It’s difficult to know when you are ready to retire. But there are certain decisions everyone must make in order to retire well. Take care to check these items of your to-do list before leaving your job.
1. Have you decided on Social Security? The federal government puts full retirement age for most of us at 66 or 67. That’s when you become eligible for your full Social Security benefit. If you wait longer, up to age 70, you get a bonus. Alternatively, you can start benefits as early as 62, but you take a penalty. The best way to look at it: You can apply for Social Security anytime between ages 62 and 70, on a sliding scale of benefits. The longer you wait, the bigger your monthly check. Most experts recommend delaying, to get the highest monthly benefit. But only you can decide when to start Social Security, based on your own health, financial and employment situation.
2. Did you sign up for Medicare? There is no sliding scale for Medicare. You sign up at age 65. Most people get Part A for free, which covers hospitals. There’s a premium for Part B, which covers doctor visits, and also Part D, which covers prescription drugs. Even if you’re not currently taking any prescriptions, it’s a good idea to sign on for Part D, because if you wait you pay a penalty. Also, unless you’re one of the lucky few with a supplemental plan offered by an old employer, you need to purchase your own supplemental policy through an insurance company.
3. Are your finances in order? Yes, you can live on Social Security alone, but you will not be living large. The average retirement benefit in 2016 is about $1,300 per month. So hopefully, in addition to Social Security, you’ve also got a pension, 401(k) plan, IRA or some other resource that can supply you with additional income.
4. Do you want to keep working? It sounds like an oxymoron. How can you be retired and still work? But a lot of retirees, especially those who retire early, keep their hand in the commercial world to stay busy and bring in some extra income. They consult for their old employer, take a part-time job or turn a hobby into a money-making venture.
5. Do you know what you’re going to do? If you’re not working, what will you do all day long? Some people, especially those who retire later in life or who have a health issue, are happy to take it easy, lie back and read a book or watch TV. And they deserve it. But a lot of people get bored in retirement. So plan ahead, and find activities that are fulfilling and satisfying. It might be a hobby, your grandchildren or volunteering in your community. Aim for something that will make you tired at the end of the day so you can sleep through the night.
6. Do you know where you will live? Contrary to popular opinion, most people do not move to Florida or Arizona after they retire. Instead, they stay right where they are. Those who do move typically sell their family home and move to smaller quarters, usually within 20 miles of where they used to live. But plenty of people still do have the dream of moving to a warmer climate with a sandy beach or verdant golf course out their door. But before you buy your dream house, spend some significant time in your new location – maybe even rent for a year – to make sure the reality matches your imagination. You might decide that two weeks at the beach are fun, but two months in the winter are a bit too much.