Deciding whether to retire is a big decision and not one to take lightly.
You need to consider all the pros and cons of retiring, as well as your financial situation, before making this important choice. You may be close to retirement age or already retired, but are still wondering whether you picked the right time to retire.
Relax. No matter what your current financial situation may be, there’s no way to know for sure if you picked the right time to retire.
The truth is, you can’t predict what will happen in the future; you don’t know if inflation is going to lower your pension payments, or if medical bills will skyrocket, making it impossible for you to live off your retirement income.
The good news is you can mitigate these risks by making smart decisions early on. So whether you’re 20, 30, or in your late 50s, here’s everything you need to know about choosing the right time to retire.
What is the Best Age to Retire?
Traditionally, most people retire at the age of 60.
However, you may consider retiring at around 58 if you’re in the private sector. Even so, that’s a lot of time to spend in the working class. Sadly, most people realize that by the time they reach the age of 60, they’ve become limited in what they can do.
No matter how healthy you are, when it comes to retiring at the age of 60, you may not be able to enjoy life as you would have if you retired ten years earlier. Because of this, we’re seeing a growing trend in early retirement.
More and more people have become aware of their financial goals and have made it a point to make sure they retire by the age of 40. While this is impressive, it may not be an option for everyone.
And it certainly isn’t the catch-all number for retirement.
To tell you the truth, there’s really no magic number when it comes to determining when you should retire. Instead, you should focus on making stability your goal. The right time to retire would be when you have enough money to relax and enjoy life.
You should also consider (in order of importance) how much you make each month, what kind of lifestyle you want, how long you’ve been working, and how many years you’ll be working once you retire.
Ways to Determine the Right Age to Retire
There are many considerations when it comes to deciding whether you’re ready for retirement. Here are some of our top tips to get you thinking:
Hit the Legal Sealing
Legally , private employers should make sure their employees are set up for retirement by the age of 58. However, if you’re in the public sector, there’s no set-in-stone number.
You should contact your HR department to see what their list includes. If you’re in the private sector and your employer doesn’t have an official retirement age, the best thing to do is leave on good terms.
Think About Your Life’s Purpose
One of the biggest reasons why people retire early is because they’ve decided to follow their “calling” or dreams.
They may decide to travel the world, start a business, or relocate to another city. Whatever their dreams maybe, they’ll need to have enough money to make those dreams a reality.
Consider Your Career Goals
The best time to retire is when your work has led to a career that you enjoy and can provide you with a comfortable income. If you’ve found this career, it means you’ve done your homework.
It also means that you’ll be able to spend your retirement doing something that makes you happy.
However, if you haven’t found this career yet, the right time to retire would be when (you hope) it comes in the future. Whatever the case may be, it’s better to find a career than retire without one.
If you’re having trouble paying your bills or making ends meet, you don’t have to wait until the traditional retirement age. It’s better to retire early and work part-time if that will allow you to pay your bills.
Depending on your current financial situation , retirement may not be a good option for you until later in life. If this is the case, focus on paying off your debts and saving up some money so that once it comes to a time, you’ll be ready for it.
Different Forms of Retirement Income
There are three main forms of retirement income: pensions, annuities, and savings. Below, we break them down for you in more digestible terms.
A pension is a payment made by the government that you can expect to receive after reaching the retirement age. It’s your right to claim this pension when you meet the criteria set by your employer, and can be based on either how many years you worked or how long you were in service.
These are similar to pensions in that they’re both forms of future retirement income. However, there is one crucial difference – annuities are based on the amount of money you have in a pension plan, while pensions are based on how many years worked.
With annuity contracts, you may receive payments either annually or periodically.
The idea behind annual annuities is that they make sense when you want to receive payments once a year after your retirement age. On the other hand, periodical annuities are based on a time frame.
Annuities are also popular among retirees because they provide a steady stream of income. With this in mind, many people choose to invest their savings in annuity contracts.
A savings account or a bank account is a great place to start your retirement savings. The best thing about this type of account is that you can make withdrawals anytime you wish, unlike with an annuity.
Regardless of whether you retire early or not, the right time to retire varies from person to person.
The most important thing is to make sure you’re financially stable. Once you’ve met these two criteria, it’s up to you to figure out when is the right time for you.
Thanks for reading! I hope you found this guide helpful. If you have more questions, please don’t hesitate to reach out!