When should you retire?
When is your retirement date? A recent article in the Des Moines Register encourages those looking to answer this question to approach the topic with some flexibility. Rather than counting the days to your 65th birthday, the author of the article, Jim Sandager, recommends that you keep in mind the following considerations, paraphrased below, before setting a steadfast date. We've also included links to helpful resources to supplement Mr. Sandager's recommendations:
How much money will you need each month to pay your bills? Sandager suggests that while there are some cases where one can live on less in retirement than pre-retirement, more likely than not, you will spend more per year. Will you spend your golden years traveling? Is relocation in your future? Will you still have a mortgage obligation after your last day of work? This living expenses calculator can help you compare living expenses on both sides of retirement day, and help you to plan appropriate saving requirements so that you maintain your standard of living in retirement.
How's your health? Sandager suggests that if your health permits and you have the interest and energy to continue working, working either full or part time beyond your 65th birthday helps to preserve your retirement savings, and can give your investments more time to grow. Another health-related consideration to keep in mind is that the average retired couple faces almost a quarter million dollars in health care costs.
Have you given thought to longevity? People are living longer than ever before, and it is important to prepare for the increasing likelihood that you may spend nearly as many years in retirement as you have in your working life. It is extremely important to build up a nest egg that can sustain you for two or three decades. Make sure your retirement savings strategy is fit to last you through the years by focusing on accumulation and lifetime income, rather than pure growth. Adding conservative financial vehicles to your retirement plan, such as a fixed indexed annuity that can guarantee income for life–no matter how long that may be–can eliminate some of the guess work when it comes to outliving your savings.