Knowing when to retire is something that is deeply personal. There seems to be two completely different types of people, both on the opposite end of the saving money spectrum.
You have those who are meticulous, who save as much as possible for retirement but more so know exactly what their magic number is. Much like a baseball team knows how many wins it needs to clinch a division, individuals and couples alike know what they need to have for retirement purposes in order to live comfortably and not have to go back to work in the midst of their “golden years.”
This discussion more so is for those who are hot and cold when it comes to retirement, the ones who know they’re paying into something but couldn’t tell you where they’ll be at 60 or 65 years of age, and instead simply are relying on dumb luck or chance to catapult them from working to not, minus of course the knowledge you’ll need or should have so you know retirement really is possible.
How exactly do you know when you’re ready to retire?
First, meet with a financial planner or talk to someone that your company, for example, would provide to you in the way of advice so that you can get to that number you’re so hoping to achieve.
Going into that meeting or phone conversation, think about how much you plan to spend in retirement as well. For example, if you want to travel for the first five or 10 years of retirement, then plan accordingly. Figure how many thousands of dollars it is going to take to make that happen without forgetting about the task at hand: paying your bills. Far too often, retirement is viewed as a means to spend your money you’ve been saving for quite some time, but really it boils down to having a plan and doing with your reserve retirement fund as you see fit, but not in lieu of planning for the future so you don’t outlive your money.
Finally, you still might have some source of income that you can’t overlook when you’re budgeting for retirement. Say you have a freelance or consulting job that won’t interfere with your retirement plans. Perhaps that pension plan is about to kick in, and you’ll be earning a percentage of your final salary, so you can for instance be a little more indulgent in your spending since that pension isn’t going anywhere.
No matter how you look at retirement, you can’t go into it blindly or banking on your money to work for you since you aren’t. Your final job assignment is simple: know when to retire safely so you can sit back and do what you intended to: relax.
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