9 indications that tell you are ready for retirement

Retirement is a huge milestone, and it’s prudent to ensure that you’re entirely prepared before taking the jump. Whether 15 years from now or right now, the decision to retire is a personal one. Here are nine indicators that you may be ready to turn off your morning alarm and transition into retirement.

You are financially independent

Bear in mind the golden retirement rule of saving at least 25 times your yearly household spending in retirement. Therefore, if you intend to pursue a retirement lifestyle that demands monthly spending of Rs 50,000, ensure that you have at least Rs 1.5 crore in retirement funds. It is anticipated to give income for another 25-30 years at a withdrawal rate of 4%. If you plan to retire early, you will need to save significantly more.

Consider investing in shares after retirement to diversify your income source. Consider income streams in five-year buckets and begin investing the remainder in equities to optimise the longevity of your retirement fund.

Debt-free status

Consider a situation of retiring with your loans still yet to be paid off. You are paying EMI on your car and home loan while your income has stopped coming in. The loan payment not only will deplete your income stream after retirement, but you will find yourself in a sticky situation to provide for its payment in the future as well. Therefore, it is wise to postpone retiring until all debt is paid off. If you are debt-free, you have taken a significant step toward retirement.

Health expenses covered

This is frequently the most overlooked aspect of budgeting. Your health insurance premium increases as you age. If you have insurance via your workplace, it will terminate when you leave the job. Alternatively, if you obtain health insurance through a private insurer, it often becomes more expensive with time.

Have you considered any medical emergencies that could put your finances into disarray? Without planning for it, you risk depleting your retirement assets and shortening their duration. One option to address the issue is to maintain a family-floater health insurance coverage after retirement (that will cost a bit, though).

Emergency buffers ready

There may be unforeseen bills — such as housing or car repairs – that deplete your funds. As a result, it is recommended that you establish a sizable emergency fund that can cover up to 12 months of family needs. Select a reputable liquid fund to store it in.

No dependents

Do you have children that are still enrolled in school? Or elderly parents who rely on you for financial assistance? You are responsible for the children’s costs at least until they enter the working. Or take care of senior persons’ bills – medical or otherwise. Check to see if you’ve met significant financial goals, such as your children’s further education or homeownership.

Income from other sources

A part-time work, freelancing employment, or even rental income can help alleviate budget and cash flow concerns. In retirement, the capacity to draw on multiple sources of income might be the difference between a stressful and peaceful retirement. Of course, the idea is to stack each source in such a way that your annual income and taxes are as smooth and efficient as possible.

Weathering market crisis

The young investors tackle market downturns very well as bargain-hunting opportunities with a long-time horizon for growth in their hands. On the other flip side, retirees require almost instant access to their funds and cannot always afford to wait for their investments to recover in case of a drop in stock prices.  Consult your financial advisor to ensure you have the appropriate portfolio drawdown strategy, asset allocation, and other sources of income in place to withstand a sharp decline in stock prices.

No job satisfaction

If you are financially secure at the current age and experiencing a loss of enthusiasm for your profession, it may be time to retire. It’s also critical to evaluate why you’ve lost interest in your job. If employment is having an adverse effect on your health and well-being, it may be time to move on and think about other ways.

You have a good social network

Having a support network in place when you retire is critical; it is frequently the last thing on your mind when the time comes. There is nothing wrong with being self-sufficient and crossing tasks off one’s personal bucket list during one’s retirement years. However, as the adage goes, a journey shared is a journey enjoyed.

Suppose direct relatives or friends do not surround you. In that case, the good news is that retirement provides an excellent opportunity to meet new people through travelling, joining a community group in your neighbourhood, or volunteering.