September 15, 2011

How Do You Know When to Retire?




"When should I retire" is a question I hear a lot. Comments left on the blog or e-mails filling my inbox ask for help in knowing when it is time to call it quits. The answer I give is usually the same: For your individual situation, I have no idea. Retiring from your present full-time job to begin your satisfying retirement is one of the more important decisions you will make during your lifetime. There are so many factors to consider that you must put in the time and effort to come to the best answer for you.

I wrote the  following post about 6 months ago. In looking it over I think the information is valuable enough to repeat now without many changes. I have a lot of new readers who may not have seen this the first time. If so, I urge you to add your comments at the end. Fresh input is very valuable to all of us. If you remember reading this post when first published, I hope a second time will spark your thinking about one or more of the points raised.

You know it is time to retire when....

You dread going to work everyday. You are tired and dispirited. Everyone has an off day or a few days every now and then. But, if that feeling is present pretty much all the time, you may have reached your limit.


You are being asked to do more work for a less money. This is the hidden message in that last productivity memo you received. To preserve your job you will have to accept a salary cut and pick up the slack of those unfortunate souls who got a pink slip. For the short term it may be in your best interest to accept this. But if the situation begins to look semi-permanent, you may have second thoughts.


You feel the essential "you" is slipping away. There isn't enough time for you to do what satisfies you and makes you happy. You find yourself doing things that make you uncomfortable. Your world has shrunk to work-sleep-work.

You can't wait to get home to work on a project or new passion. Closely tied to the "you" reference above. All your thoughts revolve around after work hours. There never is any time to do that thing you really love.

You complain to anyone who will listen (and even many who will not) about work. Spending your energy and life in a negative place increases your stress and shortens your life. It is also a quick way to get fired.

You have saved enough to live without a regular paycheck. You have run the numbers so often your calculator is melting. There are solid income streams that make you feel you can do this. You have thought through contingencies. You have thought about worst case scenarios. The numbers still work. You feel confident in your financial planning and long term situation.


A loved one is very sick and you'd rather spend your time with that person while you can. Whether a parent, child, relative, or best friend, there is no do-over if that person isn't likely to be with you through your retirement. Do you feel strongly that person needs you right now? 


Your health is beginning to slip and you have things you want to accomplish while you still can. In this case you are on the other side of the fence. You are sure you will not be physically or mentally able to do what you'd like to do if you wait too long to retire. You decide it is more important to enjoy your freedom while you have it, even if it means a more limited lifestyle.


You have affordable alternatives for acceptable health insurance and care. This question is hard to answer at the moment. Everything seems to be in a state of flux. But, if your health coverage through work will continue, or your Medicare and supplemental policy are working well you are better off than many. Plan to spend much more than you think you will. If the budget still works you have dealt with one of the biggest hurdles to a satisfying retirement.



You are excited about making a major change in your life (where you live, how you spend your time) Change is life. A life without change is in a rut. Change can be stimulating, exciting, terrifying, and necessary. Sometimes you just have to shake it up and that thought gets your blood racing.


Your self-identity isn't defined by your job. You have a life and and sense of self worth not dependent on work. This is important. There are few things sadder than someone who retires and discovers he has no life outside of work. If you have at least some friends who are not co-workers, enjoy hobbies or other activities you are much closer to being ready to leave the job.


What do you want to do with the rest of your life? When do you want to do it? Aren't those the most important questions? When you can answer them you may be ready.



Which of these questions and statements fit your situation? If you are retired, which ones were most important to you when you made the decision? Retirement today is quite different from a retirement lifestyle of even 10-15 years ago. You may plan for more work. You may want to stay in your home as long as possible. Sun City holds little appeal. You may be chomping at the bit to spend a few years overseas on mission work. You are ready for a new phase of your life, not for your life to end in a whimper. Your thought: retirement  only the beginning of a new part of my life.


How do you know when to retire? You just do.


Related Posts


My Satisfying Retirement is being featured this month in Money Magazine and on CNNMoney.com. I'd be happy to discuss your retirement journey with you. Contact me by e-mail for personal  and private attention.

