When is it Time to Retire?

How do you know when it’s time to retire? It can be difficult, even frightening, to make the decision. Here are some tips to help with planning.

Knowing when it’s the right time to retire is not always the easiest thing to do. There are many things to think about and sometimes it can be downright scary.

Some describe it as walking off a cliff while hoping that they packed their parachute right. 

But the good news, however, is that once you talk to someone who has successfully transitioned into retirement, they will tell you that as long as you are prepared, it will all work out. Besides, retirement should be an incredible time that you have worked many long years for. 

As technology advances, so does the average lifespan. As a result, retirement can easily be just as long or longer than your career. This makes it even more important to plan ahead.

Here are a few things to think about before you retire.

Monday Morning Plans

For most of us, work creates the structure that the rest of our lives is built around. Most work from 9-5 while family time, hobbies, and side projects fill in the cracks.

Once you retire, the structure that you have become accustomed to goes away. Some of the most successful and happy retirees have something to fill the void. For some this could be a part-time job or business. For others, it could be playing golf or traveling the world. 

And as many studies have shown, the type of activity matters much less than the fact that you have something that you enjoy and are fulfilled by. Before you retire, it can be wise to have a good idea of how you will spend your free time because you will have much more of it. 

Funding The Mission

The one area that makes most pre-retirees nervous is how they are going to fund their retirement. After all, most of us have gotten very used to a paycheck every 2 weeks.

And when those paychecks stop and your retirement income starts, will there be enough for you to live the way you’d like? This is the million dollar question.

A great way to get know if you are truly ready to retire is to simulate your retirement in the last couple of years of your career. You can do this by living off the amount of money that you’ll know you’ll have in retirement. 

For example, if you run the numbers on your pension, Social Security, TSP, and other retirement income and you calculate that you’ll have $5,000/month of after-tax net income, it might be wise to try living off $5,000/month before you retire. 

If living off that amount is easy, then you can be a lot more confident in your retirement income. If you realize that it is not enough to allow you to live the lifestyle that you want then it might be worth it to you to work a little longer to increase your retirement income.

As Early As Possible

For those feds that have a good amount of time before retirement, picking an “ideal” age to retire might be tough. One way to approach it, however, is by looking at the earliest age that you can retire with an immediate retirement (assuming you want to retire with your FEHB and an immediate pension). 

For those under FERS, you have to be at least age 62 with 5 years of service, age 60 with at least 20 years of service, and your MRA (minimum retirement age) with at least 30 years of service. 

For example, if you realize that you will hit 30 years when you turn age 57 (your MRA), that means that the earliest you’d be able to have an immediate retirement would be age 57. At that point you could run your numbers to get a rough idea of what your retirement income would be at that age. This can give you a great baseline to know where you stand.

The good news is that if you end up loving your work when it comes to your planned retirement age, you are always able to continue working (assuming you don’t have a mandatory retirement age). Even once you fill out your retirement application, you can always cancel it if you change your mind before your last day. 

As long as you are prepared to retire at your earliest age it will give you flexibility and options when that day comes.

About the Author

Dallen Haws is a Financial Advisor who is dedicated to helping federal employees live their best life and plan an incredible retirement. He hosts a podcast and YouTube channel all about federal benefits and retirement. You can learn more about him at Haws Federal Advisors.