If you’re working with a financial planner or pension advisor, chances are you’ve seen some nifty-looking equations that include things like your age, assets, savings, years of service, pension contributions, all sources of post-retirement revenue, etc. When all of these are factored, they result in a magic number of when you can financially retire.
While that addresses the number one concern most people have who are considering retirement – whether they will outlive their money – deciding when to retire is more than an equation. Don’t get me wrong; you do have to feel confident about your financial future, so making sure your numbers add up to a secure retirement is important. But just as money isn’t the only reason you work, it shouldn’t be the only reason you decide not to.
Work meets many of our basic needs besides providing the financial resources we need to live. We also derive a sense of identity, purpose and meaning from it. It gives structure to our day, and provides opportunities to form relationships and connect with others. Building a smooth transition from the workforce is about finding ways to meet all of those needs once you retire.
So, in addition to figuring out your finances, here are 7 other questions to ask yourself to find out if you are ready:
1. Do I want to keep working?
Seems obvious, but some people feel pressured to retire when they really would like to continue working. Do you truly enjoy what you are doing and the people you do it with? Many boomers say they want to keep working to remain active and mentally stimulated or stay connected to people.
2. What will I do with all my free time?
Work also provides structure to our day. Even if we don’t enjoy how our time is spent, we know where we are supposed to be, when, and what we are expected to do. Having unlimited free time can be scary for some people. Especially if you haven’t developed interests outside of work.
3. Who am I without a title?
Many of us have strongly identified with our work and defined ourselves by our job title – after all we are constantly being asked: “What do you do?” Retirement offers the opportunity to reorient that definition and explore who you are outside of work and answer the question “Who am I?” instead.
4. What will make me want to get out of bed in the morning?
What will motivate you to start each day with a smile on your face? Finding your purpose or meaning. For some, this won’t be an issue. They understand and feel confident that they can continue their life purpose in activities outside of work. For others, they have been waiting for the day that they can follow their true passions and interests and live their purpose. For those who highly identified with their work and derived their purpose from it, some self-introspection may be needed.
5. Who will I have lunch with?
Our need to be connected to others is another of the benefits of work. Many of us form deep relationships with our co-workers and carry those relationships outside of the workplace. Whether those friendships are sustained once you retire depends on what the bond is that you share. How will you replace these relationships, if they aren’t sustained?
If work has been your primary focus, you may have let your relationships with family and friends take a back seat. An effort to reconnect may be required. How will you build stronger relationships with those closest to you that will carry you through retirement?
6. What does my spouse/partner think?
If you are part of a couple, it’s important to determine what your spouse/partner wants his or her retirement to look like to ensure you’re on the same page. Do they share your views about: if, when and how to retire; where you will live; how much time you intend to spend with each other vs. apart? Whether you’re retiring at the same time or years apart, you’ll want to develop a plan that works for both of you.
7. Where will I live?
Many retirees plan to move when they retire – to downsize, be closer to family, enjoy a warmer climate, etc. In their excitement to start their new life, they jump in before they have fully considered how moving will impact them. A significant percentage end up moving back to their old city or neighbourhood. Taking the time to align what you want and need (e.g. amenities, location, weather, social connections, healthcare, etc.) with what a home/community has to offer will help you to avoid disappointment and unnecessary costs.