The Four Factors Behind Every Retirement Decision
Some people are incredibly decisive. Faced with a choice, they go with their gut. There’s no hesitation and no looking back.
Give others options and they freeze or feel overwhelmed–sometimes even when the stakes aren’t that significant. They waffle back and forth for days (or weeks . . . or even months).
Most people are somewhere between the extremes. They make certain decisions without even blinking. In other situations they seem to struggle and wrestle with what choice is best.
One of the hardest retirement decisions to make
For a lot of folks, one of the hardest decision in life is also one of the biggest: the decision about when to retire. “Am I ready? Is it time? Can I do this? Should I do this?”
Over the last 15 years, we have found there are usually one of four factors that can lead to the right choice.
1. Your Circumstances.
Some people aren’t necessarily itching to retire, but they find life events are pushing them toward retirement.
Your company is downsizing. Or you’ve got aging parents who are sick and in need of extra care. Or you are battling health issues yourself. Or maybe you have an adult child who’s single and needs help with childcare while he or she works.
The beauty of having a retirement plan in place is that it can keep you from being blindsided by suddenly changing circumstances.
Here’s a tip we share with all our clients (to help them prepare for a sudden change in circumstances): Go ahead and develop a retirement budget today and start living by it.
See if you can actually afford to live on your anticipated retirement income. That way, if circumstances do make it necessary to retire, you’ll have the confidence you can do it.
2. Your Emotions.
Retirement isn’t just about being financially ready. It’s also about being ready emotionally.
As with all of life’s big events–graduating from college, getting married, starting a business, having a baby, suffering a loss–walking away from a career brings an assortment of feelings.
There’s usually excitement about a new chapter. Anticipation of all that could be. But for some there are also feelings of sadness. They know they’ll miss certain colleagues or the work itself.
For these people, retirement can feel like a kind of grief. This explains why some people who can actually afford to retire choose to keep working.
For most, retirement brings all the normal emotions of adjusting to a new schedule and a new life. It can be confusing. All the routines you used to have are gone. Now you’ve got to create new ones.
It can take time to figure out new rhythms in your life. In short, retirement can be an emotional season in life. In deciding whether it’s time, you have to listen to your heart.
3. The Information You Have Available.
Answering the “retire, or not?” question is a bit more involved (and important) than figuring out if you want salad with your dinner.
You certainly don’t want to walk blindly into a choice of this magnitude. You want to be informed. You want to have all the necessary facts so that you can make a wise decision.
That means you need a financial advisor who’s knowledgable about pensions, tax laws, and how Social Security works.
You need more than a stock broker or your Uncle Bob who used to be an accountant. You need an expert who can answer all your questions and show you how to turn all those retirement assets you’ve been accumulating over the years into regular, adequate retirement income.
4. Your Own Financial Readiness.
This is typically the biggest factor. If you’re itching to see your office building in your rear view mirror for the final time–but you just don’t yet have the resources to retire, there’s really no decision to make.
You’ve got to keep working. And the wisest thing you can do in the mean time is to try to get financially ready. Being emotionally eager isn’t enough. “Is this even feasible?” is the question that must always precede “Am I wanting to do this?”
The decision about retirement is eventful, but that doesn’t mean it has to be stressful. At Christy Capital, we help clients think through retirement pros and cons every single day.
We talked recently to one of our retiree couples. They love to travel. In fact, during their first year of retirement, they took 14 trips! Can you believe he told me that this coming year, they’re planning on going somewhere every other week!?
He told me their decision to retire when they did was exactly right. Sure sounds like it!
I guess now their biggest decision most days is “Where are we traveling to next?”