35 comments:

  1. These are great points. I'm more interested, at this time, in downsizing and working less, not retiring. When my youngest is finished with college, I would like to sell the house and downsize to a less expensive (paid for) alternative, continue to work, but have more $$$ to do what I please. (Less time spent cleaning and maintaining a large home). Eventually, I see using only one car as well. I'm thinking full retirement will come when I can collect Social Security to supplement my retirement savings. I just don't have enough saved to retire earlier.

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  2. Good morning. Sharon,

    Every step you mentioned will not only make your life easier and less stressful, but allow you to build up that retirement nest egg. Great ideas.

    Much of the information I try to provide is applicable to those on either side of the retirement line. Two of the statements above, "You are excited about making a major change in your life" and "what do you want to do with the rest of your life" can easily apply to non-retirees.

    You have given me an idea for a post or two specifically aimed at pre-retirees who aren't close to retirement but want to be moving in the right direction, just like you.

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  3. I retired in May 2010. My job duties changed and I dreaded going to work. I have a pension and health insurance from my employer. Although my pension is small, so far it covers my expenses.
    Like you, I was also a big saver. This money will be used for extras like vacations and will hopefully cover expenses that may come up as I age. I do tend to live a frugal lifestyle and like a simple life.
    If you are lucky enough not to be forced to retire, it is important to think it over carefully before making a permanent decision.

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  4. Donna,

    I wonder how many recent retires are like you and me: we find we like a simpler and more frugal life. I'm not sure it is as much about the money as it is about eliminating excess so one can focus on what brings us happiness.

    Sounds like another idea for a post!

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  5. Bob - I sort of retired this summer and your descriptions in this post really spoke to the reasons better than what I had tried to explain on my own. Sort of retired means I might have to go back to work part-time at some point and that I am not sitting around drinking beer and eating bonbons, but doing more around the house than I ever have and learning new skills that I put off because I didn't have time for them before. It looks as though we have enough to be fairly comfortable for a while and am not worried about it, if I need to do some part-time work off and on.

    I feel very comfortable with our more frugal life so far and the changes that we have made and are making to make it more enjoyable than it was when we both were working.

    Thank you for republishing this article, it really reinforced how positive a change my decision to retire was.

    Harold

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  6. Hi SIW,

    Feeling comfortable with where you are now, and accepting that change might be needed in the future is the only sane way to approach this journey.

    It sounds like you are on the right path. Thanks for sharing your thoughts.

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  7. Bob,

    Your book is out! Unfortunately I don't own a Kindle. Is there another way to get it? I would LOVE to read it!

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  8. Hi Sharon,

    Yes there is another way. Kindle offers a free reader that you can download to your personal computer. If you have Windows XP, Vista, or Windows 7, cut & paste this link: http://amzn.to/dk8GIF.

    Then, you can purchase my book and read it on your PC.

    Thanks for asking!

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  9. Done! Thanks! I'm going to pour myself a cup of coffee and take some time to read it! :)!

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  10. Sharon,,

    Thank you! So far I've sold enough to afford a large pizza!

    I hope you find it worth the money and time. A sincere thank you.

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  11. Steve in Los AngelesSun Sep 18, 05:12:00 PM MST

    Hi Bob,

    I very much like your website. Thank you.

    I am living modestly yet comfortably. I have my own residence, which is a two-bedroom and two-bath condominium in a suburb of Los Angeles. Although I have a loan on my residence, I will have the loan paid off within the next 11 years and 10 months. (I am 14 months ahead of schedule with my loan payments.) In addition to making the regular monthly loan payments, monthly homeowners' association dues, and twice-a-year property tax payments, I also pay the insurance premiums on my condominium owner's insurance policy and earthquake insurance policy each year. I also am making additional principal-only payments on the loan.

    I am in my latter 50's and currently living on a modest government pension (which I will get for the rest of my life) and on savings that my parents left for me after they passed away. Later on (between the ages of 65 and 70), I will be living on the distributions from two annuities with lifetime income riders and on Social Security. I also have a Roth IRA. Starting at age 65, I also will be covered by Medicare.

