I am often asked by my younger clients and those in their mid-career stage (ages 50 - 60) whether or not they should consider retiring early. This is a great question to ask and unfortunately I don't have a straight answer for you. As with most things in life, the answer depends and it is a highly personal decision. In order to help clients assess their readiness for retirement, both financially and psychologically, here are some of the questions I like them to answer. While this list is not exhaustive, nor necessarily in order of importance, it will give you a good place to start on your path to deciding your retirement plans and will hopefully open up new areas for consideration and exploration. At the end of the day, the goal is to help you make the best retirement choices possible, for you, your spouse or partner, your family and your friends.
1) Why do you want to retire? (Is it due to a health situation? or a poor working environment or the wrong job? or a desire or need to change the world?)
2) Have you discussed this idea with your spouse and come to an agreement as to what retirement shall look like for you both?
3) Do you want to stop working at age 50/60, or is this the desire of your spouse?
4) Can you afford your expected lifestyle in retirement for the next 30 years based upon the assets you currently have?
5) Have you defined retirement goals and a well defined plan as to what you want to do in retirement? Can you visualize yourself as retired and living your desired lifestyle?
6) What will you do in retirement to stay active and replace your current job (social network, status, activity, etc.)
7) Do you have hobbies and can you afford them full-time?
8) Have you discussed this plan with your children? (This is very important if you desire to spend time with your grandkids. Your children may have different ideas about how much time together is appropriate and how much access to the grandchildren is available. Better to have the conversation before it becomes an issue. Also, starting this conversation early will help you both set healthy boundaries.)
9) Have you tried out your new lifestyle before leaving the workforce? (I recommend taking some time off, either vacation time or a sabbatical, to live your retirement lifestyle and see if you like it. You may find that what you thought was a great retirement idea really doesn't work for you, or it may be exactly what you expected. In either case you will have good information to help you make an informed decision.)
There is some overlap in the questions above, so feel free to pick and choose those most appropriate for you and your situation. In addition to working through this list, working with a retirement specialist is a great way to get answers to these questions and will likely surface more you haven't thought about. As highlighted above, I highly recommend to my clients that they do a "retirement test run" before actually retiring to see if they like the new life they have chosen. If you have the ability, maybe take a month off from work and see how you like it in line with question 9 above? But first, take some time to think about what retirement really means to you, visualize what you want it to look like and then try it on for size. Good luck as you work your way through this process. Since we are living longer and staying active longer, retirement isn't an easy decision for most of us and we want to give ourselves the best chance for success.