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How to Decide When to Retire

How to Decide When to Retire

Are you thinking of retirement or wondering how to know or decide when to retire?

If yes, then you are not alone.

A lot of business owners and even employees in the public and private sectors contemplate this every day.

And among all the decisions you have to make as an adult, this is one of the most important.

It is often said that the main reason we work is not to make money or take care of ourselves but to stop working someday.

As refreshing and satisfying as our work and profession might be, no one loves the idea of working for the rest of their lives.

For one thing, life changes happen and at some point, we might feel the need to retire and enjoy our time with family and friends.

Additionally, even if you love your job and work is already a part of your life, your physical and mental health might just necessitate retiring.

While retirement is a good thing to look forward to, it is not a decision that one should rush into or take for granted.

You must be sure that you have given serious thought to the idea of retiring before you decide to retire.

Some notable signs inform you when it’s time to retire and make your decision easier.

We will see some of these signs as we proceed.

Also, there are important questions you need to give careful thought to when it comes to deciding when to retire.

Your answers to these questions will reveal whether or not you are ready for retirement and make your decision on this easier.

We will also consider some of these questions in a later section of this article.

Now, let’s see what retirement means.

What Does it Mean to Retire?

The word “retire” is usually used to denote retreating from something, withdrawing, or moving back.

When used in the context of professional careers, however, to retire means to leave one’s job or stop working.

For those working in the public sector in many countries, there is a set retirement age when compulsory retirement comes in.

Retirement for these might also be dictated by the number of years they’ve spent in service.

Sometimes, there is also retirement as a result of medical problems or serious permanent disabilities.

One or both of these factors might necessitate the retirement of an employee working for the government in his country, usually referred to as a civil servant.

However, some people have their businesses and are entrepreneurs or business owners as you might call them.

These individuals are not bound by the laws or rules that govern employees either in the public or private sector.

Instead, they decide on how long they want to work and when they want to retire.

If you are a business owner or an employee, you should have retirement in your plans as soon as you begin working.

Voluntary retirement is when you decide that you want to stop working on a business or a job.

And this should be the long-term goal of every employee or business owner, but there are things to put in place before getting there.

Let us see some of the questions and signs you need to consider.

Important Questions You Need to Consider While Deciding When to Retire 

The decision to retire is not one you make impulsively, or do without forethought and good planning.

Especially if you have a family that depends on you for sustenance is it important to take this decision seriously,

In fact, for your security, mental health, and preservation, you need to be ready before you retire.

Are you currently giving your thoughts on when you should retire and how to decide on that?

If yes, then here are some questions you need to find answers to, to assist you in making the right decision:

What are Your Reasons for Considering Retirement? 

How long have you been in service or business as the case maybe?

Do you find yourself thinking about retirement even before the widely stipulated age or year of service for retirement?

If yes, then you need to carefully and objectively consider why you are considering retirement.

It could be that you no longer find purpose and satisfaction in your job, and hence you feel the need to retire.

If that is the case, then you might consider whether a redirection or switch of career path could be an alternative to consider instead of retirement.

Could it also be that you want to retire because you wish to spend more time with your family and find fuller fulfillment in life?

If yes, then that is a good reason to consider retirement.

But then, you will also need to give considerations to many important questions that would reveal whether or not you are ready.

We will see many of these as we proceed.

How Long Further Can You Go?

In many countries, the average retirement age for civil servants is 65 years, and many employees in private sectors and even some entrepreneurs adopt this.

However, for some individuals, this age doesn’t spell a loss of strength, lack of motivation, or even health problems.

You might find that even at this age, you are still very strong and feel the urge to continue to do more and stay in service.

If you find yourself in this situation, then you need to consider if retiring then is the best decision.

On the other side of the coin, there are situations whereby even before getting to the average acceptable retirement age, you already feel you cannot continue.

You can feel the pressure taking its toll on you and work isn’t as exciting as it used to be.

If that is the case, then you might decide that retirement is the best decision at this point.

It is important to know what message your body system gives, and whether or not you still have what it takes to continue, or if retirement is the best option.

This is another question that can guide you in making your decision.

How Much Do You Have in Savings and How Long Will It Last?

When considering the decision on when to retire, it is worth remembering that retiring means you have decided to stop working.

Therefore, aside from whatever passive income you might have at that point, your job which is your main source of income is no more.

In that case, a lot of the expenses you will incur will be from your savings portfolio.

Hence, you must consider how much you currently have in your savings and how long it can take you before you retire.

Remember that early retirement means that you will need your savings to last you for longer.

Essential expenses such as healthcare, food, clothing, shelter e.t.c. would be dependent on this.

Also, if you still want to be able to afford some level of comfortability even in retirement, then you will need more in your savings portfolio.

All these should be put into consideration when planning retirement and deciding on when to retire.

Do You Have an Emergency Fund for Health Care and Other Unforeseen Events?

Another question you need to ask yourself when deciding on when to retire is if you have an emergency fund.

Savings is important but an emergency fund is also very essential.

While some might combine them in the same portfolio, they are meant for different purposes and built for different uses.

An emergency fund is set aside for cases of emergencies, such as if a disaster occurs or an urgent need for healthcare.

Usually, depending on when you choose to retire, your retirement age might coincide with when you are advanced in years, and bring with it health problems and challenges.

Are you prepared for this kind of situation by having an emergency fund with enough money for this?

Your answer to this question will help you be objective when deciding on when to retire.

What Liabilities Do You Currently Have and Do You Have What It Takes to Care for Them?

While you are still working, you might have certain liabilities that take a considerable part of your income and earnings.

It could be caring for extended family members or relatives, supporting adult children, or paying a full house partner.

