Center for a Secure Retirement
7 Signs You're Not Ready to Retire

7 Signs You're Not Ready to Retire

The road to retirement is long — decades in the making. For most of that time, the focus is on retirement planning and preparations. But eventually, there comes a time when reality strikes and retirement is just around the corner. At that point, your focus should be on determining whether you're financially and emotionally prepared for retirement.

As you approach retirement, it's important to keep an eye out for signs indicating that you're not ready to retire yet. Here are some common situations that can signal a need to focus more on retirement planning to help you stay moving in the right direction.

1. You Don't Have a Retirement Budget Set

Part of retirement planning is determining how much you've saved and what expenses you'll need to cover every month. You'll want to know what your monthly cash flow from your retirement savings and Social Security will look like, and you'll need to plan for your monthly expenses as well. It also never hurts to create an emergency fund that can act as a buffer and help you cover unexpected expenses without dipping into your savings.

It's important to develop a budget as you near retirement. Calculate your monthly expenses and expected income so you can determine whether they would allow you to sustain your desired lifestyle. The last thing you want to discover upon reaching retirement is that you won't have enough money to cover your bills each month. Starting to plan your budget before you retire can give you time to make adjustments and become comfortable with sticking to a budget before you need to do so.

2. You Haven't Prepared for Future Expenses

Another essential component of retirement planning is accounting for future expenses. The most common expense-related question you'll need to answer is what you plan to do with your current place of residence. If you're still paying a mortgage, do you have plans to pay it down before retirement? Are you thinking about selling your home and downsizing for the future or moving to a more tax-friendly state for retirees? You'll want to consider the costs of making these changes before you enter retirement so you can plan as needed.

If you own a home or car, potential repair or maintenance costs should also factor into your planning. If something breaks, you might need to fund a new roof or even purchase a completely new vehicle. Unexpected costs can add up and wreak havoc on your carefully planned savings, especially if you haven't accounted for possible unforeseen expenses in your planning.

Don't forget to look at your expected lifestyle expenses, too. For instance, many retirees use their retirement years to travel or explore new hobbies. If that's your plan, make sure you add the costs of doing so to your budget. While having a basic monthly budget is vital in retirement, you should also include some extra padding to cover both expected and unforeseen expenses if possible.

3. You Currently Have a Lot of Debt

High levels of debt can be really hard to overcome in retirement. When you're already living on a fixed income, you want to make sure you're using it on what you love, not long-standing bills. In addition, the longer you carry debt, the more interest you'll have to pay over time, which could deplete funds that would otherwise go toward your retirement savings.

Take time to examine the debt you currently have and set a timeline for paying it off. Start with high-interest debt, such as credit card bills, and move down the list from there. You could also create smaller goals and set aside a little bit every week or month to put toward debt repayment.

4. You Haven't Thought About Health Care Costs

Health care costs tend to be some of the biggest financial expenses retirees have to deal with as they age, and you'll want to plan for as many of these costs as possible before you enter retirement. Once you turn 65, you can sign up for Medicare, but note that it may not cover all of your health care expenses.

Be sure to consider unexpected health care costs as well. For instance, if you get sick or incapacitated in retirement, you might need round-the-clock or nursing care for extended periods. If that's the case, that care may not be covered under Medicare and would cost extra. If you want to avoid paying some of these out-of-pocket expenses, consider private insurance and long-term care (LTC) insurance to fill in some of the gaps in what Medicare offers.

5. You Haven't Reviewed Your Investment Portfolio

As you get older, you don't always have the luxury of taking a passive approach to your investments. Developing a "set it and forget it" portfolio in your 30s likely meant that you still had plenty of time to deal with the ups and downs of the market. However, as you get closer to retirement, you'll want to maximize your portfolio to withstand risk and give you a dependable income for years to come.

Don't wait until it's too late to address these matters. A substantial part of your retirement planning should focus on reducing risk and preserving assets. Continue discussing your strategy with your advisor over the coming years, and revisit your portfolio consistently to ensure it aligns with your goals.

6. You Are Part of the Sandwich Generation

Today, millions of Americans are members of a sandwich generation. These are people in middle age caring for both their kids and their elderly parents. Taking care of both of these groups can have a significant impact on your retirement in terms of your ability to save now and the resources you'll have in the future.

If you have financially dependent parents or kids, review these costs and see if they are impacting your savings. If they are, there a couple of paths you can take. One is to continue working and postpone your retirement. Another is to have some honest conversations about your finances and your ability to help. By working together, you and your loved ones might be able to come up with some working solutions. Your financial advisor might also be able to offer guidance, as this type of situation is common.

7. You Still Love Your Job

Everyone is different. Some people count down the days until retirement, while others genuinely enjoy working. If you fall into the second camp, you may want to consider holding off on retirement for a few years. There are no hard and fast rules when it comes to retirement, and ideally you'll be able to retire according to your own schedule. If the thought of working for another few years still gets you excited, keep going.

You could also look to add some flexibility to your work schedule as you age. Your company might be willing to reduce your hours, have you work a few days a week from home or take you on as a part-time consultant. These options might present the best of both worlds if you don't feel ready to fully retire just yet.

Get on the Right Path

Retirement is a big life change, and for some, it's a serious adjustment. Remember that preparing for retirement isn't always about finances; you want to be mentally and emotionally ready too.

If some of the signs listed above apply to you, it may be that you're not yet ready to retire. However, that doesn't mean you can't put yourself on the right track. Work with an advisor to understand your situation, develop a plan that suits your retirement goals and keep moving toward a vision of retirement that excites you.

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