If you are still part of the workforce, you will probably focus mostly on saving as much money as you can. At some point, however, you might get a bit antsy and wonder, When will I be able to retire?
You’re right to think about that! Whether you love your career, or can’t wait to stop working, setting a target retirement date will help you solidify your plans. You will know how much money you need to save, and you will be able to set a budget for withdrawing and spending your income.
Picture your retirement. When you think about retirement, where do you picture living? What type of things do you want to do? You probably want to stay active, whether through hobbies, volunteer work, travel, or even a second career. The budget you set will be heavily influenced by the lifestyle you expect, so it makes sense to spend some time thinking about that first.
How much will it cost? Now that you have an idea of your expected lifestyle, you can put a price tag on it. If you want to maintain your current standard of living, you probably need to generate about 80 percent of your current income. That’s a very general rule and your final figure could vary somewhat from the average, depending upon your particular goals.
Consider the issue of health care. Unless you need to retire early due to health reasons, in many cases it makes sense to wait until you reach age 65. Now you’re eligible for Medicare, which will save you a lot of money on your medical expenses. If you retire before 65, you will have to find a way to cover the cost of healthcare, so factor that into your plans.
While we’re on the subject of your health, remember to factor your abilities into your plans. You want to work long enough to save money for retirement, but retire soon enough that you can pursue the lifestyle you want!
As you can see, setting a target retirement date can feel a bit like a puzzle. Hopefully the above three questions have pointed you in the right direction. Now, give us a call and we can help you narrow down your options to decide upon the right time to retire.