There are also other liabilities that you have that you know to account for some of your income.

You need to consider what happens when you retire, whether or not these liabilities will go away or remain.

This will help you devise a financial plan that ensures you are still able to carry your responsibilities and liabilities even in retirement.

Considering this question when deciding on when to retire will help you in making the right decision.

How to Decide When to Retire – Some Signs That Indicate Time to Retire 

When do you wish to retire?

If you are like the majority of people, you might want to retire early, at a time when you still have many years ahead of you.

For many, this is a dream and one which they love to see fulfilled.

Whatever your dreams or wishes are on when to retire, deciding on this is not an easy one.

Retirement is a very serious decision, and if you do not get the decision correctly, you might end up in a worse situation.

Having said that though, there are some signs or indicators that point to when retirement is the best option.

In your subconscious, you can start looking out for these signs, to easily decide on when to retire.

Here are a few of them:

You’ve Lost Interest in Working and Can Afford to Stop

One of the first signs you should look out for when deciding on when to retire is your level of interest in working.

It doesn’t matter how many years or how long you’ve been working when it comes to ascertaining your interest level for work.

Could it be that your job no longer interests you, and even a change of job doesn’t appeal to you either?

It might be that you are simply tired of the idea of working every day and you want to take a break; not a short one but a permanent one.

Well, this might be an indication that it is time for you to retire.

However, there is a catch there, as simply feeling tired or losing interest in working is not enough reason to retire.

You also need to consider if you have what it takes to afford to stop working.

That would be having enough savings, being debt-free, and also being willing to live a simple life.

When all these factors are present, then it might be time to retire.

You Have Failing Mental and/or Physical Health 

Normally, if you are in good health condition and feel stronger every day, it might not be out of place to aim to work longer.

However, if you have plans on enjoying a good retirement perhaps with your spouse, and you are currently battling with health challenges, then you might need to reconsider.

In this situation, if you decide to leave retirement at a much later time, that could mean losing the chance to do some of the things you wish to do.

Therefore, health conditions can also be an indicator that helps inform your decision to retire.

But then, also remember that there are other important factors in addition to this before deciding on retirement such as funds.

You No Longer Have Kids or Parents Dependent on You

One of the responsibilities or liabilities that take a considerable percentage of one’s income is taking having dependent kids and/or parents.

When you are still in the thick of these responsibilities, deciding to retire might not be the best idea.

However, when your kids start leaving home, fending for themselves, and making their own money, then it is easier to decide on retiring.

This is because, at this time, your expenditure and liabilities are lesser, which you will need to enjoy retirement and survive.

There’s an Agreement on this With Your Spouse

If you are married, the decision to retire is even more sensitive and one that needs good planning.

This is because you cannot make this decision on your own, but need to consult with your spouse to ensure you both are on the same page.

Whether your spouse is working or not, you both need to discuss how your retirement will affect your finances.

One factor to consider is if you are retiring before your spouse does, how best you will be able to cope and not be consumed by loneliness.

On the other hand, you also need to consider the effect of both of you retiring at the same time on your finances.

Hence, it is good and proper to only decide to retire when you and your spouse have agreed on it if you have one.

You Already Have a Clear Plan on How to Spend Your Retirement 

One mistake you will make is retiring when you have not yet figured out what to do during retirement.

Contrary to what some may think or say, retirement isn’t just a time for boredom or loneliness.

While adventures and spending time on recreational activities are a big part of retirement plans, it involves more.

Hence, make sure you have a bucket list of all the things you plan to do when you retire.

As you do, also ensure that your main motivation for retirement isn’t simply to get away from your job.

You need to know what you want to do when you retire, and only when you are at this point can you say you’ve done part of what is necessary to decide on retirement.

You Have Sustainable Portfolio and/or Passive Source of Income

While this is not enough reason to decide on retiring, it can be a factor that makes your retirement decision easier to make.

One thing that shouldn’t be ignored or taken for granted when deciding on retirement is sustainability.

If you currently work a job, then you should know that the income you get from that job will stop.

Hence, you should be certain that you have portfolios that are sustainable, especially savings and investment portfolios.

You also need to be sure you can gain access to retirement packages that will see you through this period.

When it comes to money needed to sail through retirement, there can’t be “too much”.

You No Longer Wish to Be Associated With Your Job 

It is a common phenomenon that when people are in the company of others like social gatherings, they identify with their job roles/titles/duties.

That is why when they introduce themselves, they go ahead to mention what they do after stating their names.

While making introductions as well, people would usually ask you what you do for work and you don’t hesitate to tell them.

However, when you find that associating yourself with your job no longer excites you or interests you, it might be a sign that it’s time to retire.

If you have the means to and can afford it, then you can decide to retire at this point.

Just be sure that it is the idea of working that no longer interests you and not the job itself, as there is still an option of changing career.

How to Decide When to Retire – Summary and Key Takeaways 

Retirement is a goal that everyone should look forward to, whether you are a business owner or an employee working for an organization.

While there is satisfying work, the goal of working is actually so that we get to a point and we never have to work again.

Do you think you are ready to retire? How do you decide on when to retire?

Remember the key takeaways from this article on how you can decide on when to retire.

First and most importantly, you need to carefully consider your financial standing and know if there are potential sources of income to take care of potential expenses.

As the common saying goes, the one who fails to plan is planning to fail.

Therefore, finalize your plan on time and make sure you are ready for it.

When you do this, you will not be deciding to retire on a whim, which can have adverse effects.

Rather, you will retire at just the right time, be prepared for your best time yet, and enjoy the decision you’ve made.

If the time is now for you, great. If not, then we hope you will be ready soon to have the retirement you deserve.

We wish you a happy retirement when the time is right.