Signs You’re Ready to Retire: Key Indicators

Full retirement age is 67 for Social Security benefits, but many American workers don’t wait that long. The average retirement age is just 64.6 for men and 62.6 for women, according to the Center for Retirement Research at Boston College. But how do you know when you’re ready?

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Here are signs that signal you are … or aren’t … ready to retire.

You’ve Paid Off Your Debt

Debt payments rob you of a disproportionate amount of retirement income because of the interest you pay on the principal. Experts say that mortgage debt is OK to carry into retirement if you must, but paying off credit cards and other types of loans frees up money you can save, invest or use toward retirement expenses.

You Have an Emergency Fund

An emergency fund is vital for two reasons. For one, it lets you pay large, unexpected expenses out of pocket rather than use credit or dip into your retirement savings. You can also use it for regular expenses during market downturns, which gives your portfolio time to recover. In a July interview with AARP, Kristen Beckstead, CFP and vice president at First Horizon Advisors in Nashville, Tennessee, recommended that retirees have 18 to 24 months’ of essential expenses squirreled away. If your emergency fund falls significantly short of that, you might not be ready to retire.

You Have a Retirement Plan

A retirement plan gives you strategies for building and managing your nest egg, and for withdrawing and budgeting your retirement income to cover your expenses in retirement. It’s a good idea to hold off on retiring until you have one. Otherwise, you risk leaving your financial security to chance. A Certified Financial Planner (CFP) can devise a plan for you and help you gauge your readiness for retirement. Free online tools, like this one from the U.S. Department of Labor, walk you through creating a plan on your own.

Work Has Become Burdensome

A clear sign that you’re emotionally ready for change is feeling drained from work that used to energize you — or resentful of the time work takes from other activities. Those activities might include work, but on a limited basis, and perhaps in a different capacity than you’re working now.

You Have Ways To Add Purpose and Structure To Your Days

The idea of having nothing to do might seem appealing when you’re used to juggling a full-time job and personal obligations. But eliminating the job creates a big, empty space some retirees struggle to fill. If you’ve got a clear sense of how you’ll spend your days, you’re probably emotionally prepared for retirement. Otherwise, consider using a week or two of vacation time to give retirement a trial run.

You Have Social Support

Social interaction protects against a range of mental health issues as well as premature death, dementia, heart disease and stroke, according to Mayo Clinic. But leaving the workforce pulls you away from a major source of socialization.

You’re not necessarily out of the woods if you’re married and/or have friends you socialize with outside of work. The unfortunate reality is that death, divorce and relocation end relationships, leaving some retirees without social support. True readiness for retirement means being out in the world, trying new things and making new connections so that your world gets bigger, not smaller, after you leave the workforce.

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