Are You Ready to Retire? The Answer Goes Beyond Your Portfolio.

One of the most common questions asked by those who have spent many years in the workforce is “Am I ready to retire?”

That answer is almost always yes. Who doesn’t dream about extra time to enjoy hobbies, impromptu road trips, or more time with the grandkids? Most of America’s long-tenured workers would probably say they are ready to retire.

The tougher question – the more important question – is this: Are you prepared to retire?

Preparation is one of the most important factors in any aspect of life and it is, ultimately, preparation that enables retirement.

Knowing your retirement readiness is more than just analyzing your investments and savings. It comes down to analyzing how prepared you are in two disparate facets of your life: your financial readiness and your emotional readiness.

Unless you’re prepared in both areas, you might consider postponing those retirement plans. But there may be a happy medium that still lets you kick-start retirement.

Financial Readiness

When looking at your various investments, you might have an overwhelming collection of assets, including some combination of 401(k), individual retirement accounts (IRAs), a savings account, and, possibly, a pension or retirement fund. Many of those plans send you quarterly and annual updates in lengthy reports that can be difficult to decipher.

Hopefully you’ve made investment choices with the guidance of a financial professional who has helped steer those investments – with advice on both how much you should be contributing to those funds and how to invest that money in plans that match your risk tolerance – so that you know when you’re ready, financially, to move ahead. Risk tolerance is an important concept to understand for any investor.

If you’re not talking to a professional yet, you should seek guidance for a variety of reasons. You may be in great shape and don’t know it, or you might need to hone your strategy with some help.

That expert will help you determine if you’re financially prepared to retire based on the expectations you have for monthly income in the post-work phase of your life. He or she can help you work out a plan to begin your retirement faster.

  • If you’re an empty-nester, you may be able to downsize your house and capitalize on the earned equity in your current home. Americans age 55 or older typically have around $100,000 in home equity, according to a 2019 report from the U.S. Census Bureau. Moving to a smaller home can mean converting a big chunk of that equity to cash.
  • You may want to take part-time work or consulting gigs that will supplement retirement income enough to satisfy your quality-of-life goals.
  • Or maybe you do need to seriously consider delaying retirement.

The main takeaway is that it’s important to get an outside set of eyes to help you see your finances clearly.

Emotional Readiness

As unfathomable as it may be, some people actually end up disliking retirement.

You might be thinking, “Who are these people?” But odds are that you know them, and you may even be one of them. They are people whose work gives them structure and purpose, and without it, they may fear a loss of identity.

“We plan around work. It is part of our identity. We go to a social gathering and people say, ‘What do you do?’” psychologist Louis Primavera and author of “The Retirement Maze: What You Should Know Before and After You Retire” told the AARP. That can cause panic in people who haven’t worked out that answer.

To prepare yourself emotionally may mean creating a plan to spend hours volunteering, or working part-time with your old team or in a new field entirely. It also means having honest conversations with your spouse about those concerns, so you can address them together and without surprises.

The Mixed Bag

Of course, people can fall into very different quadrants of the matrix of retirement readiness.

You might be emotionally ready but not fiscally sound. And if so, now is the time to iron out a financial strategy to bring you home and keep you there for the golden years.

You might be financially set but not have a plan for structure or meeting those emotional needs. It is vital to make sure you have a plan in place so you can feel grounded and celebrate what you worked so hard to enjoy.

Or you might not be ready in either facet. The good news is, by assessing where you are, you’re now in the driver’s seat and can start steering yourself to your goals in earnest. If you’re just now starting to think about retirement, here is a primer on the things you can do to make your goals align, emotionally and fiscally.

Best of all, you may find yourself in great shape all around. You’ve made your retirement budget and have your finances in great shape, and you’ve established a plan for how to spend all that free time you’ll be enjoying. If this is the case, it sounds like you are ready to retire.

Whether you’re ready yet, still have work to do, or are struggling to even determine your readiness, Wickham Financial and Insurance Group has experts who can help. Get in touch with one of our advisors today so that we can ensure that you’re both ready, and prepared, for a great retirement.

 

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