Looking to kiss your job goodbye in 2025? You’ll need to answer “yes” to seven key questions first. Do you have enough retirement income?
Dig into the numbers and see if you truly have enough to sustain you. Analyze your current spending and anticipate any changes during retirement, like downsizing your home or reduced commuting costs. Don’t forget to factor in big expenses like a new vehicle or bucket-list vacation.
Scrutinize your retirement income sources, including 401(k)s, IRAs, pensions, annuities, and Social Security payments. Does the income match or exceed what you need to live on each year? Next, do you have a clear retirement withdrawal strategy?
It’s crucial to avoid draining your accounts too quickly or pushing yourself into a higher tax bracket. Plan which accounts to draw from to balance minimizing taxes with having enough cash. Pay attention to the tax advantages of different accounts.
The popular 4% withdrawal rule is a guideline, but it’s not without controversy. Remember, many retirement accounts have required minimum distributions at age 73. Consider when to start Social Security to maximize benefits.
Are you clear on your retirement goals? Knowing how you’ll spend your days is just as important as having your finances in order. Visualize your ideal retirement day.
Do you want to volunteer, write a novel, or travel in an RV? Having a plan ensures you don’t lose your sense of purpose and helps determine if your finances match your aspirations.
Questions to ask before retiring
Do you have a plan for long-term care? As we age, there may come a point when we can no longer care for ourselves independently. Think about whether you plan on aging in place with in-home help or moving to a care facility.
Determine if you will purchase long-term care insurance or self-fund. Is it better for your health to stop working? A fruitful career offers purpose, which has health benefits.
But it’s not worth it if work negatively affects your health. Putting effort toward your health now is worthwhile if you can afford it. If you can’t fully stop working, consider part-time work or consulting to fill income gaps.
Have you created a clear health care plan? Plan how you’ll pay for everyday health expenses to avoid surprises. Medicare Part A is usually free, but Parts B, C, D and drug coverage have monthly premiums.
Out-of-network costs may apply. If retiring before 65, figure out health insurance premium costs until Medicare eligibility. Can you name the ways you’ll connect with friends and family?
An active social life leads to more satisfying and healthy lives, says the CDC. You’ll have more time in retirement, but you’ll lose the easy social interaction of having coworkers. List out how you’ll create and maintain social connections, like scheduling coffee dates, joining a book club, or volunteering.
Answering “yes” to these seven questions may help determine if you’re truly ready to retire in 2025, ensuring a smoother transition and a fulfilling post-work life. Consider consulting a financial advisor to tailor the analysis to your personal situation.
