January 15, 2017 — Not everybody wants to retire, even if that is the popular expectation. Many more people, even though they are old enough, aren’t ready to retire yet. This article will help you determine if retirement is right for you, and if this is a good time to do it.
Retirement is a big step and one that is hard to reverse. Our previous surveys at Topretirements indicate that there are a significant number of people who feel they retired too early. We urge you to be sure you are ready before you take the plunge. To help you with your decision we have prepared this quiz. Keep track of how many Yes and No answers you have and at the end we will provide you with an informal, non-scientific score.
1. Do you wake up in the morning wishing you didn’t have to go to work? __YES ___NO
A No answer is usually a pretty indication you might not be ready to retire. But that doesn’t necessarily mean there isn’t another job or line of work you might enjoy. And if you love what you do, why would you want to stop?
2. Has your spouse or significant other retired? __YES ___NO __NA
If your spouse is enjoying retirement that might be a good reason to think about retiring yourself. That way you would be free to enjoy trips and activities together, and potentially move to a new location. If you are single, this and the next question might not apply. However if you have close family and friends they might have some application to your situation.
3. Is your spouse/significant other encouraging you to retire? __YES ___NO __NA
If he or she seems against you retiring now, pay attention to what those concerns are. She might just realize something you don’t.
4. Have you developed some strong interests, hobbies, or friendships outside of work? __YES ___NO
Our suggestion: Get started now with some hobbies or interests. You will be happier if you have some ideas and experience with how to stay busy, before you cut the cord. Some people don’t function well without a job to give their lives structure – these folks should consider working longer.
5. Have you completed a detailed budget of your post-retirement income and expenses? __YES ___NO
If you said no – stop right there! Nobody is ready for retirement who hasn’t done a thorough analysis of their retirement finances. If the expense side outweighs the revenue side, retiring before you sort that out could be a disaster.
6. If your post-retirement income (including pension, social security, IRA withdrawals, part time work, retirement savings, and investment income) is less your anticipated expenses, do you have a plan for how to make up the difference?
This is the biggie, because if you don’t have enough money to live comfortably, it will be hard to be happy. Our survey respondents indicate that having enough money is very important to a successful retirement. Most people can live on a bit less after they stop working, but most of your big expenses will continue. Medical expenses are likely to be higher than they were during your working days.
It is fairly easy to calculate how much your social security and pension will generate (see For Further References below), but figuring out what your investments will provide is more complex. If it looks like you won’t have enough money, your options included working longer, delaying Social Security, saving more, or finding a way to cut expenses.
7. Can you live without collecting Social Security until at least age 66? __YES ___NO
This question has to do with maximizing your social security benefit. If you have an average life expectancy and take your SS benefit before age 66 you are definitely giving up a significant benefit for you and your surviving spouse. Better yet, for each year you delay claiming between age 66 and 70, your benefit will increase 8%, plus COLA. So if you can delay claiming, either by working longer or by using other savings to live on, you will normally be much better off.
8. Are you not yet 65, will you have company paid health insurance after you retire? __YES ___NO
Many people severely underestimate how much it costs to provide their own health insurance until 65 years of age and Medicare kicks in. A husband and wife can easily pay over $1,000/month in premiums, plus have a $5,000-$10,000 deductible. Expensive drugs and dental care can add onto that. So there is big incentive to wait until you are 65 and are eligible for Medicare. This is an even bigger risk since it appears Obamacare will be repealed. No one really knows what will happen then, but it is likely we will return to risk-based premiums without subsidies, making it very expensive for people over 50 to get health insurance.
9. Have you made any scouting trips or seriously discussed where you might live once you retire? __YES ___NO
It is not essential that you know where you are going to live once you retire, but it does help to have thought about it. Even better is to have made some scouting trips to potential retirement locations. And if you decide to stay right where you are now, make that a conscious decision rather than something that just happened.
10. Do you have solid plans on what you will do every day to stay busy once you retire? __YES ___NO
Retiring without a plan for how you will stay busy in retirement is usually dangerous. Your plan has to be more than “we will travel a bit” or I” will get busy cleaning up the garage and basement”. Having a purpose is a good way to stay happy.
We will be the first to admit this is a non-scientific quiz. But we feel you should examine your answers carefully – retirement is a big deal and a second chance on life. So here’s what we think:
All Yes answers – Congrats, you are ready to retire. Good luck!
1- 2 No answers – You will probably be OK , but think twice about what your No answers were. Obviously, some questions are more important than others. But, if you answered No to questions 5 and 6 (post-retirement income), those answers alone are a good reason to stay working. If you don’t have enough money your chances of a successful retirement are severely impaired.
3-4 No answers – We strongly suggest you consider postponing retirement until you have had a chance to work on your outstanding issues.
5 or more No’s – Retire at your own risk!
We hope that you find this quiz useful in your retirement preparations. Please add your suggestions and reactions in the Comments section below!
For further reference:
Topretirements Survey Results: Less Than Half Expect to Maintain Pre-retirement Lifestyle
Which of These Fantasies Could Wreck Your Retirement
Social Security’s Retirement Benefit Estimator
A Roundup of All Topretirements Member Surveys