    I started planning for retirement when I was in my 20's. I am set financially for the rest of my life. I have lived beneath my means for almost my entire adult life. I currently live within my means by doing the following: (1) I devote most of my financial resources toward housing expenses (including my loan). (2) I prepare almost all of my meals at home. (3) Even though I do have a paid-for automobile (which gets great gasoline mileage), I rarely drive my car. I drive no more than 1,000 miles per year. I usually walk, ride my bicycle, or use public transportation. Consequently, I keep my automobile maintenance, gasoline, and automobile insurance costs low. As I do a considerable amount of walking, I am in great physical shape. (4) I keep the utility costs (electricity and natural gas) for my home low. My homeowners' association pays for hot and cold water.

    It is possible for people to have a comfortable retirement. However, people must be highly motivated to do so.

    Thank you for reading my comment.

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  12. Good evening, Steve,

    I appreciate not only your nice comments about the blog but your very detailed overview of your financial setup.

    I'm not a financial expert but I'm hard-pressed to to see any flaws in your plan and execution. The fact you live in the LA area and barely drive is amazing. You know exactly when you'll have your house paid off. You have figured out your cash flow and support for the rest of your life. Your life style keeps you healthy. I gather you are happy and content.

    Steve, you are an inspiration. I started saving for my retirement in my early 30's. It sounds like you beat me!

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  13. Steve in Los AngelesSun Sep 18, 10:45:00 PM MST

    Good evening, Bob. Thank you so much for your nice comments. Thank you also for telling me that I am inspiration. I appreciate it.

    It takes some discipline for me to lead my current lifestyle. What keeps me going is my very high level of motivation. Also, some very smart decisions on my part between 2004 and 2010 substantially enhanced my personal finances. In July 2004, I sold a prior residence for about double what I paid for it in June 1999. (One reason I sold that residence, which was a four bedroom - 1.75 bath two-story house with a swimming pool in the back yard, is that I was concerned that the real estate market was becoming overheated. The house is located in another part of Los Angeles. I purchased that residence for under $295,000 and sold it for under $600,000.) I rented an apartment in another part of Los Angeles from July 2004 through late October 2008, when I purchased my current residence for under $175,000. Although real estate prices still are quite soft, the real estate market has no effect on me, because my current residence probably will be my last residence. I set up one annuity in 2006 and the other annuity last year.

    The condominium building in which I live is off of a major street with a transit bus line. (I live further inside the building. My condominium unit is very quiet.) Staying healthy is extremely important as I want to live a full and complete life. Genetically, I should live a long life. I had some relatives who lived into their late 90's.

    Thank you. I am very happy and content. The quality of my life probably will get even better once I get into my 60's and 70's.

    Thanks again, Bob. Your blog is excellent.

    Steve

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  14. Steve,

    Your comments have added tremendous value to this post because you are revealing real world, specific actions you took to achieve your goals. Obviously, you have thought all this out carefully.

    It is likely something will happen as you age to throw a pothole or two into your plans. But, based on what I've read from you, I have every confidence you will figure it out and move forward.

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  15. Steve in Los AngelesTue Sep 20, 07:34:00 PM MST

    Hi Bob,

    Thank you for your comments.

    As I get older, certain things associated with aging may occur. For example, there is the possibility that I may not be able to care for myself later on. One way I have been able to deal with that possibility is that I have an excellent long-term care insurance policy with a non-profit organization indirectly affiliated with my former employer. Although my coming down with Alzheimer's disease or another form of dementia would be a possibility, I would be more concerned about developing a physical condition (or conditions) that would impair my ability to perform my "Activities of Daily Living," thereby necessitating my need for long-term care. In addition to having good lifestyle habits which positively benefit my health, I have avoided bad lifestyle habits which could have negatively affected my health. For example, although I have a very healthy appetite, I never have had a weight problem as I still have a high metabolism. I also never have smoked anything, which, of course, includes cigarettes.

