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When Is The Right Time To Retire?

By Marjorie L. Rand, CPA, CFP®, RICP®

When it comes to retirement, you dream of hobbies and time with loved ones. But you also face the questions we all do at some point: When can I retire? Is the timing right? Am I ready? Your thoughts wander between “you only live once” and “but I need to be prepared.” 

Retiring encompasses far more than watching an investment account reach a magic number. It’s the back work that goes into creating the mystical number that prepares you for life after the 9-to-5. 

You can retire when your 401(k) contributions, investment accounts, and passive income streams cover your monthly and expected future needs. So it’s essential to create a plan to understand these figures and bring clarity to when you can confidently clock out for the last time. Creating and following a plan allows you to retire with confidence.

Essential Components To A Thorough Retirement Plan

Timing is at the center of the various pieces of your retirement plan—like when to first withdraw your Social Security benefit and when to enroll in Medicare.

For the typical retiree not requiring disability assistance, you can begin withdrawing Social Security at 62. However, that is not always the best strategy. Medicare healthcare coverage benefits are usually available at age 65 but that may not be the best option. 

For those hoping to retire early, this can create a costly gap in health insurance costs. And it’s smart to look into the benefits of pushing back your first Social Security payment. And what about long-term healthcare needs? And taxes? You can quickly see the need for a well-developed plan.

Budgets And Debt Elimination

To begin sorting through the details, start by creating a budget. A thorough understanding of your current monthly needs will help you quickly calculate estimated future expenses.

Consider any known large purchases in your future. Will you need a new vehicle? Are you hoping to help a child with college or a wedding? Are you dreaming of waterfront property? For some, these expenses are easily covered; for others, it’s important to build them into your plan.

With any budget, you need to consider debt. At Rand Financial Planning, we encourage all clients to start eliminating high-interest debt as soon as possible. (This means any form of consumer debt.)

Once a budget is defined, review your investments, savings, and income streams to begin piecing together a timeline to retirement. Consider these points:

  • Can you cover your monthly needs?
  • Do you have all your ducks in a row when it comes to healthcare?
  • Have you put thought into future long-term care needs?
  • Is there breathing room for the fun you want to have?
  • Are you leaving a legacy for the next generation?

After checking the boxes on all these components, you can confidently answer the question of when you can retire. But it’s also normal for there to be a bit of hesitation as you start nailing down the exact timeline. Obtaining guidance from a professional will put your reservations at ease and empower you to make confident financial decisions.

Obtain Input From A Certified Financial Planner

With multiple moving parts associated with a retirement plan, we encourage meeting with a trusted financial advisor. This provides you the opportunity to share your goals, understand the true costs associated with your plan, while taking into consideration the complexities of timing and taxes.

On the flip side of your plan is cashing in after all your years of saving. A financial planner can assist with all retirement components: how and when to withdraw from IRAs, investment accounts, annuities, and Social Security, to name a few. 

Do you lack certainty in answering questions related to the timing of your retirement? Schedule a 20-minute introductory call or reach out to us at 908-895-2406 or marge@randfinancialplanning.com to see if we are the right firm to help you on your financial journey.

About Marge

Marjorie Rand is founder and financial advisor at Rand Financial Planning, a comprehensive, fee-only, fiduciary financial planning firm. Marge specializes in helping her clients plan for a secure retirement and navigate life’s many transitions through customized, tax-efficient retirement planning. She is passionate about empowering her clients to make the best financial decisions for their life and being by their side no matter what life throws at them. Marjorie spent many years as a CPA before founding Rand Financial Planning so she could be a go-to source for all her clients’ financial needs and help them avoid costly mistakes. She has a bachelor’s degree in accounting from Rutgers University and a Master of Science in Taxation from Fairleigh Dickinson University, along with the Retirement Income Certified Professional® (RICP®) and CERTIFIED FINANCIAL PLANNER® (CFP®) designations. When she’s not working, Marge enjoys boating, horseback riding, traveling, and hiking with her husband and her dog, Rangeley. To learn more about Marjorie, connect with her on LinkedIn.

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