How Do You Know When to Retire? 9 Key Considerations

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Knowing when to retire is more than just about whether you can afford to. You may have the financial-means to retire, but will retirement provide you with the fulfillment and purpose you are looking for?

How do you know when you should retire? What are the signs?

How Do You Know When to Retire?

This article details a framework that can help you decide when the right time to retire is. Each day we provide advice to clients who are in the final stages of their working-life and we regularly use these approaches to help them understand what’s important to them when it comes to retirement.

To help you make a decision around your retirement, I’ve detailed 10 areas of consideration which, by the end, should give you a pretty good idea about when is a good time to retire.

Let’s go!

1. Have You Reached Retirement Age?

First things, first. Have you reached your retirement age?

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Hold up… do you even know what your retirement age is?

Funnily enough, there actually is no specific definition of a retirement age in Australia, but the two most significant ages for most people when it comes to retirement are ages 60 and 67.

Age 60 gives you tax-free access to your super and age 67 is when you become eligible for Centrelink Age Pension payments.

Now, technically, you can retire at any age if you have enough money outside super. But, for 99% of Australians, somewhere between age 60 and 67 will be a target retirement age. So, this gives you a starting point.

What’s your ideal retirement age?

Learn More: What is My Retirement Age?

2. Can You Afford to Retire?

Affordability is also an important factor when it comes to knowing when you can retire.

Having reached your retirement age (above) will help with affordability, because you will either have access to your super, which will obviously help fund retirement tax-effectively or your retirement income needs will be supplemented by the Age Pension – reducing the reliance on your own superannuation and investments.

In its simplest terms, targeting a lower retirement income will let you retire sooner, but will reduce your quality-of-life in retirement; whereas working longer could give you a higher retirement income, but also mean you have fewer retirement years.

What trade-off would you prefer?

Related Article: How Much Super Do I Need to Retire at 60?

3. Are You Excited About Your Retirement?

Are you someone who can’t wait to retire because you have so many things you wish to see and do? Or, are you not quite sure how you would even fill a week if work wasn’t involved?

It’s important to not fall into the trap of feeling as though you need to retire, just because you have reached retirement age. If you’re not overly excited about the prospect of retirement, then maybe continuing to seek fulfillment through work is the right option for you.

How excited are you about retirement? Would reducing down to part-time work be an option?

4. Feeling Burnt Out / Lack Enthusiasm

Are you feeling tired and burnt-out as you wind-down your working life? You might be fed-up with work and ready to retire.

But, have you considered that you might just need a change? Looking for work in another company or even in a different industry – even if it pays less – could be your answer.

Alternatively, we find that simply knowing when you can afford to retire is more important than retiring itself. This is because you are now working on your own terms – because you want to, not because you need to. If you think this could be you, try working through this step-by-step guide: Preparing for Retirement in 7 Steps.

Most clients we work with can afford to retire sooner than they thought.

5. External Fulfillment

Throughout your working life you’ve been valued for the service you offer your employer and your workmates or your clients and your customers. Whether you enjoy the work or not, one thing is certain; you are needed.

Simply being needed can provide a certain level of satisfaction and fulfillment. If you were to retire, do you have other ways of achieving fulfillment through family, friends or volunteering?

Apart from financial reward, have you considered any other benefits your work provides you with?

6. Declining Health

Declining health is an inevitable consequence of aging, which can impact your work or even be accelerated by it.

If you or your loved-ones have noticed your health declining, then it might be a sign that it’s time to retire, especially if work is a contributing factor.

The misguided belief that you can’t afford to retire tops my list of retirement planning mistakes.

Anyone at retirement age can afford to retire, you just need to know how to do it and be comfortable with what retirement will look like if you do. It’s probably better than you think.

7. Family and Friends

If you struggle to find the time for your family and friends because of work commitments, but the years are passing by and you’re missing moments that you know you’ll never get back, then it might be time to retire.

You might have grandchildren reaching milestones, children needing help, or friends in need. You could be just the person they need in their lives, but you’re working instead.

When do you know that it’s time to retire? Well, looking to spend more time with the people you love is usually a good indication.

8. Other Interests

Most of us have other interests outside of work and our retirement years are when we’re supposedly meant to be engaging in such activities. But, leaving retirement too late could mean missing out on these interests, especially if some of them require a fighting-fit body.

Working will always give you more money towards retirement, but at what expense? Are you slowly giving up all the things you’d planned on doing throughout retirement by working too long? If so, it could be another one of the signs that it’s time to retire.

Related Article: How Much is Enough for Retirement? 8 Considerations

9. Emotionally Prepared to Leave the Workplace

Leaving the workplace for the final time can be a stressful and emotional time. It’s the end of an era and you probably haven’t experienced such a shift in life stages since your last day of school or university.

One way that can help you deal with the emotion of finishing a lifetime’s worth of work is transitioning into retirement. These days it is common practice to reduce the days you work in the lead-up to retirement, as you get used to the freedoms it provides.

As a bonus, transitioning into retirement keeps the money rolling in for a little longer and allows you to access your super via a transition to retirement income stream to supplement your needs.

How to Retire Confidently

Deciding when to retire is a personal decision that requires careful consideration of many factors, including your financial position, excitement for retirement, work fulfillment, health, family, interests, and emotional readiness.

Retirement can offer more freedom and time for the things you enjoy, but it also represents a major life transition. You need to weigh up all of these factors to determine if you are truly ready and ensure that your decisions are aligned with your goals and objectives.

You can do this yourself, but if you want complete confidence that you are retiring at the right time, having a retirement advisor prepare a plan for you is a good idea.

This is because a professional can perform an financial analysis and determine when you can afford to retire, based on your retirement goals and objectives.

Additionally, a specialist retirement planning adviser will include a plan for you to transition to retirement, explain what to do between now and retirement, as well as find ways to reduce tax, so that you can achieve a higher retirement income.

Our financial planning firm, Toro Wealth, specialises solely in helping 50 to 70 year-olds optimise their financial position in the lead up to retirement. If you’re interested in learning more about our service and cost, click here.

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Hi, I hope you enjoyed reading this article.

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Thanks for stopping by - Chris