There’s no magic formula for knowing when you will be ready to retire. Retirement is a major life change and needs to be a financial decision, but also a personal decision. Some people dream about retirement for decades, and others are nervous about what their life might look like after work.
Either way, it is important to think about your timelines and have a plan so that your finances can support you in deciding when you are ready to retire.
What lifestyle do you desire when you retire?
One of the most important questions to consider is what lifestyle you desire once you are ready to retire. This will impact how much you need to save as well as your retirement timeline.
Think about where you would like to live when you retire and what your life will look like. Will you be travelling regularly? Will your holidays be low-key or international bucket list adventures? Do you have any big projects or hobbies that you want to focus on or do you plan to do little as possible?
Once you are clear about what your lifestyle will look like, you will be able to more accurately determine what finances you will need to fund this lifestyle. From there, you can work backwards to understand when you may be ready to retire.
How are your finances shaping up?
Your finances are a key determining factor when considering retirement. We spend our working lives contributing super and creating strategies to set ourselves up for the future. So how do we know what is enough?
When you are considering when you’ll be ready to retire, you need to be clear on your super balance and how it is tracking against what you need.
Do you have additional savings or investments to support the retirement lifestyle you desire? Will you be eligible for the Age Pension? Will you be paying off a mortgage or paying rent in your retirement?
Some people choose to work part-time as part of a transition to retirement plan. This allows for a gradual easing into retirement and means that you would continue to receive superannuation contributions in the meantime.
If you are unclear on how to get your finances in shape for retirement or are interested in a transition to a retirement plan, we recommend speaking with a Financial Planner. A Financial Planner will be able to create a tailored strategy for your unique financial circumstances.
Is your health giving you hints that you are ready to retire?
Everyone ages differently, which is why you should always consider your health when making decisions about retirement.
If you are in great shape and your work doesn’t impact your physical health, you may wish to push out your retirement. If your health is declining, your body may be telling you that it is time to slow down.
If your work is stressful or requires intense physical exertion, you will need to think about steps to improve your wellbeing as you determine your retirement timeline.
Are you emotionally ready to retire?
Your life will change significantly when you retire and it can be an emotional decision for many. If you are fulfilled in your work life and enjoy being busy, it may be challenging to close that chapter. If so, consider what hobbies you can take on to ensure you are still filling your cup and enjoying the benefits of retirement.
Take the time to reflect on how you feel about retirement and whether you are emotionally ready to retire. Think about how you are going to spend your days and ensure you have a support network around you.
Ready to retire?
As you can see, there are many factors that impact when you will be ready to retire. Your finances need to be in order, but it is also important to consider your retirement lifestyle, your health and whether you are emotionally ready.
Mapping out your retirement plan will give you confidence in exactly when you will be ready to retire and what strategies you need to put in place to help you get there. Get in touch with the APS Financial Planning team to learn more.