When you’ve made a billion bucks? Wait not so soon. Considering whether to retire is one of the most difficult career decisions a worker can make. Employees are often earning their maximum income at the point of retirement, so the financial implications can be profound.
Careful planning about the transition from full-time employment to retirement can enhance your chances of making a smooth adjustment. There are many elements to consider before making a final decision.
Don’t confuse an unsatisfying job situation with an imperative to retire. Ask yourself if you would still retire if you were carrying out your job duties in a better work environment.
Employees who are working in a job that is not a good match for their skills, values, and interests are more likely to rush a retirement. Make sure that you wouldn’t be happier with a career change than with retirement. If you have any doubts, consult a career counselor and see if you come up with any inspiring alternatives.
Track your expenses so that you have a realistic handle on how much income you will need to sustain your preferred lifestyle. One commonly cited goal is to have saved enough money so that for each year of your retirement, you’ll have at your disposal 70 percent to 80 percent of the income you earned annually prior to retirement.
Factor in changes that you could reasonably anticipate after retirement. For example, you would no longer be shelling out money for work clothes or commuting costs but you might spend more on vacations, entertainment, and dining out. Consult a financial planner for additional insights into whether you have the money you’ll need to retire. Future budget planning is pretty important.
If you need to generate some income or would prefer to continue with some employment to keep busy, explore the possibility of reducing your hours at your current employer to phase in retirement. Your employer might also consider retaining you in some other, lesser role or as a consultant.
If you’re not yet of the age when you’re eligible for Medicare, consider your options for health insurance coverage and know the costs. Meet with a member of the human resources staff of your current employer so that you are fully aware of any post-retirement benefits offered and the implications for your transition.
You may have decided you’re ready to retire and know what you’d like to do once you’re done working. But is your spouse on the same page? Make sure your retirement goals and expectations are in sync.
Perhaps the best way to prepare for retirement is to do a trial run. Test out some of your planned retirement pursuits while taking some time off. Or you might start to volunteer or do some consulting on the side to explore the viability of those options.
Good luck and happy self chosen retirement!
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