How do you know if you are ready to retire?

Many people do not have much choice about when they retire. Illness, job loss or caretaking responsibilities push them out of the labour force, ready or not.

But some people have the opposite problem: they do have a choice and yet they cannot quite bring themselves to quit working.

Some love what they do and never want to retire. Others are paralysed by fear of the unknown, financial planners say. They may worry about living without a pay cheque, spending down the money they worked so hard to save or figuring out how to structure their days in the absence of a job.

“A lot of the people I see are financially ready before they are emotionally ready,” says Cathy Gearig, a certified financial planner (CFP) in Michigan.

If you are struggling, here are three signs you may be ready to retire.

You have faced your fears

Retirement is often depicted as an endless, stress-free holiday. In reality, retirement requires some potentially stressful “paradigm shifts” or fundamental changes in people’s approach to life, says CFP Barbara O’Neill, author of Flipping a Switch: Your Guide To Happiness and Financial Security in Later Life.

Instead of earning a pay cheque, for example, retirees have to create one from their savings and other resources. If something goes wrong – such as losing money on investments – they cannot earn more money to make up for any shortfall.

Those who have been diligent savers often struggle with the idea of spending their money in retirement.

“It is really emotional for people,” says CFP Janice Cackowski from Ohio. “They are so used to seeing their account balances increase over the years and they find it really difficult to pull money out of their accounts.”

Other fears – such as being afraid of becoming irrelevant or simply being bored – can cause people to postpone retirement, according to some financial planners.

Some of her most successful clients, including business owners and top executives, have prioritised work to the point where they cannot imagine life without it, Ms Gearig says.

“Honestly, the biggest fear I see is, ‘What am I going to do with myself if I do not go to work all day?’” she says.

Once you know what frightens you about retirement, you can begin to address those fears, financial planners say.

Your financial plan has been stress tested

If your fears are financial, you can hire a fee-only financial planner to review your retirement plan. Choose a planner who is a fiduciary, which means they are committed to putting your best interests first.

Obtaining an expert review is a good idea in any case. The planner can help you navigate health insurance, decide the best way to take a pension, plan for possible long-term care and figure out a sustainable withdrawal rate from your savings.

“This will be your only retirement. It is paramount that you get it right,” says Adam Wojtkowski, a CFP in Massachusetts.

Using sophisticated planning software, the adviser also can stress test your plan to see how it works in the event of a major market downturn, a surge in inflation, higher tax rates or the premature death of you or your spouse, says Shelly-Ann Eweka, senior director of financial planning strategy for finance company TIAA.

Michelle Gessner, a financial planner from Houston, runs her clients’ plans through various combinations of events. Then she runs a “maximum spend” test to see how much money they can spend before the plan fails and they run short of money.

“I am really beating the heck out of these plans and then clients can see, ‘Hey, look, it still works’,” Ms Gessner says. “‘And if it still works, maybe I don’t have to be afraid any more’.”

You know what you are retiring to

Many retirees struggle, at least at first, to find a sense of purpose and a structure for their days. Having a plan for how you will spend your time can help, says CFP Ian Weinberg of New York.

That plan might include a bucket list of travel and experiences you can start checking off. Or, you could create a pie chart or schedule of how you want to divide your time among various pursuits: hobbies, volunteering, physical fitness, family time, travel and so on.

Retirement can also be unexpectedly lonely, especially if you are single or your partner is still working.

If your primary social interactions were with co-workers, you may need to find some new friends, says CFP Patti Black of Alabama. Ms Black recommends checking out volunteer groups, clubs and classes.

You may need some time to prepare yourself mentally and emotionally for retirement. Do not let the preparation continue indefinitely, since the future is never guaranteed, Ms Gearig points out.

“Just jump in and enjoy the ride.”

Associated Press