The answer to the question: ‘when is the right time to retire?’ is different for everyone. It will depend on your individual circumstances. So, how do you know if you’re ready for retirement?
This does not constitute advice and advice should be sought in all instances before acting on it.
Has inflation thrown a spanner in the works of your plan?
While a well-thought-out retirement strategy would have taken inflation into consideration, no one was able to foresee a global pandemic and the effects it would have on the worldwide economy. Retirement planning incorporates inflation, but traditionally, it hasn’t risen as sharply or quickly as it has over the last year.
If your money in the future isn’t enough to meet your needs because inflation has overshot your earnings, then your lifestyle during retirement will be seriously impacted. You have a finite amount of money during retirement and rising prices mean you’ll be able to afford less. If you’re spending more money on basic living expenses, then inflation could be detrimental to your quality of life.
The way to combat this is to invest your money, rather than keep it in savings, so it has a chance to grow, no matter how high inflation might get.
When you start your investing journey, you need to discover what your attitude toward risk and exactly how much risk you’re willing to take when making your financial decisions. People early on in life usually are more comfortable with higher levels of risk because of the ability to generate higher returns, and they have a long time to recuperate any losses. Some people are also just inherently more comfortable with risk than others, as well, but the reverse is also true.
Others tend to be more cautious despite knowing that bigger risk equals bigger rewards. Many people close to retirement are also more cautious as they don’t want to let any risk decisions impact their retirement savings so close to when they’ll be needed.
Ensure that you’ve embraced investing and that no matter where you are in your career, you’ll be in a good position to make informed investment decisions that keep pace with inflation.
Quite simply, a retirement timeline is the amount of time you have until you retire. When you plan to retire and how much money you have invested are crucial factors in this timeline. Retirement planning is an ongoing process that will need to be reviewed and adjusted as time goes on. As with most financial decisions, getting started early will help put you on the best path toward achieving your goals.
A few questions to ask yourself when deciding when is the right time to retire are:
- Do you have enough saved up to support the lifestyle you want to lead during retirement?
- How much longer are you happy to work for?
- Are you healthy enough to continue working?
- If you’re experiencing health problems, do you want to retire sooner?
- Do you enjoy your job?
- Will you be bored once you stop working?
Of course, these answers will be unique to you, because deciding when to retire is a personal decision. One that’s influenced by your finances, health, and emotional well-being.
Are you ready to retire?
With inflation an even bigger factor than ever when it comes to your finances, don’t let your retirement savings fall victim.
Whether you’re only just getting started on your planning journey or need to check in as you’re getting close to retirement, working with a financial advisor can only help. Get in contact with the experts at Dental & Medical Financial Services to discuss your plan today.