    In the meantime, I keep my life as simple as possible. I also keep myself physically active. Life presents challenges for all of us. I certainly am no exception. However (and fortunately), I have an abundance of life experiences and knowledge to deal with and resolve future challenges that may occur.

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  16. Steve,

    Long term health insurance is a hot topic. It is expensive and has lots of exclusions but it could prevent bankruptcy if you find yourself needing nursing home care.

    My wife and I have discussed it and passed on it for now. We expect to eventually move into a continuing care community so long term care insurance wouldn't be needed. We'll keep our fingers crossed we won't regret the insurance decision.

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  17. I think people know early they just have to wait a while in order to plan the steps to get there and do it right.

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  18. Jereme,

    I disagree. I'm afraid my experience and research proves that most people don't understand what sacrifices they need to make to achieve a goal. Waiting is not something we do well.

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  19. Steve in Los AngelesWed Sep 21, 10:59:00 PM MST

    Bob,

    Fortunately, my long-term care insurance is not too expensive. It is about $93 per month. It also has a five percent inflation rider on the coverage.

    With regard to the discussion between you and Jereme, achieving a goal does require planning, some sacrificing, and some hard work. A certain amount of discipline also is necessary. In my life, I practice what is known as delayed gratification. My current lifestyle gives me a high degree of control over my life and a tremendous amount of peace of mind. All of what I stated in this paragraph combined with my physical activities (especially walking) have slowed down my biological clock tremendously. In fact, with the exception of those people who know me, most people could think, just from looking at my face, that I could be in my late 30's or early 40's.

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  20. Steve,

    My ability to have an early retirement was built on delayed gratification. There is a balance required, however. Life is meant to be enjoyed, so delaying all pleasure into the future isn't the answer either. By definition the future is always in front of you so you never reach a time when you permit yourself to do something you want to do.

    As we grow older we should learn what is a need and what is a want. Satisfy the need now, and fulfill the want when you can afford to and not before.

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  21. Steve in Los AngelesThu Sep 22, 09:50:00 PM MST

    Bob,

    Thank you for your comment. I agree with you completely.

    For the next 11 years and 10 months, I am satisfying mostly my needs. My most important need is paying off the loan on my residence. If I pay off the loan sooner, then I will give more attention to my wants. One thing that is very important to me is to live responsibly and with a high degree of health and vitality (regardless of whether I am meeting my needs or wants).

    Keeping my finances in excellent shape is of major importance to me. I never want to be in a situation that I worry about my personal finances.

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  22. We are a self employeed couple who has built a small business with a few employees. Our business is not what it once was and my spouse is ill. We have pleanty of income from savings, investments & other sources. My spouse will get early medicare due to disability as of July. We have not found a way to sell our business I feel we should close it down, my spouse feels that we should keep it open long enough to find a buyer. What if we never find a buyer, are we going to let our business own us rather than us own our life? Help with this issue?

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    1. Obviously I don't know the whole situation or all the issues involved. But, as a general rule I would say you have identified the key issue: who owns whom?

      My business started to fade 12 years ago and I struggled with the same issue. I decided to close it and get on with my life. The last 12 years of retirement have been the best time of my life.

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  23. Hi Bob. Some interesting comments - got me thinking about an article I found on Oprah.com entitled "20 question that could change your life." Number two on her list really is consistent with what you are saying and has stayed with me: "Is this what I want to be doing? This very moment is the only moment in which you can make changes. Knowing which changes are best for you comes from assessing what you feel."

    I have worked as a business analyst for over 30 years and the bad news about that is that I tend to over-analyze everything - in my business and personal life. But,sometimes you just need to go with your feelings and I am sensing that retirement is one of those decisions. When you feel it is time, it IS time. No need to overthink everything - Don S.

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    1. I also tend to over-think at times. It comes from my consultant background. I try to say something so precisely there can be no misinterpretation that I can sound stilted or even condescending. I have to be careful not to talk to Betty like a client!

      Right now as I type this I am sitting at the table in our RV, under oak trees with the window open, in an RV park in Texas. "Is this what I want to be doing?" YES!

