How Do I Know When I Can Retire?

Jun 20, 2013 3:20:43 PM / by Jason Shaw

know when to retire

Thinking about retiring?  Careful planning is essential to living comfortably after leaving your career.  These are the key factors you will need to consider when deciding when you can retire with confidence and security.

What assets do I have available for retirement?

Take stock of any IRAs, 401(k)s, personal savings, and other assets you are willing to liquidate.  It is important to get the advice of a professional financial advisor when determining when and how to liquidate assets, as the labyrinth of taxes, fees, and penalties associated with these choices can be very difficult to navigate.  An expert can help you get the most out of the assets you have.

What debts, liabilities, and other demands on my cash flow can I anticipate?

  • Account for your major debts:  mortgages, car payments, credit cards, and any other loans you have outstanding.  Budget for these items for as long as you will need to pay them off.
  • How will you address your healthcare needs?  Will you use Medicare, private insurance, or a combination of the two?  Will you have dental coverage?  Budget for both premiums and likely out-of-pocket costs.
  • Will you be supporting any dependents?  Consider the cost of providing for children, grandchildren, or others who may depend on you during your retirement.  Will you be helping to pay for a college education?  Look at what you have saved for that purpose and how much of your budget you will need to allocate in addition to that amount.

What sources of cash already exist for my retirement?

Do you have a pension or annuity?  How much can you expect to receive in Social Security income?  If you are not sure, the Social Security Administration offers an easy-to-use calculator on its website:  Remember that these benefits are taxable above a certain income level.

Will my income and assets cover my projected expenses?

If not, consider how you can make up the difference.  You may decide to put off retirement while you continue to build your nest egg.  Another option is to partially retire and work part-time to increase your cash flow.  Smart investment choices can also provide supplemental income.  Consult a professional for advice on sound investing.  On the other hand, it is also helpful to think about how you can simplify your life to reduce future demands on your finances.

Will I be able to meet unexpected expenses?

A good retirement plan needs to include sufficient flexibility to allow for the unexpected.  Think about these unexpected costs that some retirees encounter and how you might accommodate them:

  • Home repairs
  • Increased retirement period due to increased life span
  • Health issues
  • Long-term care needs
  • Adult children with financial difficulties
  • Inflation
  • Changes in tax code and entitlement programs
  • Taxes on Social Security benefits and nest egg withdrawals

Is my plan sound?

As with any plan, garbage in equals garbage out.  Consult a professional financial advisor to make sure you have a sound, workable plan.  After carefully considering all of the above questions, get expert advice to maximize the income and assets that you have and to make them last as long as possible so that you can enjoy a secure and worry-free retirement.  Contact the experts in our Des Moines office for professional retirement planning services and advice.

Tax and accounting services provided through Boelman Shaw & Company, LLC. Advisory services provided through BSC Capital Partners, LLC a state of Iowa registered investment advisor.

Topics: Retirement

Written by Jason Shaw