How do I know when to retire? (part 2)
Last Updated: December 28, 2015
Part 2: Three reasons to retire as soon as possibleHow do you decide when to retire? In part one of this topic, we saw that the more important question is not, “When can I retire?”, but, “When is the best time for me to retire?” We reviewed three reasons why you might want to delay retirement past the time when many of your coworkers have left the workforce. On the other hand, some people make the mistake of not retiring soon enough. They are scared about having enough money and keep working longer than they need to, missing out on the freedom they could be enjoying in retirement.
- You won’t need to save for retirement any more.
- Your taxes might be reduced due to less income, and some of that income may come from tax-free investments, such as Roth accounts or municipal bonds. Plus, any capital gains income may be taxed at a lower rate, and not all your Social Security income is taxable.
- You may no longer need as much insurance. Disability income insurance and life insurance designed to replace your income if you are unable to work is no longer necessary.
- Work-related expenses, such as business clothing, professional memberships, and extra gas for the car, will go away.
- By reducing your earned income so it’s under $15,720 (in 2016), you can receive Social Security retirement benefits starting at age 62 without any earnings limit reduction.1
- You don’t have to stop working completely. You can continue to work part time while enjoying freedom from the commitments of a full time job.
- FINANCES: Because retirement may not be as expensive as you think. When you analyze your saving goals for retirement, work with a Certified Financial PlannerTM professional. Ask them to help you set a realistic goal for retirement that takes into account the specifics of your situation – including all probable reductions to your income needs. (See the sidebar for examples of possible reductions.)
- FULFILLMENT: Because you may want more time to pursue fulfilling activities outside of work. If you find fulfillment in hobbies, travel, volunteering, or pursuing other activities outside of work, why spend most of your time in the office? It’s time to enjoy what you love.
- RELATIONSHIPS: Because you may want to devote more time to relationships outside of work. Freedom from commitments at work mean you can spend more time with those you love. Enjoy the treasure of your children, grandchildren, friends – and even your spouse!