The right time to retire

by Stacy Francis, CFP®, CDFA

When should I retire? a woman called me up to ask today. I found it charming; quaint, even, to make such a complex question sound so simple. If only it were so simple that I could just have spouted out age 65 or 55. Would not it be wonderful if you just KNEW what date you could and should retire?

Looking at it from a finance point of view, you can retire when the combination of the retirement benefits you will receive and the average yield from your invested capital is at least as high as your expenses. Keep in mind here, that your expenses may change when you retire. You may wish to travel the world, or spend a year touring the States in an RV. You may want to move to be closer to your children, or simply to a warmer climate. Your expenses may go up, or down, and you need to take all that into consideration before you act. You may also wish to leave money behind for your loved ones, in which case you may need to work a little longer to set the money aside. You may be in good health, or poor.

But apart from the money stuff (which, by the way, qualified professionals will gladly help you with), the most important thing you’ve got to ask yourself is: do you want to retire? Do you enjoy your job? Would your life be more rewarding if you retired, or less? What are you looking to get out of the upcoming couple of years? Would you miss your coworkers awfully if you left your job, or do you look forward to mid-week lunches with your husband?

Whatever your reasons for retiring or not retiring are, there is a financial side, and an emotional side. And only you can balance that equation.

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