be healthy and vital at age 95, you don't want to find yourself wishing for a bout of pneumonia because you've run out of money.

Once you've jumped over the financial hurdle, it doesn't mean you have to or even ought to retire. Quite the contrary! Now you're ready to do work or projects that fit your terms. If you love your job, are having fun, and see nothing else you'd rather do, just keep on enjoying it.

When I discuss retirement with friends who are working some of them makes it clear that boredom is the biggest enemy of retirees. They loves the challenge of working and feels it keeps them going.

Here are some questions to ask yourself:
  • Is there anything else I would rather be doing?
  • Do I enjoy the environment I'm working in?
  • Am I accomplishing something other than just earning a paycheck?
  • Do I enjoy the people I work with, or am I just putting up with them?
  • Do I feel I am missing something?
  • Is my spouse on board, or does he/she feel my working is prohibiting us from doing too many other things?
  • Do I have other hobbies I enjoy that I could turn into a part-time business I would enjoy?
  • Do we currently live where we want to live?
  • Am I just tired of the rat race and want a change?
When I was in my late 50's, I asked a friend how you know when you're ready to retire. He grinned and simply said, "You'll know." He was right.

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