If ever there were a question that seems to answer itself, this is likely to be the one. We’re ALL ready to retire. Of course, there’s being ready to retire, and being ready to retire. With that in mind, let’s take a look at what needs to be in place so we really can say “Yes,” when asked, ”Are you ready to retire?”
It’s All About The Benjamins
The difference between a comfortable retirement and a stressful one is directly related to the amount of cash you’ll have coming in when you’re not heading out into the world to make your way every morning. So, when you’re trying to determine whether or not you’re ready to retire, the real question you’ll need to answer is will you have enough money to enjoy a comfortable lifestyle?
This means you’ll need to figure out how much cash will be required each month to support you in the manner to which you’ve become accustomed. The “experts” refer to this figure as your “projected monthly spend.” Those same experts say you should count on needing at least 70 percent of the income you currently have. In other words, if you’re currently bringing in $100k annually, you’re likely to need $70k each year to keep going the way you’re going.
How Long You’ll Need The Benjamins Matters Too
In addition to determining you’ll need 70 stacks each year, you’re going to have to figure out how long you’re likely to need them. Granted, none of us knows how many years we were apportioned on the date of our birth. However, you can get a good idea by observing the longevity of your ancestors.
Are your mom and dad still alive and kicking at 95? Was the same true for their parents? If so, it’s reasonable to expect the same will be true for you—all things being equal. Either way, you’ll be better off erring on the longer side than the shorter side. This will help minimize the possibility of coming up short—as well as leaving your spouse struggling should your departure time precede theirs.
Getting Your Ends to Meet
One of the most important things you can do to ensure your ends remain acquainted with one another throughout your retirement years is eliminate your debt before you retire. Going into retirement with a paid off mortgage, the pink slip to your car and zero credit card debt will get you started on what James Brown called the “good foot.”
Otherwise, the interest you’ll pay on those obligations is money you could have used to fund the enjoyment of your retirement. This is especially true of high interest credit card debt. With average credit card interest rates running in excess of 20% (as of this writing) that’d be a lot of cash just going out of the window each month.
Meanwhile, those are ends you could be using to earn compound interest rather than paying it. The professionals at National Debt Relief have a number of strategies you can use to put credit card debt behind you and give you more money to invest.
You Don’t Need to Be Warren Buffett to Be Like Him
Depending upon the nature of your employer, you may already be investing for retirement without realizing you are. Though fewer and farther between than in the past, some employers do still have pension plans in place. However, most have gone the 401(k) route, in which you’re expected to do it on your own. On the other hand, some employers match the amount you put away each month—up to a point. You should do everything possible to get every cent of that “free” money if your employer offers matching funds.
Either way, you’ll need to figure out how much to contribute from your pay each month to hit the number you’ll need—once you’ve decided how long you’ll need your money to last.
The best way to start is find out how much you already have put away. Next, you’ll need to subtract your current age from your planned retirement age to figure out how much time you have to get there. With those numbers in hand, you’ll be able to figure how much you’ll need to set aside each month to be ready when that day arrives. A good retirement calculator can help you do this without doing the math on your own.
There are a number of other ways to grow your money as well. The best play can often be a carefully crafted portfolio of diversified investments—both traditional and alternatives such as real estate. A good financial advisor can help you in that regard; once you determine how much you’ll need and how much time you have to get it.
So, are you ready to retire? Ideally, the information you’ve picked up here can help you make an informed decision in that regard. And, if the answer turned out to be “Not quite yet,” at least you have an idea of how to get there now.
