Signs That You Are Not Financially Ready To Retire

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Signs That You Are Not Financially Ready To Retire

The moment you are ready for retirement, you are certainly giving yourself the zeal to have enough time to relax and stay at home. Irrespective of the nature and the interesting part of retirement, it is very obvious that some people that are not financially ready to retire. Some people might feel like they really want to have such moment that alarm won’t wake them up very early and get them rushed for work but rather they just feel like waking up at any time they wish and do things as they want – they are just wishing to retire from office.

When you are ready to retire that means you are ready to stop waking up too early and taking every ounce of strength you have to get out of the bed and start your day. But we should all know that if at all it is very simple and easy to retire, a lot of people would have loved to retire even as at 25years old simply because no one wish to be stressed. Before you can opt for retirement, you should critically look into some considerations such as your proper planning of budget, a well established investment by yourself, your financial plan, the nature of your debt control and your plan on how you wish to live in the future. When you are able to understand that the listed situations need to be critically planned, then you can have a better roadmap.

This is because when you retired at early stage, you might be prone to some consequences which might affect your future plan. Most people don’t know that there’s a range of what they need to have before they can live comfortably. In order for you to have a better decision you should be careful and sensitive before making it.

Therefore, if you are willing to retire or you are planning to feel how excited it would be when you are not longer disturbed by the early morning alarms, you should take your time to think about it and check if you are indeed ready for retirement. Here are 7 signs to show that you are not financially ready to retire.

1.     Not Having A Standard Financial Plan: The great aspect you shouldn’t joke with is the financial plan. In a situation whereby you don’t really have a monthly financial budget whereby your expenses and other costs are covered then you might not necessarily know how much you will need when you retired. This is because you have not been able to estimate how much you spent in a month and hence you can’t categorically know how much you would need or spend after retirement. Therefore, it is pertinent for you to make sure you are able to sit down, draft out how much you need to run your necessary tasks in a month in addition to other expenses and even miscellaneous (emergency). The good part of it is that when you are able to have a stipulated fund meant for emergency before your retirement, it will be easy for you to have one when you retire.

The issue is that it might be a bit difficult for you to build up your savings the moment you stop receiving salary or wages to your account. This means that it won’t be any longer easy for you to have savings when you don’t receive paycheck anymore. Another case you still need to look into before retirement is that you should be able to know your desire after retirement probably you are going for a smaller house or you are moving closer to the grandkids or planning to go for a trip to Europe or anywhere. This means you should be able to consider every single cost by estimating either monthly or yearly so far you can’t know the actual amount that will cost you after retirement. This means you only need to know how much you need to save in your account before you can decide to retire in comfort.

2.     When You Are Struggling to Pay Current Bills: The moment you are striving to pay your bills through your monthly paycheck then you will surely find it not easy when you retire. That is why it is very important for you to have pre-retirement income for you to be able to enjoy a better retirement. Also, it requires you to know how you will have to make a good analysis of your expenses while you are still active in service for you to have a better plan after retirement. In a nutshell, you are to be steadfast to your bills while at work when you are still able to receive paycheck before you decide to retire.

3.     When You Don’t Regularly Check On Your Savings: Some people find it difficult to deal with monetary transactions. It might be due to personal fear or rather sensitivities. Regardless of what the case could be, it is very appropriate for you to always check on the level of your savings. This is because when we are to talk about your retirement savings, we can’t shy away from your investment and that is why we reiterated the major reason you should make sure you have a plan for your retirement.

A situation whereby you don’t proper channel savings towards investment for retirement purpose, you are likely to have financial challenges. Therefore, it is advisable that you are vigilant with what you are saving in the sense that you can actually be checking on your saving towards retirement either weekly or twice a month. This act would enable to detect if the savings is really moving in line with your targeted goals after retirement and also it will allow you to plan for your life after retirement. You should look into how you can be vigilant with your saving when you are still in service and have the opportunity to correct and amend as appropriate before retirement.

4.     When Your Debt Level Is High: High level of debt will unarguably weaken your saving purse and this will affect your financial stability. When you are retired, you are probably going to be living with fixed income; this means you won’t be able to spend unlike when you are still receiving paycheck. In that regard, you will need to spend wisely and hence if you are still paying off your debts even after retirement, you won’t have much with you that could be used for other expenses. Therefore,

it is expected that you should rather pay down the debt before you retire in the sense that you will work more than years that you preferred. The good part of it is that it will enable you to offset some money that would have drain your savings after retirement and the sense of ease will be there for you that you won’t be having all those deductions hanging over your head. Also, be reminded that getting rid of debt is tantamount to getting rid of interest payments that can take a toll on your long-term finances. By the time you are able to pay off your debts before retirement, you won’t be bothered when retired.

5.     When There Is No Plan For Future Major Expenses: You need to take note of some certain expenses that are essential in your way of life such as buying new car, getting a vacation home, going for holiday, maintenance of home appliances, repaving of driveway and other noticeable expenses. While still at service receiving paycheck in your account, you should be able to know the cost of those expenses and how you have been managing it. It is through that you can be able to properly plan how you will manage and pay it up during retirement. Most of the retirement planning counselor usually advises that people should make sure they are able to tackle larger expenses before retirement because the impact to their portfolio can be significant.

6.     When You Haven’t Considered Inflation Costs: Be reminded that no amount of dollars you have in your account, it won’t go as far as it would today. Taking for example, let us assume you are 40years old and your current salary amount to $60,000 and you are willing to retire by the age of 60 years old and spend the remaining 20years enjoying your retirement. Let us assume that the inflation averages 3% per year and you are someone that can live comfortably on 70% of your pre-retirement income, the analysis of how much you need to maintain your standard of living at different ages is shown below:

AgeIncome Required to Maintain Lifestyle
40 (current age)    $42,000
60   $75,857
80   $137,006

With the above illustration, you will realize that irrespective of how high the amount of dollars you saved is, your income will fall short of your needs by the time you retire. Also, as life expectancies increase, your savings meant for retirement might not be able to meet up with the inflation cost as you keep getting older.

7.     When Retirement Worries You: It is a thing to feel excited because you are about to retire, it is another thing to think about life after retirement. While some people are actually excited about their plan to retire when the time is up, some people really get it frustrating and couldn’t hold their anxiety. Working makes you to spend your time and energy towards

specific actions and this has made some people not to feel like letting it go. Some people might be passionate about working always and won’t mentally wish to go for retirement. If this seems applicable to you whereby you keep developing the zeal and passion to work, you can decide to opt for “second act” tasks such as working as a part-time or registering as a volunteer in an organization. This would definitely keep you engaging in our task or the other even after retirement.

Note:

Retirement is a good cause after service; it is simply the time you will need to enjoy the fruits of your labor work. However, it is imperative for you to watch over your finances as at when due and make a good plan. You shouldn’t make mistake of retiring when you are not financially and mentally ready for that. Know your wants and limitations; it will help shape your future.

References:

https://www.investopedia.com/articles/personal-finance/021716/10-signs-you-are-not-ok-retire.asp

https://www.fool.com/retirement/2017/06/22/5-signs-youre-not-ready-to-retire-even-if-you-thin.aspx

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