Recognize that retiring before full retirement age can reduce your benefits by almost 30 percent. Please help us continue to provide you with our trusted how-to guides and videos for free by whitelisting wikiHow on your ad blocker. This article was co-authored by our trained team of editors and researchers who validated it for accuracy and comprehensiveness. If your savings are in that ballpark, you could be in good financial shape to retire. Your Health Insurance Options in Retirement, 5 Money Steps to Take If You're Forced to Retire Early, The Future Financial Status of the Social Security Program, Is My Test, Item, or Service Covered? Consider new expenses such as nursing homes or assisted living facilities, taxes, or inheritances for your children. Recognize that your social security payments may also decrease if you work part time. You can also make cuts to your anticipated retirement budget. By using our site, you agree to our. Employees are often earning their maximum income at the point of retirement, so the financial implications of retiring too early can be profound. If your spouse will retire at the same time as you. Contact local authorities to get more specific information. You may also need to pay taxes in the new country. wikiHow's. "How Much Care Will You Need?" If your retirement income sources can easily cover this with some funds remaining, you can probably retire with confidence. In addition to the logistical aspects of retirement, you also need to consider the emotional and personal fallout. Using an online retirement worksheet can help you figure out what your monthly expenses may be. Recognize that you may also have unexpected expenses, such as healthcare or other emergencies, that you want to have enough income to cover. Alternative and less expensive dream places: Berlin, Thailand, San Diego. If you are married, you and your spouse will need to decide on financial details such as: In addition to tracking your current expenses, you'll need to factor in changes that you could reasonably anticipate after retirement. Many people assume they can, and should retire when they have the financial resources to replace their paycheck or can maintain a certain type of lifestyle. If you need to generate some income or would prefer to continue with some employment to keep busy, talk to your boss about reducing your hours at work. What would you like to do during retirement? If you an in excellent health and your family members live longer, continue to work. If you want to make sure you are prepared for retirement, consider doing a trial run while taking some time off from work: Many retirees also start with a "soft" retirement, in which they scale back from full-time work but don't leave the workforce entirely. For example, moving to a peaceful and remote farm or another country may make it more difficult to see you loved ones often. Along the same lines, we are all aware that people are living longer, but that doesn’t always mean those extra years are healthy ones. There are exceptions in unusual circumstances where an employer has been granted an Employer Justified Retirement Age (EJRA). For example, you would no longer be spending on work clothes or commuting costs, but you might spend more on: Consult a financial planner for insight into whether you have the money you'll need to retire. One researcher found that when a person is working they can have up to 22 high-quality interactions with other people every day. Consider how close you want to be to your children, grandchildren or other family members. People often don’t think about the social aspects of retirement but the changes that it can create can be difficult to overcome without some planning in place. While those in an insecure situation experienced earlier memory decline. I’m a social worker turned financial planner who uses both skill sets to help folks prepare for the mental, social, and physical, as well as the financial aspects of retirement. Be aware of scams that target retired persons. The study concludes that people who are more socially connected, to family, friends, and community are happier, physically healthier, and they live longer, Researchers also found that strong relationships aren’t only good for one’s health. Consider retiring and beginning to take withdrawals from your investments if you are on the cusp of a bull market. Deciding when to retire, isn’t just a financial question. Meet with a member of the human resources staff of your current employer so that you are fully aware of any post-retirement health benefits offered. Retirement is about the alignment of money and values. You may find that a career change is a better choice for you than retiring. By … Take cost of living into consideration. Participants who reported feeling securely attached to another person, meaning they could count on another person in times of need, had their memories stay sharper for longer. Paying off your monthly mortgage can also eliminate a considerable expense and ensure you have more money to retire. It’s one that must address each of the five key areas of retirement: Mental, Social, Physical, Financial, and Spiritual. Retirement should be a comfortable part of any person’s life, but the decision to retire is not as simple as hitting a specific birthday. Use these criteria to select a retirement spot: Think about the cost of living. The actual amount you receive in Social Security benefits may be different from any estimates, depending on when you retire. Retiring too early can have serious financial consequences, especially if you are not yet eligible for Medicare or Social Security. © 2020 Forbes Media LLC. Make sure to calculate your social security benefits with your investments and savings to get a complete picture of how much money you will have every month. This means that your portfolio can likely get through future market downturns. That’s a change many people aren’t prepared for and one that can leave them feeling isolated or out-of-the-loop. Investing in less risky portfolio can ensure that you get enough in returns to fund the retirement you want. High-quality interactions are face-to-face discussions with another person. Opinions expressed by Forbes Contributors are their own. She is a financial journalist with more than 20 years of experience. Last Updated: November 5, 2020 That means having a plan to learn new things, connect with old and new friends, strengthen their marriage and other close relationships, as well as stay active and mobile. As their experiences show, the decision to retire is a personal one that’s as much psychological as financial. When deciding if you should retire, determine the type of lifestyle that you want to live and if you can afford it. While those in an insecure situation experienced earlier memory decline. Consider the other type of climate: the cultural one. If you aren't yet old enough for Medicare, consider your options for health insurance coverage and know the costs. You may also discover that your lack of satisfaction with working has nothing to do with the job itself and more to do with your readiness to stop working entirely. Learn to use Zoom in this beginner-friendly course. You may have also thought of a nice college town or even just staying where you are to enjoy grandchildren. Therefore, a better, two-part question to ask yourself is, “Are you ready for this new phase of life?” and more importantly, “Can you prove it?” The simple change does two things. Would you be happier with a career change rather than retirement? Understanding Your 401(k) Retirement Plan, 7 Most Frequently Asked Retirement Questions, Want to Retire at 55? Medicare.gov. The Social Security Administration can also help you estimate your retirement benefits. What is important is that you plan and prepare for it. Once you're retired, you'll likely want to stay retired. For the majority, therefore, the decision does not need to be made by age alone. But retirement comes with a lot of other factors that need to be taken into consideration if an individual or couples want to make a successful transition. For example, wintry conditions may present a great challenge to you as you age. One study found that about 40% of baby boomer respondents said it was difficult for them to kneel or stoop, stand for two hours, walk one-quarter mile, climb 10 steps without resting, sit for two hours, lift and carry 10 pounds, reach over their heads, push or pull a large object, or grasp small objects.