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  24. Then Bob, I think you have the right perspective. When you have been doing something so long - corporate marketing research in my case - it is a bit difficult to change. But, I am approaching that day and you know what: I am really looking forward to it. By the way for me, it is the beach, having grown up in Southern California in the 1960's - and we are looking at the beaches of Florida as the next step. Florida is a retirement cliché - but, so be it. Enjoy your RV in Texas!! When the time comes, I hope to enjoy my surfboard in Pensacola Florida - Insofar as I can find a wave to ride in the gulf.

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  25. Great blog, Bob. Especially appreciated the "Are you ready for retirement questions/check list?"
    Regarding the LTC insurance question, have you considered a $100K three-year policy without an inflation rider in light of my age (approaching 70)?
    That was recent recommendation: affordable and would provide some protection, even at this late date.

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    1. My wife and I have discussed LTC policies and decided to not pursue them for various reasons. We expect to move into a CCC (3 level) within the next 12-15 years that will take care of our long care needs.

      Of course we run the risk of something happening before then, but with our resources and those of my parents' estate we feel we are OK .

      Glad you liked the checklist. I wish I had found something like it when I was ready to retire 12+ years ago. It would have made my decision easier.

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  26. Boy, I wish an acquaintance had read (& followed) the check list! It has provided an unforgettable warning not to retire when MY answers to the check list clearly point to the door. That's one retirement that sadly was a classic "win-win" - bringing a huge smile to the employee as well as sighs of relief for the co-workers.

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    1. I wish that list had been available when I retired! I would have felt much better about the decision at the time. Now, I know retiring when I did was one of the best things I could have done for myself and my marriage.

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  27. I found your site tonight and love it! I especially can relate to "when to retire". The last position I took within my industry (TV biz), I knew was the wrong move to make, but decided to talk a change. Well, it went from bad to worse, and started affecting my health and my mental well being. I know change was close. I didn't do anything drastic...I saw therapist, doctors and specialist docs who could give me some guidance. I scrambled to pay off my house, pay off my car, save money like crazy because I knew the day would come when I would say "screw It, I'm done". That day happened June 13, 2013 -- I walked out of my office knowing I would never be back. I called in sick since my boss was out and then I called our short term disability insurance and signed on with them. It all worked out and I am so happy! There is a peace in my life that I can't describe. Gone are the days of being bullied and harassed and underappreciated and screamed at and belittled! Now I have no debt, social security money, pension money, insurance long term disability, I've delayed the expensive taxes on my house so I can save that $4500 a year to travel. Signed up of O'Bama Care! They are supplementing my health care. In two years I'll be eligible for Medicare and things are great! Best think I ever did!!!!
    Thanks I'm really enjoying your blog and the links to travel sites. My goal now is exotic travel - I'll be in Thailand for 3 weeks soon! .A single lady (aged 58) can do this! There are those who think I'm nuts and those who are envious. It all boils down to timing!

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    1. Welcome to the family, Pam. It sounds as though you got out just in time to save your sanity and start to make the most of the time we have been for this life. Too many folks wait too long.

      A good blogging friend and her husband went to Thailand a few years ago and absolutely loved it. Check out her blog, I am sure there is a post or two about their trip (http://earlyretirementjourney.blogspot.com/)

      I have been retired now for over 13 years. It has been the best time of my life and it seems to get better month after month.

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  28. Just come to your blog and this post a little late but have to say how reassured I am by this post. I think I managed to tick most of the boxes and it's great to know that someone else thinks I'm making the right decision.

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    1. Welcome, Caree. I'm glad you found support for your decisions!

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  29. I am not yet on retirement age, but your post made me think about my life today and the future. Decision making is critical. It feels like I can't afford to suffer after my retirement. I feel the need to take action as early as now. I need to think what can I do or what else should I need to prepare at this moment. Should I head on to different insurance to secure my future? Life, long term care or health?
    I dunno yet, but I think I should start on obtaining some quotes, or information about them.
    Organize my thoughts before heading on.
    Thanks for jumpstarting my outlook in life! I look forward to a relaxing and worry free future.
    Thanks and more power!

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