When will you be ready to retire?
Particularly if retirement is still far away, you’re probably thinking in terms of dollars—how many you will have and how long they will last. But new research finds that for many people the decision to retire is not just about money. It’s about life and the freedom to enjoy it.
While financial and work-related factors are the primary reasons people continue to work, with eligibility for Medicare and Social Security as key concerns, a recent survey* found that it’s often non-financial factors like family, health, and lifestyle that ultimately cause people to decide to retire. Among retirees, 72% chose leisure as a very or somewhat strong reason to retire, 64% pointed to stress at work, and 62% cited a desire to spend more time with their grandchildren.
If you’re looking forward to the freedom that retirement brings, here’s a checklist of things that can help you prepare, both financially and emotionally, for the shift.
Five years before you plan to retire may be a good time to start thinking through the details and prioritizing your goals. This is the time to decide when you’ll retire as well as the kind of lifestyle you want after retirement. Be as accurate and realistic as you can, discuss your plans with your partner, if you have one, and continue to review and refine your expectations as you approach retirement. Make sure you consider the following:
As you round the bend toward retirement, you may not want to take on any more investment risk than necessary. But the consequences of being too conservative can be just as worrisome when you account for inflation and the possibility that you could outlive your savings. Part of the solution is an appropriate asset mix and understanding your objectives.
Although you can’t control market behavior, you can help minimize its long-term effect by selecting an age-appropriate investment mix. Remember that you may live 30 years or more in retirement. So while retirement is often the time to take some risk off the table, make sure you’re not tempted to become too conservative.
The economy and lack of confidence that pre-retirees could make their money last throughout their retirement are two of the most important financial factors that keep them working*. If these reasons resonate with you, consider the following steps to help boost your retirement readiness:
* Fidelity Investments Decision to Retire study, August 2015. This study represents insights from a series of in-depth interviews conducted in Boston, Chicago, and San Francisco (April 2015), and from an online survey of more than 12,000 defined contribution plan participants recordkept by Fidelity, ranging in age from 55 to 80 across all industries and income levels, who felt they had some control over their decision to retire. The research was completed in August 2015 by Greenwald & Associates, Inc., an independent third-party research firm. Fidelity also worked in collaboration with the Stanford Center on Longevity on the study.
Guidance provided is educational.
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