How do you know if you are actually ready to retire

Should you quit your never-ending job, and make a decision to retire early?

What else do I need to have, in order to consider my retirement seriously?

These are just a few, but very common questions popping up in the minds of most young and middle-aged working person.

The thought of early retirement instantly lets us eschew all the work-related worries. Being free of such anxieties may be a big relief for us; however, at the same time we should also give up the thought of the additional money that we could have earned to enjoy a wealthier retirement.

Considering this, does the retirement decision become even more difficult now?

Let us here discuss the six indications that will help you decide if you are capable enough to retire, or should you continue working.

1. Are all your debts cleared?

Everyone dreams of a relaxing and a comfortable life post retirement. It shouldn't be such that you are still surrounded by worries of making any kinds of huge payments. Therefore, rather than retiring along with a burden of any heavy dues, you must actually plan your retirement such that it is free of any kind of loans, big credit card balances to clear, mortgages or debts.

Only, in the latter case will one be able to relish their life post retirement with their lifetime savings and the retirement income. Apart from all the recreation, you can also use the retirement wealth to add in to your savings for an emergency. Doing this will be a lot more beneficial, rather than being entangled up with the payment of pending dues.

2. If your savings have outshined your retirement goal:

Having a retirement goal has always been an essential self-motivation factor to push yourself beyond your limits. And, when your investments and savings surpass your target, then you have another positive clue to think over an early retirement.

At the same time, you should also remember that in order to retire much before than you had actually planned, you must have enough savings to take into account these additional retirement years.

In a case, when you don't have a savings plan going well with your early retirement plan, then you need to do a rework. This should include recalculating your savings for the additional years. Also, check the eligible age for your pension schemes and retirement plans to ensure that your savings also cover its expenses, until the time you reach the qualifying age.

3. Is your healthcare covered?

Healthcare costs are skyrocketing with every passing day. Therefore, those retiring earlier than their Health Plan's eligible age must also have a plan ready to cover their health costs post retirement till they become eligible to avail the plan benefits. Here, if you have coverage via your spouse's plan or you’re past employer, then an early retirement could be a possibility. Another alternative for realizing your early retirement is to look for a private health insurance scheme.

4. Have you already started practicing the retirement income budget?

It is a fact that post retirement, retirees have a lower monthly incomes (that may be fixed from their pension, or a retirement plan) compared to the same while working. For those who have already started implementing their retirement income budget, are actually moving a step closer to achieving their goal of an early retirement.

For those who have not started with this practice, should start living on a fixed as well as reduced income early. This will give you an actual sense of the difficulties that you might be facing, as well as save you from getting a sudden shock.

5. If your retirement plan is exclusive of any early withdrawal fine:

Needless penalties are a complete no-no. This is even true for people opting for retirement early and landing up with a fixed income. Therefore, if you are also contemplating upon retiring early then thoroughly look for plans than include a withdrawal option that is free of any kind of worthless penalties. Only then, it will be favorable for you to permanently pull out from your work.

6. Do you have a new retirement plan?

For those retiring early must ensure that they are not quitting their everyday routine schedule just to spend long days with nothing much productive to do. This early retirement can also result into your increased expenses with unnecessary shopping, having meals outside, etc. carried out just to pass the time.

Will such a retirement actually be considered as happy? Not sure really.

Rather, plan for a part-time employment post retirement and at the same time enjoy a hobby or travel. One can even plan their daily tasks in order to ease into an early retirement.

Consider for example, replacing your official meetings with volunteering tasks or weekly outings, or something as simple as a daily walk or gym. Moreover, you can plan a trip that has been due for long, or can even join some classes to learn some new activities.
If such kind of activities can happily pass your time, then you can very well think about retiring early. However, if the same activities bore you so soon, then your early retirement can be on pins and needles.

These were just a few signs that will help you with a prediction for a healthy early retirement. Or, if you are still unsure of making this crucial decision, you can always speak with, and seek consultation from your professional financial planner. 

The author is Ramalingam.K an MBA (Finance) and certified financial planner. He is the Director & Chief Financial Planner of holistic investment planners  (www.holisticinvestment.in) a firm that offers Financial Planning and Wealth Management. He Can be reached at  ramalingam@holisticinvestment.in