If you’re like most people, your job has been a central part of your life. So wouldn’t it be nice to have the flexibility to decide when you no longer want to work?
Many people of retirement age have achieved this type of control. In fact, two-thirds of workers 65 and older say they work mostly because they want to, not because they have to, according to a 2021 study by Edward Jones and Age Wave. But this means that a third of workers in this age group feel financially compelled to work. That doesn’t necessarily mean they don’t like the work they do, but it’s probably fair to say they would have liked the option of not working. How can you give yourself this option?
You can start by asking yourself these questions:
When do I want to retire? You want to identify the age at which you want to retire. You can change your mind later and move that date up or back, but it’s a good idea to have a goal in mind.
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What retirement lifestyle do I want? When you retire, do you plan to stay close to home and pursue your hobbies, or do you hope to travel the world? Would you like to volunteer your time? Open your own business or do consulting? Obviously, some of these options will require more resources than others, so you’ll want to follow a financial strategy that aligns with the retirement lifestyle you want to pursue.
Am I saving and investing enough? As you chart your path toward your retirement journey, you’ll want to evaluate the sources of income you’ll have available to you. If you feel like you can’t meet your retirement goals, you may want to consider saving more.
When should I start taking Social Security? You can start collecting Social Security benefits as early as age 62, but your monthly payments will be much larger if you wait until your “full” retirement age, which will likely be between 66 and 67. Your decision about when to take Social Security will depend on several factors, including your other sources of income and your family history of longevity. Of course, as you probably know, the Social Security system is facing significant financial stress, so we may see changes to Social Security, depending on what actions Congress might take. In any case, you may want to be fairly conservative in estimating how much Social Security can contribute to your retirement income.
By addressing the questions above, you can get a clearer idea of when you might reach the point where work is optional. But you’ll also need to consider other factors, such as how much you enjoy working or when your spouse or partner plans to retire. Either way, the sooner you start planning for this next phase of your life, the better off you’ll be when it’s time to make the transition.
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