The right retirement age is different for everyone. Some want to retire as soon as humanly possible, and the FIRE movement has exemplified this. Others enjoy work and can’t imagine retiring soon. The ideal retirement age is different for everybody.
What’s important is knowing when you can retire, and what you’ll do with the free time. Have a plan, and know when you can afford to retire. Once you know that, you can begin the next stage of life when you’re ready.
Have a Plan After You Retire
Many retirees experience a sugar rush of happiness once they retire, but that happiness can fade if you don’t know what you’ll do with all your free time.
The negative effects of retirement can hit you if you don’t know what you’ll do after you retire. You can become bored, lose friendships, and feel like you have less purpose if you don’t have a plan after retirement.
Make sure your plan keeps you physically and mentally active, and put specific goals in place. Do you plan to golf more? Build on that, and plan to golf at specific courses, while achieving a certain handicap.
The more specific your goals are, the more achievement and purpose you’ll realize. Travel is another example. Instead of just saying you’ll travel more, make a specific plan of traveling to a certain number of countries per year, while learning to speak a new language.
With a plan and specific goals, you’ll enjoy your retirement a lot more. This will help you fill the social void left from working, and accomplishing goals will give you purpose.
Know When You Can Afford to Retire
Aside from having a plan, you also need to know when you can afford to retire. To determine that, multiply your retirement expenses by twenty-five. This is commonly called the multiply by 25 rule.
Let’s suppose your retirement expenses will be $40k per year. Multiply $40k by 25, and you’ll need a $1 million net worth to retire. This is also known as the 4% rule, since the most you can safely withdraw from your net worth is 4% per year.
Now you know what your net worth needs to be, you’ll know when you can afford to retire.
Consider Working Part Time
Another idea is cutting back your hours and working part time. You’ll keep getting a paycheck and health care benefits, while enjoying more time off.
Aside from the pay and health care, working part time gives you the social benefits of working. You’ll have friends to catch up with, and tasks to accomplish.
Working part time will ease your way to retirement, and it could fill the gap if your net worth isn’t 25x your expenses. Give it a try, you can always fully retire later.
The Right Retirement Age – The Bottom Line
So what’s the right retirement age for you? Make sure you have a plan before you retire, and know when you can afford to do it.
Also, consider working part time to ease into your retirement. This will keep paychecks and healthcare coming, while giving you the social benefits of working.
Maximize your income, cut your costs, and put all that money in your hierarchy of savings. Finally, keep in mind your current and financial health to determine when you should begin this next stage of life.